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REPORT
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WITH ANNEXES PREPARED UNDER HIS DIRECTION.
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LEAGUE OF NATIONS
REPORT
ON THE
PROBLEM OF RAW MATERIALS
AND
I^O O D *^ T U F JRS
BY
PROFESSOH GIN I
WITH ANNEXES PREPARED UNDER HIS DIRECTION.
CONTENTS
Page
Introductory Report by Professor Gini 5
Events leading up to the Enquiry : Origin, Sources and Nature of the
Documents to be considered.
General Report on the Question, by Professor Gini (with an Index) . 15
Annexes:
I. Cereals. By Professor Vinci 81
II. Wool. „ „ 103
III. Cotton. „ ,, 131
IV. Coal. By Dr. Sloutski and Professor Vinci 151
V. Mineral Oil. „ „ „ 175
VI. Iron Industry. „ „ „ 197
VII. Chemical Manures „ „ „ 219
5002i>3
INTRODUCTORY REPORT BY PROFESSOR GINI.
EVENTS LEADING UP TO THE ENQUIRY: ORIGIN, SOURCES AND
NATURE OF THE DOCUMENTS TO BE CONSIDERED.
The enquiry on raw material and foodstuffs, to which this report refers, has
been preceded by numerous other enquiries bearing witness to the interest which
the question has for a long time aroused.
Several of these enquiries did not concern the League of Nations: e.g., the
motion submitted by the Italian Delegates in March 1919, at the Raw Materials
Committee of the Peace Conference; the motion of a similar character, especially
concerned with coal, submitted by the Italian Delegation at the 31st Meeting of
the Supreme Economic Council, held in Rome, November 21st-23rd, 1919; the
Agenda of the Congress of International and Neutral Co-operative Consumers
(Paris, June 1919); the resolution of the second International Socialist Com-
mittee held at Geneva, 1920; the resolutions of the Economic Conference held
at Paris in 1920, and of the International Chamber of Commerce adopted at its
initial Congress, held in Paris, June 23rd-30th, 1920, and at its second Congress,
held in London in July 1921.
Other enquiries, on the contrary, called for some action on the part of the
League of Nations. It would be well to recall these enquiries as leading directly
to the present enquiry.
!
A. — At its meeting on June 4th, 1919, the French National Federation of
Consumers' Co-operative Societies, after drawing attention to the lack of agree-
ment as to the best method of carrying out the distribution of commodities —
whether by unrestricted competition or by State control — recognised the need
for precise information on everything relating to prices and stocks, and laid certain
proposals before the Supreme Co-operative Council, as a result of which the latter
body made the following recommendations: —
(1) "That the Government should transform the department dealing
with prices (Service d'Observation des Prix) into an Office of Statistics of
Internal Commerce, dealing with prices, supplies and movements of different
commodities; and that this Office should work in permanent contact with the
Supreme Co-operative Council, which is better qualified than any other organi-
sation to defend the consumer."
— 6 —
(2) "That an International Office of Trade Statistics should be established
in connection with the Secretariat of the League of Nations to examine the
resources and requirements of the various countries and to consider how
distribution may be carried out to the greatest common advantage."
The Reports of the National Federation of Consumers' Co-operative Societies,
and the recommendations made by the Supreme Co-operative Council are included
inthe"Etudeset Documents" published by the International Labour Office, Series B,
No. 2, October 5th, 1920.
B. — A few months later, at the International Labour Conference in Washington,
the Italian Workers' Delegate, M. Gino Baldesi put the following motion to the
vote (the 20th Sitting, November 26th):—
"The International Labour Conference considering that the question of
unemployment is strictly connected with the distribution of raw material and
with the question of the cost of ocean carriage for the same, and considering
that this question cannot be the subject of a study by this body itself, refers
it to the League of Nations and recommends that it take it up for study and
solution."
M. Baldesi followed this with a statement in which he defined his motion as
follows: Whereas the inadequate supply of raw materials necessary for industry
is the chief cause of unemployment in many countries, whilst in other countries
which produce these raw materials unemployment is often due to over-production,
it was proposed that the Conference should draw the attention of the League of
Nations to the importance of an equitable distribution of raw material in preventing
unemployment and to the expediency of setting up a permanent Committee which
would guarantee this equitable distribution among the various countries, according
to their present and future industrial requirements. Whereas the disparity and the
fluctuations in the rates for ocean carriage encourage speculation and the mani-
pulation of prices, it was further moved that the Conference should draw the atten-
tion of the League of Nations to the proposal made by the United States Congress
in Resolution 311 of September, 1914, which recommended as desirable the setting
up of a permanent International Committee with advisory powers for the regulation
of the rates of transport by sea.
On a roll-call vote, the Baldesi motion was rejected by 43 votes to 40.
The motion of M. Baldesi as well as his statement have been published by the
International Labour Office in the pamphlet already quoted.
C. — A year later, the International Miners' Congress, which was held in Geneva
between August 2nd-6th, 1920, discussed a resolution, which aimed at setting up
an International Committee for the distribution of coal, and unanimously adopted
the following resolution: —
"The Congress, considering the ill-distribution of fuel, ores and other
materials, and the speculation and intermediate profits which are given full
opportunity in this as in all other spheres;
"Considering also the misery which results from such a state of things :
•'Expresses the desire that there be constituted within a brief period an
international office for the distribution of fuel, ores and other raw materials
indispensable for the revival of a normal economic life; and
"Requests that the International Labour Office should take into careful
consideration this urgent demand, put forward by the delegates of the Inter-
nationa! Federation of Miners; and
"Entrusts to it the task of finding a remedy as early as possible, in accord
with the Executive Committee of the International Federation of Miners and
with the assistance of the various branches of the League of Nations."
This Resolution and the problem which it raised were the subject (as Mr.
H. B. Butler informed the Secretary-General on October 22nd, 1920) of a thorough
investigation by the Governing Body of tlie International Labour Office which,
on October 6th, adopted the following proposal: —
"It is proposed that in response to the request which has been made, the
Governing Body should continue negotiations with the League of Nations on
the following basis: —
"(1) The constitution of an International Office of statistics of prices and
supplies (the first of which might deal with coal), attached to the Economic
and Financial Section of the League of Nations.
"(2) We ask the Economic Section to constitute this Office in such a way
that the International Labour Office shall be represented on it, and through
the medium of its officers or members of its Governing Body follow carefully
from day to day the investigations made and the result obtained, and thus
respond practically to the aspirations and desires expressed in the resolution
of the International Miners' Conference."
A Report of the International Miners' Congress has been published by the Inter-
national Labour Office in "Etudes et Documents," Series A, No. 7, October 19th, 1920.
A Note on "The Suggested International Coal Office," with the text of Mr.
Butler's letter, has been published by the International Labour Office in the Bulleitn
of November 3rd, 1920, No. 9; and the same letter also appears in the "Report of
the Work of the Provisional Economic and Financial Committee," published by the
League of Nations. (E.F.S. 1, G.P.V. 1.)
D. — Long discussions on the subject of raw materials and commercial restric-
tions took place at the International Financial Conference of Brussels (September
23rd to October 6th, 1920). The Report of the Conference states: —
"The Conference strongly endorses the declaration of the Supreme Council
of March 8th last that a full and friendly co-operation should at once be re-
established between the States created or enlarged as a result of the war, in
order that the essential unity of European economic life may not be impaired
by the erection of artificial economic barriers ; each country should aim at the
progressive restoration of that freedom of commerce which prevailed before
the war, including the withdrawal of artificial restrictions on, and discrimi-
nations of price against, external trade."
The Conference also recommended that an international organisation should
be created and placed at the disposal of States which might wish to have recourse
to credits, in order to ensure payment for their essential imports.
It also recommended the Council of the League of Nations to draw the attention
of the various Governments to the question of Finishing Credits, and to entrust to
a Committee composed of jurists and business men the task of proposing the legis-
lative measures necessary for the realisation of this kind of credit.
E. — Shortly afterwards, the International Congress of League of Nations
Unions, meeting at Milan, October 12th-16th, 1920, adopted the two following
resolutions : —
1.
"In view of the fact that the establishment of universal economic soli-
darity is one of the essential conditions of the new international order which
the League of Nations is to establish;
"And in view of the fact that this solidarity, and with it the peace of the
world, is menaced by existing protectionist tendencies, and that therefore
it is of the utmost importance to do away with these tendencies, the inevitable
result of which is industrial and commercial materialism: —
"Adopts the following resolution: —
"That the League of Nations should sanction as soon as possible the prin-
ciple of the abolition in all countries of restrictions and barriers of all nature
to commercial exchange, especially as regards essential raw materials, inas-
much as such restrictions and barriers tend to create conditions of inequality
between the nations in all reforms leading to regeneration and development."
2.
"The Congress expresses the opinion that any Mandatory Power is for-
bidden to make use of its position to secure, either for itself or for other Members
of the League, special economic and commercial advantages."
II.
These events, however, did not, as a matter of fact, originate the report which
I have the honour to submit to you. Its true origin is to be found in the fallowing
resolution adopted by the Council of the League of Nations, which met in Brussels
on October 25th, 1920:—
"The Council has fully considered the difficulties experienced by numerous
countries in assuring the import of raw materials essential to their welfare
and even to their existence, and has requested the Economic Section of the
Economic and Financial Committee to study: —
"(a) The extent and nature of their requirements;
"(6) The causes of these difficulties (other than those arising from
lack of credit or fluctuation in the rate of exchange, which have already
been considered by the Brussels Financial Conference); the effects
of the existence of monopolies will be very specially considered.
"The Council invites the Committee to submit to it at the earliest possible
moment a report on the results of its enquiry, a report which is indispensable
for the further deliberations of the International Economic and Financial
Conference."
This resolution was the result arrived at in a debate in the Council, following
a report presented by M. Tittoni, the Italian Representative, on October 25th,
with regard to possible action by the League with a view to securing equitable
economic and financial treatment for all its Members. In this debate an important
part was taken by Mr. A. J. Balfour.
M. Tittoni's statements and Mr. Balfour's remarks are included in the « Report
of the work of the Provisional Economic and Financial Committee », published
by the League of Nations. (E.F.S. 1, G.P.V. 1.)
The Assembly of the League of Nations, having noted the resolution taken by
the Council, again discussed the question and adopted the following resolution at its
Meeting on December 8th, 1920: —
"The Assembly, having noted the resolution taken by the Council at
its meeting in Brussels, October 25th last, considers it indispensable that the
Economic; and Financial Committee should continue its work without delay
in the manner indicated by the Council."
III.
The Provisional Economic and Financial Committee met in December. The
Committee ))roceeded to give effect to the recommendations of the International
Financial Conference of Brussels in respect of Internal ioual Credits and of Finishing
Credits. It also noted the contents of Mr. Butler's letter, dated October 28th,
1920, and was generally in agreement with the International Labour Office that
steps should l)e taken under the supervision of tiie League of Nations for the syste-
matic compilation of statistics of production, distribution and consumption of
the chief commodities essential to the ('coiuiuiic existence of the various countries.
(See Report quoted, page 132.)
But, meanwhile, the Committee gave elTect to the resolutions of the Council
and of the Assembly of the League of Nations by preparing two questionnaires.
— 9 —
one dealing with import and export restrictions, with monopolies and with unfair
competition (E. F. 23), and the other asking for statistical information with regard
to the supplies of raw materials and foodstuffs (E.F. 24).
The questionnaires were sent in the month of January to the various Govern-
ments with the request that the latter would be good enough to return them to
the Secretariat, which had been asked to examine and collate the information,
by January 31st in the case of questionnaire E. F. 23, and by February 15th, 1921,
in the case of questionnaire E. F. 24.
IV.
It was evidently with the object of carrying out the duty which had been entrus-
ted to him by the Committee, and also to prepare for the Committee all the infor-
mation necessary for its discussions, that the Secretary-General of the League of
Nations did me the honour on February 14th, 1921, of requesting me to "devote six
months to drawing up a report on the production and the distribution of raw material
and foodstuffs," to be laid before the Economic Section of the Provisional Economic
and Financial Committee.
The invitation was at once accepted, but, as a result of illness, it was only
on March 16th that I could proceed to Geneva and commence my work.
As a result of the intimate connection between the enquiries (a) on raw material
and foodstufTs, and (b) on commercial restrictions and monopolies, I was asked to
consider also the part of questionnaire E. F. 23, which deals with the two latter
subjects.
At the end of April, I was given the following collaborators to assist me in sending
out and classifying the questionnaires and in collecting the statistical information
and preparing the report:
Professor Felice Vinci, Lecturer in the Institute Superiore di Commercio at
Bari, Dr. Nokhim Sloutski, M. Frangois Fissore, Licencie es Sciences economiques,
and Miss Hooke.
V.
The replies to the two questionnaires did not, however, arrive within the re-
quired period ; and even after the date fixed they came in very slowly. Moreover,
the answers to the statistical questionnaire were nearly always incomplete. In
any case, even if the returns had been complete, they could not have given a true
picture of the situation of the various countries as regards raw material and food-
stuffs, seeing that questionnaire E. F. 24 asked for no information with respect to
the period of the war, and, for the period following the war, confined itself to a request
for annual returns. Hence, it was impossible to follow in sufficient detail the deve-
lopment of the situation after the war and to explain clearly the differences between
this and the pre-war situation. It seemed, then, absolutely necessary to send out
another, and more detailed, questionnaire.
The new questionnaire differed from its predecessor in asking for data for each
month for the years 1919,1920 and the first half of the year 1921, and in asking also
for yearly statistics for the whole period 1910 to 1918. It was, moreover, made up
of various tables, one for each commodity, each table to be forwarded by the Govern-
ments to the office best qualified to deal with it. All the lists, again, were trans-
mitted, through the Ministry of Foreign Affairs, to the Central Office of State Statis-
tics with the request that the latter should have them completed by the offices
concerned, and, after checking the figures, send them back as soon as possible to
the Secretariat. The list of articles covered by the first questionnaire was
increased, in the second, from 28 to 60. This questionnaire, like its predecessor,
was sent not only to the States Members of the League of Nations, but also to a
few other States, which, from their importance in the question of raw material,
might be in a position to give valuable information, or to which it was, for other
reasons, thought advisable to apply (United States, Germany, Esthonia, Latvia,
Lithuania, Hungary, Ecuador and the Hedjaz).
— 10 -
The new questionnairo coulii not be sent out until the beginning of May. Difle-
rent periods were granted for the replies from the various countries. The replies
had to be sent by June 15th, at latest, in the case of European countries where,
by reason of the superior organisation of the statistical office and the lesser degree
in which their territories had been altered by the war, there was reason to believe
that the compilation of the statistics would prove an easier task. In the case of the
other European countries, the return was called for by June 30th, and, lastly, in the
case of States in other continents, one month after the receipt of the questionnaire.
The same information was subsequently requested from the Government of
Central Lithuania (the disputed territory of Vilna), for which neither Lithuania
nor Poland was in a position to furnish any data.
VL
It was, however, to be foreseen that various causes (the attitude of certain
States not belonging to the League towards that body; the excessive number and,
in some cases, also the excessive complexity of the questionnaires already sent out
by the Secretariat and the International Labour Office; difficulties in replying on
the part of the new States created after the war; the slowness of "communication
with the more distant States) would have prevented the arrival of a sufficient
number of replies — or, at any rate, their arrival within the time required. Moreover,
the questionnaire could not have produced — even assuming the most favourable
circumstances — certain information which would have thrown a flood of light on
the subject under consideration, and which could only have been obtained by means
of verbal conversations.
It was therefore evident, from the very beginning, that it would be impossible
to rely on being able to use the data given in the replies to the questionnaire to
obtain an idea of the world's production and consumption of foodstuffs and raw
materials. It was essential to seek other sources of information, but these sources
could not have furnished, in regard to all the products, such detailed and precise
information as it had been hoped to obtain by means of the questionnaire.
It was accordingly decided to draw up statements in regard to the more impor-
tant raw materials and foodstuffs, or groups of these articles, by means of informa-
tion derived from all available sources and in accordance with a programme, which
should be uniform in its main features but modified in respect of each product or
group of products in accordance with the amount and the details of the statistical
material collected.
It also appeared essential to make personal visits to the countries with regard
to which little exact information was available in respect of raw materials and food-
stuffs, in order to obtain replies to the questionnaires, to explain, when necessary,
the manner in which these replies should be prepared, to dispel the uncertainties
especially liable to occur in the new States which possessed no complete set of
statistics for the pre-war period, to obtain explanations in regard to the questions
to be discussed, to get a personal view of the situation, and to collect information
from the best-informed and most impartial persons.
Fifteen countries were visited jvith this object: Spain, Portugal, France, Italy,
Denmark, Norway, Sweden, Finland, Esthonia, Latvia, Lithuania, Central Lithua-
nia (Vilna), Poland, Austria, and Czecho-Slovakia. 1 twice passed Ihrough
Germany, going to Denmark and returning from Czecho-Slovakia. .4s for Swit-
zerland, where I lived for several months, I was sufficiently familiar with condi-
tions there. There was unfortunately no time to visit Hungary and the Balkan
States, and it was therefore only possible to obtain information indirectly in regard
to those States.
VII.
The result of these labours is represented by the documents which I have the
honour to submit to the Committee. These consist of a General Report and seven
statements dealing with wool, cotton, coal, mineral oil. iron, cereals and fertilisers.
— 11 —
The statements regarding cereals, cotton and wool were drawn up by Professor
Vinci, those dealing with coal, petroleum, minerals and fertilisers by Dr. Sloutski,
assisted by Professor Vinci, in both cases under my direction.
The following statements make no pretence to be complete monographs on
the subjects with which they deal. If this had been desired, it would have been
necessary to approach an expert in each subject and to allow him a considerably
longer time than has been allowed to us. The statements in question are chiefly
designed to place at the disposal of the Committee figures and information capable
of supplementing the replies to the statistical questionnaires on foodstuffs and raw
materials, and to the questionnaire on commercial restrictions and monopolies,
which replies have not arrived in sufficient numbers. Naturally, the authors of the
reports have also drawn from the information at their disposal the conclusions
implicit in the replies.
In drawing up these documents, the answers to the two statistical questionnaires
and to the questionnaire regarding commercial restrictions and monopolies were
made use of as far as possible, but the greater part of the facts had to be obtained
from other sources — either from official publications prepared by the difTerent
States or from memoranda or articles drawn up by statistical offices, industrial
associations, or private persons.
Generally speaking, the figures are taken from official sources, while figures
originating in the publications of industrial associations or of private individuals
have, except in exceptional cases, not been reproduced but have served as bases
for the statements contained in the text.
VIII.
The number of replies so far received to the questionnaires has, indeed, not
been very large.
The questionnaire regarding commercial restrictions and monopolies has hitherto
produced eleven replies, relating to Austria, Belgium, Denmark, Great Britain,
Greece, Holland, Hungary, Italy, Japan, Luxemburg, and Sweden. With the excep-
tion of Belgium for the Belgian Congo, and Japan for Korea, Karofutu and
Kwantung, no State has given any information in regard to its colonies. Spain,
though she has not yet sent any reply in regard to her State territory, has given
a few facts with regard to her colony in the Gulf of Guinea. The answers to the
questionnaire regarding commercial restrictions and monopolies have been printed
and submitted separately to the Committee. It would have been desirable to
embody them in a statement, but the fact that many of the most important States
have not replied, and that the replies of the remainder are for the most part
obsolete owing to the changes which have taken place in commercial legislation,
induced me to abandon this idea.
On the other hand, I hope that certain other States which I approached during
my tour will send in their repfies. ■
The first statistical questionnaire produced 13 answers, from Belgium, Canada,
Denmark, Spain, Finland, Greece, Hungary, Italy, Japan, Norway, Poland, Great
Britain and Sweden. With the exception of Belgium for the Congo, none of these coun-
tries has given any information in regard to its colonies. Moreover, a large number of
repHes are far from complete; in nearly every case additional information, which
had not in every case been received, had to be asked for. Seeing that the replies
should have been sent off by February 15th, it must be assumed that no further
replies to this questionnaire will be received, especially as the States which have
not yet answered will prefer to reply to the second statistical questionnaire, which
is more complete and easier to answer. -
' Since this passage was written, replies, more or less complete, have been received from
Latvia, Lithuania, France, Switzerland, South Africa, Czecho-SIovakia, India and Finland.
^ Two replies, moreover, have since been received: Roumania and Holland.
— 12 —
The second statistical questionnaire has already produced 10 replies, which
are certainly greatly superior in value to the replies sent into the previous question-
naire, though in many oases data are laci<ing in regard to recent periods, and there
are other regrettable omissions. The replies hitherto received refer to Belgium,
Esthonia, Portugal, Bulgaria, Finland, Greece, Norway, Roumania, South Africa
and Czecho-SIovakia. It should be observed that six of these States had not replied
to the first questionnaire. No doubt other replies may be expected; in fact, it may
be hoped, quite a large number, judging by the fairly numerous assurances received
by the statistical offices which I visited: ' but it must not be forgotten that for several
States (such as Poland, the Balkan States and the Austrian Succession States)
the task of giving statistical information in regard to production, imports and exports
before and during the war would involve the complete reconstruction of their sta-
tistics from data collected by different Governments and not always capable of
exact comparison. Poland, however, has undertaken this task, which will no doubt
prove most useful for the Government itself, but will take eight months, it is thought,
to complete. Moreover, all the States outside Europe, owing to slowness of com-
munications, have not yet been able to reply through the agency of their foreign
ministers.
The Committee will decide whether it is advisable to approach the Govern-
ments (or the statistical offices themselves) whose replies are actually in arrearsi
but who — it must not be forgotten — have their hands full in replying to the
other questionnaires of the Secretariat and the Labour Office. It is obvious that,
even if the enquiry into raw materials had to be completed with the documents
submitted this session, the data obtained through the second statistical question-
naire might be of real value in connection with other work of the League of Nations
— e.g., in studying the blockade question.
IX.
Finally, the General Report which I have the honour to submit to you is based
on the seven statements, on the replies to the questionnaire regarding commercial
restrictions and monopolies, and, above all, on the result of the study of the
question of the supply of raw materials and foodstuffs which I had commenced on
my own account before I was commissioned to do so by the Secretariat of the
League of Nations, and which 1 have since continued more intensively. It need
hardly be said that the information which I obtained personally in the different
States has been of quite exceptional value to me.
In drawing up this Report, in accordance with the terms of my agreement
with the Secretariat, I have no intention of substituting my own work for that
of the Committee which had been instructed by the Council to submit its report
and decisions to that body; my object is simply to facilitate their task. Mine is a
report giving the personal opinions of an expert on the whole question of the supply
of raw materials and foodstuffs, and designed to furnish the Committee with infor-
mation which may be of use to it in its future labours.
It has accordingly been drawn up without any regard to political consider-
ations and with that freedom of thought which every expert finds essential for the
accomplishment of his task.
As the Secretariat did not lay down in its instructions any limits to the scope
of my Report, I did not think it necessary, in drawing it up, to keep within the
limits which the Council had set to the Committee's report by eliminating any
investigation of the difficulties in the supply of raw materials which are due to the
lack of credit or to the fluctuations of exchange — matters whic^li had already been
examined by the l"'inancial Conference at Brussels. I considered that at the present
time the Committee might lind il useful lo have some information even in regard
to these matters.
' Fourteen ottier replies have since arrived: from tlie United Kingdom, Denmark, the
Serb-Croat-Slovene State, Austria, Holland, I'cru, India, Ijatvia. Brazil, Germany, Chile, Egypt,
Canada and Guatemala.
— 13 —
It is, in fact, evident that tlie relations between the problems of exchange and
credit and that of raw materials have now assumed a difTerent aspect from that
which they presented in October 1920, when the question was discussed by the
Council of the League of Nations.
Again, even if no decision was to be arrived at in regard to these two points,
it might be interesting for the Committee to have placed before it the intimate
and complex relations which connect them with the solution of difficulties in the
supply of raw materials and foodstuffs.
As the Committee will see, the greater part of the difficulties in the supply
of raw materials and foodstuffs in the present phase of the crisis, is, in my opinion,
due, directly or indirectly, to the disequilibrium and the fluctuations of the rates
of exchange. If the Committee should consider that this is the field in which the
League of Nations can initiate particularly useful measures, it will perhaps be able to
find in my Report arguments to support this point of view.
I am confident that my labours and those of my collaborators will be of some
service to the Committee in making its decisions, and that the Committee will
recognise that it would have been difficult to do more in the short space of time
accorded us, and with the materials which had been placed at our disposal.
Geneva, August 16th, 1921.
GENKRAt. HEPORT ON THE QUESTION
BY
PROFESSOR 01 NI.
INDEX.
I.
Pa»e
The present economic situation and the continued importance
which attaches to an enquiry with regard to raw materials
and foodstuffs 17
II.
The CAUSES of the difficulties in the supply of raw MATERIALS AND
FOODSTUFFS 22
III.
Consideration of the possible steps which might be taken by the
League of Nations 23
1. The optimistic point of view 23
2. Steps to be taken in regard to the distribution of raw materials and
foodstuffs 24
A. The nationalist solution.
B. The solution based on State control.
C. The solution based on unrestricted trade.
Free Trade proposals and protectionist practice.
Possible steps to lessen the difficulties of tariff wars.
(a) Customs Unions between groups of States.
{b) Representation of third parties in the conclusion of com-
mercial treaties between two States.
(c) Possible action in respect of export dues and of special im-
port duties.
(d) Possible action in respect of monopolies.
3. Possible action in respect of emigration 37
4. Special position of mandated territories with regard to freedom of
commerce 37
5. Possible action in respect of transport 39
6. Possible action in respect of the length of the working day .... 41
7. Possible action in respect of international credits 42
A. Credits for raw materials, intended for:
(a) export industries.
(b) industries for home markets.
B. Credits for foodstuffs.
— 16 —
Page
8. Possible action in respect of exchange 50
DifTiculties in the supply of raw materials and foodstufTs arising from:
(a) Fluctuations in the exchanges.
(/;) Systematic variations in the exchanges,
(f) The disequilibrium of the exchanges.
The various causes of the lower level of prices in countries with a
depreciated currency.
Tlie economic consequences of the disequihbrium of the exchanges.
The possible advantages for some States of a policy of inflation in the
present economic situation.
Attempts to surmount the difliculties arising from the present condi-
tion of the exchanges.
(a) An international unit of account.
(b) An international currency.
(c) The devaluation of the currency.
Preliminary conditions required for these measures.
The appointment by the League of Nations of technical advisers
for States with a depreciated currency, with a view to the resto-
ration of the rates of exchange.
IV.
Principal conclusions .'VND proposals
75
GENERAL REPORT ON THE QUESTION.
THE PRESENT ECONOMIC SITUATION AND THE CONTINUED IMPOR-
TANCE WHICH ATTACHES TO AN ENQUIRY WITH REGARD TO RAW
MATERIALS AND FOODSTUFFS.
The economic situation of the world, as a result of which the proposal for the
enquiry with regard to raw materials and foodstuffs first arose and took shape,
was in several respects quite different from, in fact the exact opposite of, the pre-
sent situation.
At that time, the demand for all or almost all raw materials and foodstufTs
greatly exceeded the supply, and an impression was thus left in t^ie minds of all,
that the available stocks for disposal would for a long time be insufficient to meet
requirements. States which were producers of raw materials and foodstuffs, im-
pressed by this obvious scarcity, took steps to ensure supplies for the home markets
by means of prohibitions or restrictive measures, by taxes imposed on exports,
or by differential prices and endeavoured also by these means to secure economic
advantages from their peculiarly favourable situation. On the other hand, o\ving
to the necessity for limiting national consumption, they were led to prohibit or to
restrict immigration, while the absence of all incentive for stimulating the demand
from abroad led them to limit the granting of credit to States which had need of it.
Owing to this state of affairs there was a continuous tendency to a rise in prices,
which seemed unending, and the result was a temptation to possessors of goods
to sell the smallest quantity possible, in the hope of obtaining greater profits, and
on the other hand a disposition on the part of consumers to make purchases on a
large scale and beyond their immediate requirements, in the hope of providing
against purchasing conditions which might be still more burdensome.
The great anxiety caused to States which import raw material and foodstuffs
may easily be understood; these States not only foresaw difficulty in securing the
amount necessary for their prosperity and even their existence, but also saw
the future growing ever more and more serious. In October 1920, the Report of
the Financial Conference of Brussels was still speaking of the gulf which for several
years would separate supply and demand. At the same time, employers and workers
alike regarded with apprehension the fate of industries which were running the
risk of perishing of inanition, and as the fate of whole sections of labour, who they
feared might be thrown out of employment.
In the course of a few months, and before the conclusion of the enquiries which
had been undertaken, the situation had completely changed. To-day, as regards
all or almost all raw material and foodstuffs, the supply is far greater than the
demand. Accumulated stocks are vainly waiting for orders from purchasers, whence
8
— 18 —
many people are drawing the conclusion that material resources are far superior
to requirements.
Under the pressure of holders of stocks, the richer States have gradually come
to abandon, or at least to limit, the policy of restrictions and of export duties, either
abolishing them or suspending them or reducing their sphere of application, whilst
they are endeavouring by every means in their power to secure credits, on terms
which are not too risky, for poorer nations which otherwise would find difficulty
in importing.
The decrease in prices is causing holders of stocks to place them upon th
market at a very low price, sometimes less than cost price, for fear lest they should
later be compelled to sell them at a still greater loss, whilst consumers are waiting
for still more favourable purchasing conditions, and are abstaining from all expen-
diture that is not quite indispensable. It is now the nations which export raw
material and foodstuffs that feel some anxiety, as they see production stagnating
and unemployment becoming threatening.
The crisis of under-production has been rapidly replaced by a crisis of markets.
The change in the situation leads some to think that an enquiry for the purpose
of studying or examining difficulties which now lie in the past is- useless. But if
we go to the root of the matter, we shall on the contrary find that its interest is
for many reasons a permanent one.
In reality, the present economic situation represents to a great extent only
the natural and inevitable consequence of the past crisis. It cannot be denied that
the difficulties of technical and psychological adaptation which were experienced
during the transitional period from war economy to peace economy have been
overcome and that production has consequently resumed a less abnormal course
and has contributed, to a certain extent, to relieve the lack of supply in relation
to demand, but the decisive causes for the change in the world's situation are to
be sought in other circumstances.
The desire to protect themselves against the steady rise in prices had caused
consumers to provide themselves with goods to an extent beyond their immediate
needs. On the other hand, the checking of the policy of inflation, which was effected
in States where economic conditions were more favourable, and the stopping the
supply of credit by these States to States which where more in need of imports,
have cut off the financial sources which were artificially fostering the demand for
goods. Such a policy has contributed towards the appreciation of the currency
of the States which adopted it, but on the other hand has helped to render exchange
conditions still worse in States which were, so to speak, cut off from all assistance,
the disequilibrium and the fluctuations in the exchanges becoming thus more
accentuated, and putting a serious check on the international exchange of goods.
Again, a definite fall in prices in countries whose circulation was more stable was
clearly shown, and consumers began, both in those countries and in others where
a fall was considered certain, to abstain from purchasing, whilst holders of goods
placed upon the market big stocks, hitherto concealed, on an unexpectedly large
scale.
This inter-play of action and reaction will appear inevitable to anyone who
is acquainted with economic forces. It must, however, be admitted that the reaction
would have been less violent, and the present crisis less acute if, during the period
which has just passed, the richer States had adopted a more unselfish policy. In
the final result, their own policy has turned against their interest. It is, indeed,
undoubted that the prohibitions and restrictions on trade, the export duties, the
unexpected suspension of credits granted abroad, without any discrimination
between credits for consuniplion and productive credils, the obstacles placed in
the way of the flow of immigi'ation from countries which were in more difiicult
circumstances, have in various ways liindered or delayed in such countries the
resuinjition of normal economic life, have checked the development of their pro-
duction, and have tluis caused in them a deficiency of means of purchasing which
has made it correspondingly dilficult for the richer countries to dispose of their
goods.
— 19 —
A study of the difficulties of the supply of raw materials and foodstuffs has not,
however, merely the scientific interest of throwing light on a state of affairs now
passed, from which the present crisis has arisen; to those who examine it closely
it also presents great practical utility both for the present and for the future, for
such difficulties have by no means disappeared, but have only assumed another
form, and may, moreover, in a more or less distant future resume their original
aspect.
We have said that the excess of supply over deng^and which is noticeable to-day
causes many to believe that there is an excess of material resources over require-
ments. This impression is incorrect. Supply and output of goods on the one hand,
and demand and requirements on the other, are phenomena which are clearly
distinct.
Supply is not necessarily composed of the whole output of new goods, but only
of that part which the producer or holder is disposed to put on sale. On the other
hand, the supply may be considerably greater than the new output, whenever the
holder puts on sale previously accumulated stocks. Whereas in the economic
crisis which has now passed the producer or holder intended to put on sale part
only of the continual output of new products, in the present crisis, for reasons we
have seen, he offers not only the whole new production, but also the whole previously
accumulated stock.
Inversely, requirements cannot possibly be deduced from demand, still less
from consumption. Demand corresponds only to that part of requirements
which the consumer thinks he has sufficient means to purchase. Consumption
corresponds, in its turn, only to a part of demand, that part which has been
able to be actually satisfied. If, in the present economic state of affairs, supply
is greater than demand, whereas, in the past, demand was correspondingly greater
than supply, this is due, partly, but only for a small part, to a diminution in require-
ments, due to the fact that in many countries the demands for the reconstruction
and reconstitution of reserves on the part of families and commercial concerns have
already been satisfied, and likewise to an increase in the output of goods, owing
to the improvements in production which have taken place. But those are not
the chief causes of the change in the situation. To a far greater extent the change
has been brought about by a diminution in the consumer's power of purchase, owing
to the checking or diminution of the policy of inflation within the country and
the policy of credits for consumption granted abroad.
The present crisis is, so to speak, a twofold crisis. On the one hand, there is
still a crisis of underproduction, in the sense that production, being still inferior
as regards almost all goods to pre-war production, remains insufficient to cover the
requirements of the world, which, owing to the increased needs both of individuals
and of the community, are certainly greater than the pre-war requirements. On the
other hand, there is a second crisis arising from the insufficiency, in comparison with
the output and offer for sale of goods, of the available means of purchase. This
is the crisis which hits us hardest, and it is therefore said — and rightly so, if we
confine ourselves to the superficial view — that difficulties of supply or raw
materials and foodstuffs, which in the past crisis were due to scarcity of supply
on the part of exporting States, depend at the present time on insufficiency of
means of purchase on the part of the States which have most suffered from the
war. But, if we go to the root of the matter, we shall easily see that the first
crisis is the fundamental one, and that the second only leads back to it. As
occurs in many diseases of the human body, so in the present economic crisis,
the most obvious cause of the evil is hiding from our eyes the more vital
fundamental causes. Goods are purchased by means of other goods. The means
of purchase which are lacking to States which are in difficult circumstances are
precisely those products which they are not yet able to produce in sufficient quantity
both for their own consumption and for international exchange. The past crisis
was a crisis of under-production on the part of rich States and of incapacity to meet
a demand which was artificially increased in all States owing to currency inflation
and credit. The present crisis is still fundamentally a crisis of under-production.
— 20 —
but on the j)art of poorer States, which, being deprived of credit from abroad and
being unable to have recourse to the issue of paper money to such a liberal extent
as formerly, now lack means of purchasing and are thus- the cause of stagnation
in the commerce of the rich States. If it be borne in mind that poor States
are not generally manufacturing or industrial States, but essentially States
which produce foodstuffs and sometimes raw materials, the conclusion will be
reached that the present crisis is also in substance due to a deficiency of these
products.
The advantage of the present situation over the past is essentially that it
represents a phase of transition towards a normal situation in which supply and
.demand, resources and requirements, will be almost equally balanced. Now that
the artificial exaggeration of purchasing power on the part of consumers, which was
derived from inflation of currency and of credits for consumption, has been reduced,
the purchasing power of each nation has come to depend more strictly on its power,
of production to which, under normal conditions, it should exactly correspond.
Apart from the general cause, consisting in the lack of purchasing power on the
part of the poorer States, there is another more special cause: — the difficulty they
experience in selling one of their most important products, i.e., wood.
Owing to the hindrances to the construction of dwelling-houses due to the
legislation regarding rents, which is universal in the European States, and to the
slackness in the shipbuilding trade due to the superabundance of tonnage, the de-
mand for imported wood has practically ceased, the local supply being generally
quite sufficient for other requirements. Many poor States, while lacking the means
for purchasing the goods they need, find their stocks of wood accumulating in their
depots without being able to liquidate them. Obviously, this particular cause is
partly dependent on the general one, since the present excess of tonnage is due to
the decrease in international exchange, which itself is the consequence of the critical
condition of foreign trade.
In my opinion, there is no need to take a pessimistic view of the future. The
purchasing power of the poorer nations will gradually increase with the progress of
their reconstruction, however slow and wearisome this may be; and this will pro-
portionafiy ease the crisis in the foreign trade of the exporting States. Consequently,
the excess of tonnage will be reduced and a fresh stimulus to the shipbuilding trade
will be given. These circumstances, coupled with the gradual abolition of the regu-
lations regarding rents and the rebuilding of houses in the devastated regions of
France, will increase the demand for wood and will thereby improve the purchasing
power of many States, which at present find it difficult to make international
payments.
In rich States, on the other hand, accumulated stocks of goods are being more
and more reduced because of the existing di'crease in production, and, during the
last few months, prices have ceased to fall so fast. This, in conjunction with the
using up of stocks, will lead consumers who had put off purchasing, in the hope of
more advantageous conditions, to decide to make their purchases at once.
We may therefore look forward in the near future to a gradual re-establishment
of normal conditions of siii)|)ly and demand, and need not fear a return to the
excess of demand over supply which in recent times has caused anxiety to certain
Slates.
If, however, this appears to be true of production regarded as a whole, it must
nevertheless be admitted that, in the case of some products, the demand may,
even in the near future, decidedly exceed the supply. This is what some people
fear in respect of wool. In llicir view it is not possible that the demand for manu-
factured goods on the part of the countries which the war has left practically without
cloth or woollen goods may increase as their economic conditions im{)rove. The
demand for raw materials on t lie \)nvl nf factories which have suffered little from the
war may thus, in course of time, increas(> too rapidly for the exporting countries
to be able to keep pace with it in the production of raw materials. Their future
producing power may be indeed seriously impaired by the present crisis, and the
— 21 —
system of cornering to which the export of a great part of the wool is subject at
the moment may perhaps prejudice the national readjustments which the deve-
lopment of the situation may require. It is doubtful, on the other hand, whether
existing stocks would suffice to make good the deficit between the new production
and the demand during the period of adaptation.
If we look into the more distant future, we have every reason to expect, not
to exclude, the possibility of economic conditions in which the general supply of
raw materials will be inadequate to the demand, thus reviving the difficulties and
problems which led to the enquiry on raw materials. Experience has shown,
and economic theories clearly explain, that the course of economic development
is subject to fluctuations through periods of irregular length, which possess,
however, fairly uniform characteristics. In these periods a phase characterised by
falling prices and an excess of demand over supply is invariably succeeded by a
phase of rising prices in which the demand exceeds the supply. It is therefore to
be expected that, after the equilibrium between supply and demand has been re-
established for a short time, thus closing the phase which began some time previously,
the economic recovery of the countries which are suffering at present, the final
adjustment of organisation of the world economics in accordance with the new
national groupings, tlie resumption of trade activities, and the extensive require-
ments for the reconstruction of Russia will bring about an economic situation in
which the demand for raw materials will exceed the supply.
We must therefore conclude that an enquiry into the difficulties regarding the
supply of raw materials and the means by which this may be remedied is of the
greatest interest at the present moment. Moreover, the difficulties of the supply
of raw materials and foodstuffs have not in fact come to an end, but have merely
assumed a different aspect from that which they bore when the enquiry was decided
upon. It is, moreover, not unlikely that, in the case of certain raw materials, the
old difficulties may arise again in the near future; and it is more than probable that
this will happen in a more general way in the more distant future.
The League of Nations should devote the most careful attention to this problem,
since a great deal of interest has been aroused and, in the States concerned, great
expectations have been excited regarding the results of the proposed enquiry.
A thorough and conscientious investigation is all the more necessary in that the
proposals put forward in the discussions which have so far taken place must be
admitted to have been very inadequate, considering the magnitude of the problems
raised. It is obviously not the establishment of new committees or sub-committees,
to enquire into the origin and distribution of raw materials throughout the world,
nor the institution of a Statistical Office to record the fluctuations of stocks and of
prices, which the States concerned now expect from the League of Nations, however
great the scientific interest of such institutions and their practical utility in the
future might be. The League of Nations must examine the problem in a manner
commensurate with the practical issues raised; it must consider and decide what
measures may or should be taken in the present circumstances or in any circum-
stances which may arise in the future, in order to avoid or to reduce the various
difficulties met with in the supply of raw materials. If no adequate measures can
be taken, this must be clearly proved, and the difficulties explained. If, on the
other hand, suitable measures can be applied, then tha League of Nations should
clearly and unequivocally indicate what steps the States Members of the League
should take in order to attain their object.
22 -
II.
THE CAUSES OF THE DIFFICULTIES IN THE SUPPLY OF RAW
MATERIALS AND FOODSTUFFS.
riu' (lifTiculties in the supply of raw materials and foodstuffs may depend
upon a number of circumstances of different kinds:
A. The scarcity of the quantities available, due either to the exhaustion of the
old stocks or to their limited renewal owing to decreased production. Both the
former and the latter may be the result, either of natural, or of artificial causes
as, for example, in the case of a system of monopoly, when there is a deliberate
attempt to raise prices by restricting production.
B. An increase of requirements. In the case of foodstuffs, this obviously consists
in an increase of the requirements of the consumers. As regards raw materials,
on the other hand, it would seem at first sight that the requirements mainly to be
considered are the requirements of the factories which used sucli materials. But
factories can only operate effectively in so far as markets can be found for their
finished articles, so that it is the requirements determined by the consumption
of these products which, in the last event, determine the greater or smaller quantity
of raw materials required. An increase of manufactures in excess of the supplies
of raw material available, and also of the available markets for the finished products,
may cause a crisis for the manufacturers who have thus made investments which
prove to be valueless, but it cannot cause a crisis in respect of the supply of raw
materials, in the sense with which we are at present concerned.
C. Difficulties in distribution, which in their turn may depend upon a number
of factors :
{a) Commercial restrictions, such as proliibitions or limitations of exports,
imports or transit. Custom duties, licences.
(/)) Difficulties in communications by land or sea.
(r) The increased distance between the centres of production and the
coimlries which consume foodstuffs or the manufacturing centres where raw
materials are made up.
It is easy to see that these various difficulties which impede distribution are
intimately connected amongst themselves.
The increased distance between the centres of production and the centres
of manufacture and consumption not only retards the arrival of raw materials,
but also naturally implies greater requirements as regards means of communication,
and when the centres of production and the centres of manufacture and consump-
tion arc situated in different States, between which there is not complete commercial
liberty, it also leads to commercial restrictions, of greater or loss importance. Com-
mercial restrictions, moreover, of whatever nature constitute impediments to supply,
not only directly, in so far as they reduce the volume of commerce and increase
prices, but also indirectly, in so far as they prevent the distribution of goods from
the centres of production to the centres of manufacture and consumption along
the most naturally economical routes, and compel the employment of more expensive
routes and the discovery of more distant markets.
D. Difficulties of a financial nature, arising from scarcity in the means of pur-
chase, or from Ihictuations in the rates of exchange, or from instability in the poli-
tical situation, or in the lalinui' market, or from commercial circumstances which
make the pr()S|n>(t of I he disjiosal of maiiufacl ures at a remunerative price doubtful
or definitely unfavourable.
E. Speculations, sometimes iliusoiy as, for example, when the holders of raw
materials and foodstuffs are induced, during a rapid rise in prices, to refuse to sell
— 23 —
the whole or part of their holdings because they expect to realise higher prices later,
without taking into consideration the fact that the nominally higher prices which
they hope for in the future may not, in fact, be substantially more advantageous,
owing to a diminution in the purchasing power of money.
All these circumstances have contributed in a greater or lesser degree to the
difficulties in the supply of raw materials and foodstuffs which are the reason for
this enquiry. Even at present, when in some countries several of these circum-
stances have ceased to be important factors in the situation, in other countries
they still exist in all their gravity.
III.
CONSIDERATION OF THE POSSIBLE STEPS WHICH MIGHT BE TAKEN
BY THE LEAGUE OF NATIONS.
Can the League of Nations take any steps to reduce or forestall such difTiculties
in the supply of raw materials and foodstuffs as may be found to exist in present
circumstances, or as may recur at some future time, and if so, ought it to take
such action ?
1. The Optimistic Point of View.
There are many persons, especially scientists educated in the economic and
social conceptions of the last century, who are accustomed to see in every event
the wise and harmonious hand of nature and who maintain that the best thing in
every case is to allow nature to work without attempting to interfere with her
designs. Any inequalities, they say, are natural and inevitable, and even crises
are also natural and inevitable. Such inequalities are, moreover, providential in
so far as they eliminate weaker economic organisations and allow only the stronger
and the most fitted to new conditions to survive. Thus, in the present crisis, the
sacrifice of the nations which are industrially weaker and less suited to present
conditions is not only inevitable but in their view represents, at bottom, the least
of possible evils. To keep alive artificially any industries whicli are unfitted, or
relatively less fitted, to present conditions represents a destruction of wealth and
energy and tends, moreover, to deprive the nations of the stimulus of progress.
Such views might indeed be tenable if the present crisis were permanent, or
if a temporary deviation from normal industrial conditions were possible without
causing grave difficulties in the return to normal industry. But all the evidence
shows that the present crisis in the supply of raw materials is temporary, while
it is clear that serious loss would ensue if there were to be any suspension of activity
which would drive away skilled labour from the factories, and in many cases involve
them in heavy expense before they could return to normal work. Nor can it be
said, on the other hand, that the industries and States which are mainly threatened
by the crisis in the supply of raw materials are technically inferior, and that to
abandon them to their own resources would constitute, therefore, an advantage
for the economic world. Their present inferiority can, in many cases, be attributed
to fortuitous circumstances, as is seen, for example, in the situation of States which
were exceptionally exposed to hostile invasion. Finally, it must be remembered
that the creation of unemployment among large masses of labour, especially in
economically weaker countries, is not only contrary to all feelings of humanity,
but also to the dictates of political prudence.
The task of the League of Nations is indeed not to level all inequalities, but
it can and should be its duty to strive as far as possible to prevent the inevitable
inequalities resulting from natural factors being aggravated by artificial inequa-
lities due to human competition, which must finally result in damage to the whole
world and danger to social peace.
— 24 —
To promote international co-operation, to achieve international peace and
security, to bring about the reign of justice — these are the principles written in the
Covenant, and these are the principles which should inspire the activities of the
League of Nations.
Granting, then, that the League of Nations would do well to direct its energies
to the adjustment of the difficulties which certain States experience in regard to
the supplies of raw materials and foodstuffs, it remains to consider in what
manner the League may best set about its work.
It is, of course, useless to hope that the League of Nations can usefully take
any direct steps to alter the psychology of peoples or their needs. But the remedies
which the League may attempt to apply are essentially remedies relating to the
production of raw materials and foodstuffs, their distribution and the elimination
of financial difficulties. Above all, the League of Nations has been, and is, called
upon to take action in connection with the problem of better distribution. It is
characteristic of human psychology to call attention to inequalities in distribution
when the quantities for division are less than the normal; this is an unfortunate
characteristic, because it means that just at the moment when all energy should
be concentrated for the purpose of intensifying production, it is dissipated in con-
flicts and disputes. Without admitting, therefore, that the path in which the League
of Nations has hitherto been called upon to proceed is the path in which it may work
most efficaciously, we will consider this path first of all precisely because it has
already attracted considerable attention.
Various solutions for improving the distribution of raw materials and food-
stuffs have been proposed, and we will consider them separately.
2. Steps to be taken in regard to the distribution of raw materials and
foodstuffs.
A. The first solution may be termed the nationalist solution. According to
this, each nation should be self-supporting, that is, it should be able to draw sufficient
raw materials and foodstuffs for its own jiopulation and its own industries from
within the territories which belong to it politically, or at least from the territories
within which it has the right of economic exploitation.
This was the idea for which the representatives of various nations tried to
secure acceptance during the Peace Conference. It is not surprising that it was only
very partially accepted and was, in practice, only accepted for the benefit of the
stronger nations because, if it were carried out to the full, it would necessitate an
enormous wealth of raw materials and a particularly favourable geographical distri-
bution. It would be still more difficult to carry this solution into effect at the pre-
sent moment, when territorial adjustments have been almost completed. It would,
in fact, be impossible to adopt this point of view at present without giving various
nations economic concessions in the territories of other nations, involving a limi-
tation of the sovereignty of such nations that would not be accepted without diffi-
culty. Such an expedient has been acc(!])tt'd, as is well known, in the case of the
mines of the Saar Valley, but this exceplional and temporary arrangement is only
conceivable as one of the peace conditions imposed upon a conquered nation, by
way of reparation.
It must also be recognisisd that the premises which we have recalled, and upon
which the nationalist solution is based, are diherent from tlie premises which should
guide the League of Nations in solving the question of raw materials.
This solution correspond.s, in fact, to the interests of States in time of war, when
national economic systems arc more or less completely cut off from each other; but
it ('annot be of any real utility in time of peace, except for the purpose of securing
more favourable conditions for national producers and consumers than for the pro-
ducers and consumers of other countries; if this solution he accepted, the advantages
of the former can only be obtained by the sacritice of the latter. If, on the contrary,
freedom of commercial organisation and of the trade in raw materials is put into
- 25 -
operation — a solution which meets the general need and is therefore the special
concern of the League of Nations — it is almost a matter of indifference whether
the sources of raw materials and foodstuffs remain politically dependent on one
State rather than another. In this case the main advantage of the nationalist
solution would be that a State could make use of its paper money in the territories
allocated to it, and could improve its exchange when the territory in question was a
creditor from the point of view of the balance of payments. These, after all, are
the advantages which France draws at present from the allocation to her of the Saar
mines.
It may, however, be justly observed that the advantages of the nationalist
solution should be judged, not on the hypothesis of an ideal liberty in trade and
concessions, but in view of the real economic policies of States, which differ in a
greater or less degree from this ideal. In such conditions one must consider that
it is both fairer and more advantageous for the economic welfare of the world that
raw materials and foodstuffs should be divided among political territories in such
a way that every State should have a share in raw materials and foodstuffs corre-
sponding as far as possible to the national consumption — for, if this is the case,
any system which entails a departure from freedom will result in the protection
within the State of certain classes of citizens to the disadvantage of certain others, —
than that certain States should be forced, in order to meet their needs for materials
and foodstuffs, to have recourse to antagonistic States, whose economic policy may
interfere with their development, or force them to obtain their needs by paying
tribute.
It is for this reason that the nationalist solution — although it cannot be
applied completely except for the benefit of certain nations, and cannot therefore
claim to be called a solution from the international point of view — nevertheless
can, and should, serve as one of the criteria for the adjudication of the zones which
are still disputed between antagonistic States, above all if it is doubtful whether
there would be in the future any cordial economic collaboration between these States.
B. A second solution which is worthy of most careful consideration is that
which may be called the Socialist, or perhaps even the State, solution in spite
of the fact that it would operate, not within any given State, but for a group of
States. According to this solution, the raw materials and foodstufTs of the whole
world would be acquired by a central organisation and equitably distributed by it,
in the common interest, among the various States according to the requirements of
each individual State.
This solution is of great importance from an historicatl point of view, because
it has inspired, either openly or tacitly, the proposals for the settlement of the prob-
lem ■ — proposals which have received a peculiarly wide publicity.
It is, in fact, the solution favoured by Signor Baldesi at the International
Labour Conference at Washington, and, as regards coal, by the Interna-
tional Congress of Miners; it is also the solution towards which the French
National Federation of Co-operative Consumers' Societies leant ^vith obvious sym-
pathy, and it would seem as if Signor Tittoni was also inclined towards it in his
report. This at any rate appears to have been the interpretation given to Signor
Tittoni's view by Mr. Balfour, who remarked that the Tittoni project pre-supposed
a right of common ownership among the various States over the raw materials of
other States. This would result, it might be held, in an intolerable limitation
imposed upon the sovereignty of States. This objection would only have been valid
if the control of raw materials, towards which Signor Tittoni inclined, had to be
imposed by the decision of a majority, whereas it was only proposed that it should
operate, in conformity with the Statutes of the League of Nations, when it had the
free consent of all the States. A limitation which States voluntarily impose upon
their own powers does not constitute in any way an attack upon their sovereignty,
but rather a manifestation of such sovereignty, which, according to the most modern
and profound thinkers, consists in nothing else but the competence of the State to
limit its own powers. On this subject Signor Baldesi very rightly observed that
— 26 —
States had imposed restrictions of a similar nature upon tliemselves in regard to
the organisation of labour. All social evolution, moreover, bears witness to a conti-
nuous and progressive limitation, on the part of the States, of the exercise of their
powers in accordance with the requirements of closer international economic colla-
boration.
But it is not necessary to have recourse to these arguments in order to
combat the " State " solution or to take refuge, as Mr. Balfour did, behind
the by no means insuperable difliculty of defining raw materials and manufactured
products. There is much more weight in the objections based on the difficulties
and inconveniences which the operation of the proposal would involve, as the expe-
rience of post belliim economics has proved beyond all doubt. The "State" solu-
tion, in fact, would only revive, in an exaggerated form, in respect both of the markets
concerned and of the number of States interested, the policy of the "Executives,"
which was established during the war and which continued in the period immediately
following tlie war.
It is well known that this policy, which during the war appeared to be a necessity
and was maintained, although not without difficulty, by reason of the solidarity
binding the Allied nations in the common peril, was after the war seen to possess
grave disadvantages when this solidarity was relaxed and, in consequence, all the
notorious difficulties inherent in the working of bureaucratic organisations were
accentuated. The system of "Executives" was abolished, with the pushdown of
the financial solidarity between the Allied and Associated Powers but it could not
long have existed, in consequence of unanimous protests from producers, merchants
and consumers, and there is no reason to suppose that it could advantageously be
resumed at the present moment. Further, the international bureaucratic orga-
nisations which are still at work carrying out "reparations" seem so ill adapted to
the task of distribution that the amount of raw materials imported by the subjects
of certain Allied States for the reparation account — availing themselves of powers
entailing specially favourable conditions — is much less than the quantities im-
ported by private enterprise.
This is not the place to discuss whether this inadequacy of the bureaucratic
systems depends on the present organisation of society, or whether it is due to more
profound and permanent causes inherent in human nature. But it must be admitted
that, as regards the working of the system of the "Executives," such shortcomings
were not due to the fact that they were only concerned with a relatively small group
of mainly importing States, and hence were forced, in order to obtain raw materials,
to have recourse to foreign countries, and to buy in the market at the prices demanded
by the producing Stated It was not high buying prices which constituted the
principal objections to the system of "Executives," but the dilatory and rigid
character of their method of operation and distribution, the incompetence shown
on some occasions by their staffs in the execution of the duties with which they were
entrusted, and the continual difficulty of establishing principles of distribution at
once equitable and accei)table to all the interested parties. To these drawbacks
should also be added the difficulties of fixing prices for purchase and sale when the
distributing organisation concentrated the whole, or nearly the whole, of the produc-
tion, and there was, therefore, no market in which a ruling economic price existed.
Further, in present conditions, it would not be possible to hope for a general ajjpli-
cation of the system through the intermediary of the League of Nations, in view
of the fact that those States which do not b(>long to the League would necessarily
be excluded.
Even the warmest supporters of the proposal do not seek to conceal the prac-
tical difficulti(!s in the way of its operation — whatever may be the causes to which
they attribute these difficulties. They now restrict themselves to demanding
a statistical organisation which should follow closely and record accurately the rise
and fall in stocks and |)riccs, I la- hade in foodsl nil's, the resources and needs
of liic dilTcrcut coiiulrics. Without compromising the future, this proposal could
certaiidy he supported and accepted. I'lven if, indeed, from a practical point of
view, such an organisation might not prove of any great assistance in the solution
— 21 —
of the problem of the supplies of raw materials, it could in no way have a harmful
effect, and from the scientific point of view it would lead to studies of undeniable
interest. We may, however, be allowed to express the opinion that the proposal
would not have any ulterior influence on the control of the distribution of raw
materials. We already have a precedent in the foundation of the International
Institute of Agriculture which, created for the purpose of regulating the cereal
market, is no more than an organ of information regarding the state of harvests,
stocks and prices of agricultural products, economic institutions and diseases which
concern agriculture.
However, I do not consider that this is the last word to be said on the proposal
for a solution based on a system of State control. The system of the "Execu-
tives" has shown itself ill-adapted for a period of peace, but it represents the solu-
tion which necessity forced the States to adopt during the war. It seemed the only
means by which it was possible to control exports to neutral and enemy States,
and thus to render effective the blockade of the latter. Now the blockade is the
principal, if not the only, economic weapon at the disposal of the League of Nations
against States which may become its enemies. The League may therefore consider
whether, in order to make this weapon effective, it may not become necessary to
have recourse to the control of raw materials and foodstuffs by means of ' 'Execu-
tives," as was done by the Alhed States durjng the war.
The question therefore arises whether it would not be desirable for this purpose
to examine at once whether, in case of need, an organisation to control and distribute
raw materials and foodstuffs could be established and how it could carry out this
work.
C. We shall be working in a more practical field in considering a third solution
advocated by many in order to remedy the difficulties in the supply of raw materials
and foodstuffs. This is the solution based on the removal of all restrictions —
the free trade solution. This solution would consist in establishing — if need be
gradually — complete freedom in international trade and in economic relations
within individual States. It is clear, and indeed is generally admitted, that
everything which impedes the freedom of production and exchange results
immediately or in the near future in a diminution of the general wealth. There is
no need to lay stress here on the impediments to the supply of raw materials and
foodstuffs which result from export restrictions, from the subjection of exports to
special duties and State licences, either in the country of origin or in the country
of destination, and from the existence of monopohes which restrict output for the
purpose of raising prices.
Compared with the State solution, examined above, the jree trade solution
would have this advantage — that it would not imply a right of common ownership
by all the nations of the world's raw materials and foodstuffs, but, in accordance
with a principle frequently applied in many ways in public and private law, would
tend merely to prevent the States in whose territory these materials are produced
from abusing their power to the detriment of others. From this point of view,
therefore, the jree trade solution might encounter minor difficulties. It certainly
cannot be denied that any limitation placed upon a State in respect of the choice
of its economic policy would constitute, at bottom, a restriction on the exercise of
its sovereignty. But, as has already been pointed out, economic evolution is tending
towards a growing limitation in the exercise of State sovereignty, a limitation
voluntarily assumed by the States themselves, precisely by virtue of their sove-
reign powers, in order to render possible, to their mutual advantage, a closer economic
collaboration between the States.
It was the acknowledged utility of the principle of exchange between various
political entities which originally brought about the recognition of the right of
foreigners to protection, and which, in course of time, led to the framing, elaboration
and establishment of a whole series of international conventions concerning pro-
perty, exchange and transport, and which in recent years has consecrated the principle
of the open door. The principle of the "liberal" system of no restrictions would,
in fact, do no more than really open the frontiers which, though accessible in the
— 28 —
material sense, are virtually closed when obstructed by Customs barriers. The
increasing economic interdependence between States was made clear by the ordeal
of the war and the difficulties of the post-war period, and might well justify an
eventual regulation of the exercise of sovereignty by States.
The limitation of the exercise of sovereignty would be minimised, and would
be more readily acceptable, if no endeavour were made to impose on the States
the full programme of unrestricted trade, and it were merely attempted to prevent
them from imposing prohibitions and duties on exports and establishing or encou-
raging monopolies, as it is these measures which appear to offer the most serious
impediments to the distribution of raw materials and foodstuffs.
This is the course which the Provisional Economic and Financial Committee
apparently intends to pursue, as appears from the fact that the first of the question-
naires which it has sent out is concerned with the collection of information regarding
the extent and forms of restrictions on imports and exports, and the extent and
forms of monopolies — for the purpose, presumably, of placing limits upon them.
Yet, when the problem is examined as a practical issue, it soon becomes
clear that an opinion on these measures cannot be given without a general
examination of the commercial policy which any given State pursues or with which
it is confronted, and the reactions on its commerce of the internal policy of other
States. To take an actual example: if a nation finds unexpectedly that, as a result
of prohibitions or restrictions, however legitimate, on the consumption of alcohol
in other States, certain foreign markets are closed to the produce of its vineyards,
and that almost the whole of its agricultural economic system, painfully built up
by centuries of labour, is jeopardised, how can such a nation be denied the right of
compensating itself in some way for the enormous losses thus sustained by means
of export duties on the raw materials which the other States require ? What has
been said regarding the effects produced by the prohibition of alcohol applies
equally to cases where high import duties have been introduced which cause similar
obstructions to the flow of exports from exporting countries, which have organised
their economic system for the purposes of this trade. These observations show
the uselessness of expecting to solve the problem of commercial restrictions and
monopolies if these are considered as isolated factors; and they show that a solu-
tion must be sought in a broader consideration of the whole economic policy of the
States, both in regard to their internal regime and to international relationships.
Tt will easily be understood that it is impossible to find a complete solution of
the problem as, under present conditions, there is no ground for hoping that States
will consent to base their own legislation in matters of internal policy on the inte-
rests not of their own subjects, but of foreigners, even if such a course appeared
advantageous from the point of view of world economy. Moreover, in many cases,
as in the case mentioned above of the prohibition or restriction of alcohol, a policy
may be designed, not to protect the material interests of the citizens, but to safe-
guard their health and public morals, and it may be injurious not only to foreign
but also to home industries. It may also be observed that to admit that interests,
which have once been established, become acquired rights precluding any change
in the existing situation, would bar the way to all progress. All this may be true,
but it does not alter the fact that such measures, even though inspired by the best
intentions, may inflict damage upon the economic system of foreign States,
and naturally drive the latter into adopting counter-measures of defence and
retaliation.
We therefore come to the conclusion liiat the existence of independent States
which are, however, economically interdependent leads to certain conflicts of inte-
rests which it is at times beyond human wisdom to avoid. Hut this is no reason
why investigation should not be made to ascertain whether other conflicts are
avoidable, even if only a partial solution of the problem is thereby attained.
It is, at any rate, certain lliat States are much more inclined to submit their
own economic policy in regard lo international trade than they are to submit their
own internal policy to a general adjustment of international coninKU'ce on the lines
of free trade, cither because in tiie former field the interests of foreigners are more
— 29 —
direct and obvious, or because reprisals on tlie part of foreign States appear in this
field more justifiable, or because precedents — even if only imperfect ones — for
such adjustments have been established in commercial treaties already existing
between various States, or, finally, because States are prepared for the policy of
freedom in international trade by the doctrines of a whole scientific school of
thought, which has at times, over long periods, provided the guiding principle in the
Customs legislation of whole nations. The fact that measures of defence or reta-
liation may become inevitable, in cases of the character referred to above, does not
exclude the possibility of a solution on general lines.
We are thus led back to the free trade solution in its full significance, and
it must be examined in relation to the sentiments and tendencies of the nations at
the present time.
Before the war the free trade theory was, except in England, almost exclu-
sively confined to students; since the war it has attracted wide adherence, after
discovery of the dangers inherent in an exaggerated State control, and it is now
regarded with favour among business men, producers and statesmen. In the new
States especially, where the Customs system is not bound by traditional elements
or influenced by bitternesses arising from fiscal struggles, even the most influential
statesmen now express themselves in favour of the adoption of free trade, at least
between the States of Europe, for the purpose of resisting American competition.
This is because the ordeals of the war and the post-war period, as has already
been pointed out, have clearly shown how close is the economic interdependence
between the various States. On a larger scale, this war has had, from this point
of view, a similar effect to that produced, according to certain authorities, on England
by the Napoleonic wars, during which, for the first time, adequate account was taken
of the economic interdependence which binds together the various classes of society.
At that time, as now, it was only the weight of facts which brought home the change
in the situation. Indeed, since 1870, the date of the last great European war, until
to-day, the economic bonds between the various States have become closed and
stronger in a thousand different ways. At that time international economic rela-
tions were by no means non-existent, or negligible, but they had not attained such
importance as to deprive individual States of the position of independent economic
entities. But at the present time States, at any rate as constituted in Europe, are
no longer self-supporting economic entities; and thence arises the prevailing tendency
to form larger economic units. This is not a new tendency. It is nothing but the
latest manifestation of a tendency which has existed during the whole period of the
economic evolution of society, and which has caused the political unit to change
from the family to the tribe, and thence successively to the city, the principality
and finally to the State in its present form. As is always the case, the organisa-
tion constituting a political entity at any given moment forms an obstacle in the
transition to the next and vaster organisation, inasmuch as the ideals which cry-
stallised efforts for the achievement of the first stage are opposed to the ideals which
herald the second. Thus to-day, language, which has been the most potent instru-
ment in the attainment of "State unity," constitutes a powerful obstacle in the
transition from this to "super-State unity." The tendency towards a wider political
organisation of the present European States certainly dominated, more or less
consciously, the entire p olicy of the pre-war period. The war itself, it may be said,
was a vain attempt by the Central Empires to put this tendency into practice and
to pass from the State o rganisation to a vaster organisation by means of an imperialist
policy. In the League of Nations we are witnessing an attempt in another direc-
tion to solve the same problem with, we trust, greater chances of success.
Nevertheless, although these tendencies assert themselves widely and authori-
tatively, the impartial observer is disconcerted when he observes that the commercial
policy of States d oes not in point of fact correspond to these tendencies, but seems
even to be advan cing in a contrary direction. Indeed, a distinctly protectionist
tendency prevails, in almost all States since the war. Very few, if any of the States,
have completely refrained in the post-war period from prohibitions of imports and
xports, on a vast scale, or the subjection of articles of various kinds to special
— 30 -
licences, which if it does not prevent trade in these articles at any rate greatly
hampers it, or the reservation of certain quantities for home consumption, diffe-
rential prices, the general increase of all import duties, the abandonment of the
most-favoured nation clause, and the introduction of export duties.
It must be realised that the causes of these measures are largely temporary
They are the result primarily of unavoidable financial necessities. Changes in in"
c omes and fortunes which have taken place during and after the war, the fluctua"
tions in the level of prices, and, in many newly-constituted countries, the deficiencies
of the administrative machinery, have made it impossible for the financial admini-
strations to adapt the bases of taxation to changed resources. To make good the
growing deficit in the budget, the Exchequer had to draw upon the available, rather
than the expedient sources ; and Customs revenues which are easy to collect and a
sure source of revenue constituted an obvious channel of supply. Certainly, no one
would be prepared to blame Poland if, in her present financial straits, she main-
tains an ad valorem export duty of 10 % on petroleum. On the other hand. Customs
barriers constitute a weapon of war; they are put up in anticipation of negotiations
for new commercial treaties in order to obtain better conditions from foreign coun-
tries; and the States would certainly be prepared to lower these barriers on reci-
procal terms secured by new agreements. Sometimes, as we have already pointed
out, export duties and increased import duties form an excusable means of retalia-
tion on the part of States which find that a vital blow has been struck at their
national economy by the internal measures of other States, such as the prohibition
of alcohol, which was inspired by the increased care for pubhc health developed
during the war. Reasons of health are responsible for prohibitions of imports from
States where infectious diseases of animals are raging. A whole series of prohibi-
tions on the importation of articles of luxury have resulted, as is well known, from
efforts to improve the exchange in States wiiere it was particularly unfavourable.
But, on the other hand, it is perfectly natural that States which have specialised
in the production of articles of luxury should, in their turn, endeavour with greater
or less success to compensate themselves by means of Customs reprisals for the
loss suffered by their national economy as a result of such prohibitions. Prohi-
bition of the export of foodstuffs — at any rate as long as provision for the home
market is not assured — which is a measure generally adopted by States whose
exchange is unfavourable, is justified by the fear that the exports may reach such
proportions as to cause a shortage for the home population. Such a policy cannot
be explained solely by the tendency to favour the working classes, which dominates
the political parties who have established themselves in power in the post-war
period, but it has also its root in the disequilibrium of the rates of exchange
which, as I shall shortly explain, causes a difference in the cost of living amongst
the various States and, at least for the time being, makes profitable the exports
of foodstuffs and other indigenous merchandise from the countries with a lower
rate of exclumge to those with a relatively bett(!r exchange. Moreover, countries
with a high rate of exchange, whose home trade is menaced by an influx of goods
from countries with an unfavourable rate of exchange, which are offered for sale
at low prices as compared with the cost of home production, have recourse to the
protection afforded by increased import duties. Sometimes, as has been the case
in Czecho-Slovakia, a rapid improvement of the exchange makes it advisable and
indeed almost imperative to prohibit the importation of certain goods in order
to allow the liquidation, without undue loss, of the stocks which have been acquired
under a State guarantee, at a time wiien the exchange was more unfavourable
and the price in the national currency was therefore much higher. In other cases,
a scarcity in a neighboiu'ing State makes it advisable to erect an export barrier
for foodstulfs by means of zones in which unrestricted trade is excluded, as has
been done by Ijjthuania on the borders of Russia. To these causes must also be
added ignorance of economic machinery on the part of many of the politicians
who have been brought into power, without sufficient training, by the creation
of new States and the ]>ri'(louiinance of less education politii-al parties.
But all these conditions are gradually iuii>roving, and such improvement would
give rise to the ho|)e that the ideal of unrestricted trade, which is desired by such
— 31 —
a large part of the educated classes, will be attained in the near future, if a more
general and far-reaching difficulty did not place obstacles in the way of its reali-
sation.
This difficulty arises from the fact that the war and the post-war period have
not merely proved the existence of an economic interdependence between the
States, the bearing of which was not formerly realised to its full extent, but have
also shown the danger and harmfulness of such a state of affairs, so long as the
present political organisation endures.
Indeed, economic interdependence presupposes and accentuates a certain
professional specialization by means of which the best-endowed nations devote
themselves to the activities which are most remunerative, and which, as a rule,
are also the most important from a social point of view, while the less profitable
activities are relegated to the other nations, which are already poorer, and tend
to become more so, as compared with the first. It is certain that from this differen-
tiation both derive, as a rule, an advantage so long as the economic connections
are neither broken nor weakened. But when they do break or weaken it is the poorer
nations which suffer most. This economic interdependence practically resolves itself
into a dependence of the poorer nations on the richer ones. In case of war or of an
economic crisis, therefore, the prosperity and indeed t.Tie very existence of the poorer
nations may be imperilled. This is the basis of the nationalist policy which, by
means of a relative economic isolation, prefers to assure to the nation, even at a
certain sacrifice of its prosperity, a lesser economic dependence and a smaller risk
in case of a war or a crisis. The war through which we have just passed and the
post-war crisis have thrown these difficulties .of economic interdependence into
relief, particularly as regards the economically weaker nations, and the general
return to a protectionist policy is thus explained. Thus launched on a com-
mercial policy whose course was dictated exclusively by their own interests,
the States attempted to exploit the advantages of their situation in every possible
manner even by action obviously harmful to the economic welfare of other States;
hence the differential prices for coal exported from England, and the export duties
on grain and wool from the Argentine, which elicited protests, in the name of the
equitable treatment of commerce promised in the Covenant of the League of
Nations, from the States whose interests were thereby damaged.
The careful observer will, however, realise that the above-mentioned difficulties
are caused by the economic interdependence of the nations only in so far as such
interdependence is not accompanied by a political interdependence voluntarily
assumed and recognised. The close economic interdependence which exists between
the different regions of one State does not give rise to any of these difficulties, if
these regions willingly accept union in the common State; it is only when the
various regions are united by force — as was the case in the former Austro-
Hungarian Empire, or when between the interdependent economic units there is no
permanent bond of union, as was the case before the war between the States of Europe
— that economic interdependence may give rise to the perils indicated above.
Hence, we come to the conclusion that the application of the "free trade" poUcy
which is theoretically desired by so many people would be practically advisable
only if a super-State organisation could guarantee the continuity of this policy
even through a period of economic crisis, and if it could also exclude the possibility
of wars which would bring it necessarily to an end.
Even the most optimistic recognise, I think, that such a task would be beyond
the present strength of the League of Nations. But without claiming to carry into
effect the whole of such a programme, could not the League of Nations take some
steps in this direction ? In my view, the answer should be in the affirmative.
(a) The first step in my view should be in the direction of encouraging, support-
ing or upholding the formation of Customs Unions, on a more or less important
scale, among groups of States. It is true, generally speaking, that we cannot exclude
the possibility of wars and fiscal conflicts, but it is also undeniable that there are
States whose economic interests are not antagonistic but rather complementary,
and whose political interests are in agreement so that the possibility of war between
them can be reasonably excluded.
Thp conclusion of a Customs Union between such States appears to be quite
natural; such a union would reinforce by co-operation the economic strength of each
nation, would reciprocally make good their deficiencies, and would contribute to
the diminution of the difficulty which some of them experience in securing supplies
of raw materials and foodstuffs.
The proposal presents the minimum of difficulty in the case of new States which
are not hampered by fiscal traditions. As regards the Baltic States, 1 submitted it
first to the Latvian Minister in Rome and then to other political personages in
these countries, and it was received with great enthusiasm. It was found, moreover,
to correspond so closely to the needs of the moment, that, on the very day of my
arrival at Riga, a meeting of the competent ministers of Esthonia, Latvia and Lithua-
nia arrived at agreements for a Customs Union and for conventions on transit and
fiscal regulations. This meeting, which was held in the first half of July, was followed
by a second meeting at Reval towards the end of July at which Esthonia and Latvia
agreed to abolish their Customs frontier. Lithuania made, for the time being,
certain reserves. A Transit Convention between the States came provisionally
into force.
A third meeting is being held at Riga at the time of writing (September 20th).
Its agenda includes the unification of Customs tarifTs, of laws on taxation and on
monopolies, as well as an agreement for the development of the trade in timber and
flax. Finland is a sympathetic onlooker at this conference, without, however,
binding herself for the time being. Many people favour the idea of extending
such a union to the bordering States of Finland and Poland.
A similar idea could certainly be considered by other groups of States.
Influential people in Portugal speak very favourably of an Iberian or Italo-
Iberian Customs Union. Similar unions would be more difficult to establish
between the Balkan States or between the Austrian Succession States where
serious political rancour still exists.
There are undeniable difficulties in the case of older States where industry and
agriculture are already adapted to Customs regulations which would have to be
thoroughly modified. In such cases, the Customs Union could only be arrived at
by gradual stages, either by establishing now a future programme of the changes
to be made and reduction of duties involved, or by resting content for the present
with commercial treaties of a closer and more liberal character. We cannot,
however, disguise the fact that, in order to relieve the present crisis and other crises
which may occur in the future, some sacrifices must be made by the nations which
have difficulty in obtaining raw materials and foodstuffs or, alternatively, in finding
markets for them. But those who are unwilling to make concessions to interna-
tional solidarity must be ready for a bitter struggle; if they adopt this attitude,
they must be prepared to submit to the consequences without complaint.
It may be objected that the constitution of these partial Customs Unions, which
will ])robably be followed by closer j)olitical unions, appears contrary to the ideal
of the League of Nations, which aims at uniting all the States on the same footing
in one large family of nations. But it is questionable whether this ideal is not
still too ambitious in present political conditions, ami whether it is not this exces-
sive ambition which is the cause of certain difficulties which have been encoun-
tered by the League of Nations. Undoubtedly, the difficulty which the League
experiences in uniting a number of States with divergent tendencies and interests
in a common point of view would be diminished if these States could join together
in various groups, among which it would obviously be easier to establish an agree-
ment. In the same way, in parliamentary procedure progress is made when the
political representatives are grouj>ed in clearly defined parlies. We must not forget
the old proverb, nalura non facit saltiis, and w(! must consider whether the transi-
tion from the pre-war social organisation, with completely independent States, to a
world organisation, of which the League of Nations represents the first attempt,
would not be facilitated by intermediate organisations composed of groups of States
whi(;h would form links between the one type of organisation and the other. There
is no obstacle in Lho text of the Covenant. On the contrary. Article 21 shows that
— 33 —
such a form of transition is entirely in the spirit of the Covenant. The Article
states that international agreements, such as arbitration treaties, and regional
agreements, such as the Monroe Doctrine, which ensure the maintenance of
peace, are not considered as incompatible with any of the conditions of the
Covenant.
A difficulty which is not the less serious for not being readily apparent results
from the disequilibrium of the exchange. At the present moment, in fact, when
the foreign values of the currencies of the neighbouring States, such as Spain and
Portugal, are very unequal, there is — as noted above — a strong tendency, on
account of the difference in prices, for the supplies of foodstuffs and other goods
to flow from the country with the depreciated exchange into the country where the
exchange is better. This tendency is often so strong that even high Customs barriers
instituted to check it prove insufficient for the purpose and the goods are smuggled
across the frontier. An instance of this is the smuggling of live-stock from Portugal
to Spain, along a frontier which, crossing a plain, can only be supervised with great
difficulty. It will readily be understood that a Customs Union, unless accompanied
by^ money convention, would greatly increase this difficulty. This, in my opi-
nion, is the very danger which mainly threatens the Customs Unions in the Baltic
States. The Baltic States have quite understood the necessity for going as far as
a Customs Union, and conventions on transit, monopolies, and duties, but, though
they have discussed the question, it seems that they have not yet agreed on the
necessity of going so far as a monetary union. Even before the union has been put
in practice the Lithuanian industrials already complain, within my personal know-
ledge, of the competition with which they are threatened in their own country
from the imports from Latvia, where money is much more depreciated and where,
in consequence, the level of real prices and the real cost of labour are lower. This
would seem to be the origin of the reservations made by Lithuania on the subject
of the abolition of the Customs frontiers.
(b) One of the consequences of the economic interdependence among States
which has become more and more extensive is that commercial treaties and conven-
tions concluded between two States now concern not only the economic organisa-
tions of the contracting States, but also, and often to a vital degree, the economic
systems of other States. Hence the idea that in the negotiations for commercial
treaties between two States it might be possible to achieve in some way the repre-
sentation of the interests of third parties. The League of Nations would be obviously
the best qualified organisation for such representation, and there should be no
difficulty in securing acceptance for this principle if the States were convinced of the
perfect impartiality of the League of Nations, a proof of which the League is now
called upon to provide in regard to the question of raw materials which we are now
considering.
(c) Action tending in a general way to prohibit export duties or other fiscal
measures which have particularly prejudicial effects on other States, cannot, in my
opinion, be advocated for the reasons explained above. As already stated,
there are circumstances in which such duties may be justified by measures of internal
policy of other States which are outside the control of the State in question. In
other cases, export duties are not only justified but rendered necessary
by disparity in the exchanges. Distinctions must here be clearly drawn between
different cases. There are cases where it may appear that the export duties or
differential prices are not essential to the State which applies them but are only
a means of more lucrative exploitation of a privileged situation. It is on that
account that the differential prices maintained by England in the case of coal and
the export duties imposed by the Argentine on grain and wool had been criticised.
In such circumstances, there would be a good case for intervention by the League of
Nations on the demand of the States which are hit by such measures. Such inter-
vention might well prove of real service either by conducing to the suppression of
the duties, if their harmful character be proved, or at any rate by eliciting exhaustive
explanation' from the States which would be placed, as it were, at the bar.
It has also been observed and, in my view, with justice, that there are two
different classes of raw material which must be differently considered. Raw
materials of the first class, such as wool and cotton, are continually being renewed,
with the assistance of man; the other class of raw materials, however, such as coal,
iron, and petroleum, constitute reserves supplied by nature without effort on the
part of the nation which possesses them and cannot be reproduced. It is above all
in respect of this second class of raw materials that there may exist a demand
that the interests of other nations and of posterity should be taken into
consideration and that international regulations for their development should be
established.
It may be that intervention might also be opportune with regard to the
special duties on imports from countries with depreciated exchange which, in various
forms, have been approved or proposed in Canada, Spain, United States and England.
These special duties are designed to relieve the marketing crisis from which such
States are suffering and — unless they infringe upon special conventions — they
may be justified as a means of defence to which nations resort only too naturally,
even thougli they redound inevitably to the prejudice of other nations. But it is
nevertheless questionable whether in the final event such duties will result in any
real profit to the States with high exchange which intend to impose them, and
whether they would not rather prove damaging to themselves. For, in practice,
they delay the re-establishment of a normal level of exchange in the countries with
depreciated currency, and actually accentuate such depreciation, or at least retard
recovery; in this way, they tend to aggravate and prolong the disequilibrium of
the exchange and the difficulty experienced by the poorer States in securing supplies,
phenomena which constitute, as explained above, the causes of the marketing
risis in the richer States.
The same comment may be made on the subject of export duties, particularly
when they are imposed by wealthy States on products imported by poor States. The
duties, which will raise the price of these products, will have the inevitable effect
of red\icing the quantity exported. It is true tliat the products in question are often
food-stuffs or raw materials which are indispensable for the existence of the popu-
lation or the industry of the importing States, and these will make every effort
not to reduce consumption to any appreciable extent. It is upon that very point
that the exporting States count ! But in any case, as a result of the heavier expenses
incurred for the importation of these products, the consuming States will be obliged
to reduce their imports of other products derived either from those States which
imposed the duties, or from other States. In the second case these latter States
will be obliged, on account of the tendency to establish a balance between imports
and exports, to reduce their imports from the States which have imposed the duties.
The latter, in any Case, will not be able to escape from the harmful consequence of
their own action. If the export duties are very high, however, if their application
is unduly prolonged, or if economic conditions in the importing States are precarious,
another harmful consequence will arise — a much more serious consequence. The
production of the importing States will be diminished; their purchasing power will
continually decrease, and they will be obliged to reduce their imports more and
more. Tiiey will, in addition, be obliged to have recourse to the issue of paper
money on a large scale, and will thus disturb the international exchanges, and
bring about, or at least hasten and aggravate, crises in the markets. This is indeed
what has recently happened. As we pointed out at the very beginning of this report,
the present crisis would have been much less acute if, during the economic period
in question, the richer Stales had followed a less egoistic economic policy. (Sec
f>age 18.)
(d) The question of monopolies is of special interest to the present inquiry
in view of its origin and the particular attention which has been paid to it by the
resolution of the Council of the League of Nations. The replies to the questionnaire
sent out on this subject, supplemented by information derived from other sources,
prove tliat there are States where no legislative provisions exist for control in this
field. Ill Germany, in particular, not only are monopolies not prohibited, but the
valitlil y of engagements (>nlered into with a view to the establishment of mono})oly
is legally recognised. Tliere are, however, other States which, particularly during
— 35 —
the war, have taken legislatiA'e steps with a view to preventing the artificial increase
in prices, and the cornering of stocks; and there are also some States which have
really attempted to prevent the constitution of monopolies.
The measures taken during the war might certainly be applied to checking
or restraining the constitution of monopolies, but those measures were designed
rather to prevent the cornering to which the continued increase in prices gave
rise and the excessive divergence between the buying and selling prices of middlemen
— to whom the public mainly attributed the blame for the increased cost of com-
modities — rather than to prevent monopolies, in the sense of the producers'
unions sufficiently powerful to secure the control of production and of prices. The
conditions of the market during the war were such that the producers had no interest
in voluntarily limiting production, because they could all rely upon exceptional profits
owing to the ever-increasing prices. Production was, naturally, so inferior to the
demand that all the producers were already enjoying the advantages assured them
by monopolies without the necessity of artificially restricting the quantities placed
on the market.
In Europe, moreover, before the war, even where legislation against mono-
polies existed, it was not enforced except in Austria, where certain attempts
were made in this direction.
But the situation is quite different in the United States of America, where
measures against monopolies figured in the original constitutions. The great majority
of the individual States, as well as the federal Government, have successively
passed a series of laws with a view to limiting, preventing or dissolving monopolistic
combinations, and the struggle against trusts has been for many years an invariable
plank in the platforms of all political parties at elections.
But, in spite of energetic legislation and the support of public opinion, it can
certainly not be said that monopolies have disappeared or have become weakened.
The United States of America still remains the classic country of pools, trusts
and similar combinations. The application of the laws, it seems, has forced the
combines to assume new forms, but it has not destroyed them. It is obvious, indeed,
that it is a matter of extreme difficulty to enforce separate action upon producers
who have agreed to work together fqr a common control of the production and the
sale of commodities. For this reason, many students have been led to the conclu-
sion — and, in my view, the right conclusion — • that monopolistic combinations
represent a result of the natural evolution of industrial concentration which cannot
be stopped by the State but can only be controlled and directed with a view to
restricting their harmful- effects.
It has often been suggested to this intent that the details of the management
of monopolistic combinations should be published; but it is obvious that such a
measure does not in itself constitute any control, but is merely a condition for
rendering control effective.
In order to decide how control should be exercised, it is before all necessary
to be quite clear as to what harmful effects are attributable to monopolies; these
arise from the fact that groups of producers and sellers generally tend to restrict
production or at least to impede the market in order to realise higher prices and
consequently greater profits.
A means of combating this result, in the case of combines already established,
would be to prevent them from restricting production. But it will be recognised
that there is a difficulty in principle in determining the amount of production
which a combine ought to achieve.
Another method, employed during the war and in the post-war period, with
a view to preventing or combating excessive profits, was the control of prices; but
this has been proved, at least in the conditions of the post-war period, to involve dis-
advantages which largely counterbalance any beneficial results that may be expected.
A way of preventing the excessive advantages which syndicates derive from
the excess profits of monopoly would be to force them to establish an eva-
luation of their capital holdings and to confiscate entirely or in part such profits
— 30 —
as may be considored, in relation lo the capital, to exceed a normal rate of interest.
But it is quite clear that such evaluation is very difficult and, on the other hand,
that the syndicates can easily increase artificially the evaluation of their holdings
and in this way evade the intentions of the law.
It should also be possible to consider a scheme for compulsory participation
by the Stale in the share capital and in the management of syndicates so that
the State would thus acquire a means of supervising their activities. But anyone
with experience in practical affairs will realise that a loose supervision would
not achieve its result and a too close supervision would merely impede the
development of economic life with harmful effects, which would probably outweigh
the advantages which it is desired to achieve.
An effective measure would be to prevent individuals or groups from possessing
more than a certain percentage of the shares of any company, but this measure,
apart from difTicuIties of control, implies the registration of all shares in the names
of their holders.
In America, Die Courts dissolve combines which are proved to be exercising
harmful effects on the national economy and impose fines upon them; the combines
reconstitute themselves, however, in new forms. The action of .the Courts has
certainly had the effect of weakening the predatory system of trade warfare of the
big trusts, but it must be admitted that it has not achieved results proportionate
to the efforts made.
There seems little reason to expect that any action on the part of the League
of Nations designed to prevent the constitution and operation of producing and
distributing combines will meet with any greater success than that achieved by
the individual Governments.
In point of fact, however, it is not against the existence of such syndicates
that certain nations are protesting: on the one hand, their existence would seem
to be inevitable; on the other hand, their control is a domestic problem for each
State. The protests arise rather against the national character which certain com-
binations dealing with raw materials of international interest tend to assume, not,
as is often alleged (and in some cases with undoubted justice), as a result of the
natural pressure of competition, but by means of privileges which the States reserve
for their own nationals and sometimes for citizens of friendly nations, when indeed
it is not the State itself which exercises the monopoly.
Such a situation offers a double disadvantage, in that, on the one hand, the
exclusive concessions for the operation of certain industries — in accordance with
principles which are not dictated by economic considerations — tend to diminish
the yield of these industries, and, on the other hand, the concentration in the
hands of a few nations, usually the most wealthy nations, of the advantages of mono-
polies, increases still further the disequilibrium, which is already too marked,
between the economic prosperity of the various States. It is this disequilibrium
which constitutes, as shown above, the fimdamental cause of the present crisis;
and it is for this reason that protests have been raised against the British Govern-
ment's control of woo! and Ihe Anglo-French agreements regarding oil concessions.
It should certainly be possible to overcome tlieso difficulties. It miglit, for
example, bo agreed, in practice, to establish the principle that sales of commo-
dities and (concessions for industrial enterprises should go — on a strictly commer-
cial basis — to the highest bidder, independently of his nationality; and again,
when such enterprises are constituted into joint stock companies, special provi-
sions might be made in regard to subscriptions to the capital and the sale of the
shares, with a view to preventing the representatives of any single nation acquiring
a monopoly. The methods of applying these principles siiould, of course, be the
object of profound study by experts.
In this sense, action by the League of Nations would undoubtedly be in harmony
with the general feeling of justice, as well as of the special aims and duties of the
League. Such action might have the beneficial result of dispelling doubt and suspi-
cion, even if, whih^ sucn'ceding in its aim of re-establishing the equal rights of all
— 37 —
nations in the exploitation of new concessions, it failed to free certain industries
from the control exercised by the most economically powerful States. The pro-
specting, extraction and transport of oil, for example, involve very considerable
risks and very special technical installations. This means that enormous capital
is required which only particularly rich nations can furnish. But it is just and
opportune that these nations should not, in addition to these natural and inevitable
advantages, enjoy the added advantage of special favour from the Governments.
3. Possible action in respect of emigration.
Closely connected with the question of the restrictions imposed on trade in
raw materials and foodstuffs is the question of the restrictions imposed on immi-
gration.
All wars cause modifications in the territorial distribution of wealth, which are
generally far greater than the modifications which result from the same causes
in the distribution of the population. The population of the belligerent
countries, as compared with that of neutral countries, suffers as a result of the mor-
tality among the soldiers, the increased mortality among the civilian population
and the reduction of the birth-rate; but the wealth of the belligerent countries as a
rule, and in particular the wealth of the defeated countries, suffers a yet more marked
diminution; hence the phenomenon, visible after every war, of an unusual stream
of immigration from the belligerent countries to neutral countries, which is encour-
aged by a number of circumstances of a psychological and social character, which
tend to weaken the bonds uniting the populations, of the countries which have just
emerged from war, to their native lands. If, among the belligerents, there are any
which entered the war at a later stage, or which, by reason of their economic consti-
tution, have far great powers of resistance, or which, owing to other favourable
circumstances, have suffered less or profited more from the war, they are in the same
position, as far as emigration in the post-war period is concerned, as neutral count-
ries. What occurs, in fact, is a natural and healthy process of readjustment by
means of emigration, there being a tendency to leave impoverished countries for
countries which have become enriched during the war, or which are at any rate less
impoverished. At present, the changes in the distribution of wealth, as a result
of the last war, have assumed, as is well known, an enormous importance. But
the process of readjustment, which would naturally have followed, has been impeded
by the prohibitionist policy adopted in regard to immigration by certain neutral
States, and by some of the belligerents, who emerged from the war with greater
economic prosperity. Undoubtedly, such impediments to natural readjustment
have prevented, and still prevent, the world's return to normal economic conditions,
no less than many other provisions against which much greater conplaints are raised
by the nations who suffer prejudice. Action on the part of the League of Nations
in this field would only be too well justified; its practical result would naturally
depend upon the attitude towards the League of Nations adopted by those States
which, from the point of view of immigration, are of the greatest importance.
4. Special position of mandated territories with regard to freedom of
commerce.
Some of the forms of action outlined above for securing freedom of trade and
emigration may meet with objection on the ground that they might, in a greater
or less degree, infringe upon the sovereign rights of States. As we have already
pointed out, this objection cannot be justified, as the measures proposed would
have to be accepted by the States themselves, precisely by virtue of their sovereign
powers. It is important, moreover, to remember that this objection could not arise
in regard to the mandated territories. The absolute equality of the various States
Members of the League of Nations in exchange and commercial relations is
guaranteed by special provisions in the Covenant; and the League of Nations has
only to carry them out.
— 38 —
Article 22 of the Covenant distinguishes three categories of Mandates. These
are as follows:
(a) Countries formerly belonging to the Turkish Kmpire,
(b) Certain countries of Central Africa,
(c) Certain territories of South-West Africa and the South Pacitic isiancis.
As regards the second class of Mandates, Article 22 states explicitly that the
Mandatory "must be responsible for the administration of the territory under
conditions which will guarantee freedom of conscience or religion, subject only to
the maintenance of public order and morals, the prohibition of abuses such as the
slave trade, the arms traffic and the liquor traffic, and the prevention of the esta-
blishment of fortifications or military and naval bases and of military training of
the natives for other than police purposes and the defence of territory, find will
also secure equal opportunities for the trade and commerce of other Members of the
League.'"
It must not be assumed from this explicit declaration that, as regards the other
types of Mandate, the Mandatories are exempt from such conditions because no
specific declaration has been made concerning these .Mandates. In point of fact,
the whole of Article 22 is governed by the preamble, which states t"hat "the well-
being and development of such peoples form a sacred trust of civilisation and that
securities for the performance of this trust should be embodied in this Covenant."
It would, indeed, be falling short of this solemn undertaking if we permitted the
Mandatory to exploit for his own advantage the natural resources of the countries
entrusted to his care by precluding them from the beneficent and stimulating
influence of free trade. The words quoted above specify the obligations of the Man-
datory in the case of " B " Mandates, but do not imply any contrast with the
obligations of the Mandatory with regard to the other categories of Mandates.
It is true that, as regards the last category of Mandates, attempts have been
made to draw dilTerent conclusions from the text of Article 22, which says that the
territories "can be best administered under the laws of the Mandatory as integral
portions of its territory." But the Article continues with the words: "subject to
the safeguards above mentioned in the interests of the indigenous population."
This clearly refers to the guarantees enumerated for "B" Mandates which are quoted
above, and there can be no doubt, in my view, that the clause relating to equality
of exchange and commerce is intended to protect also — not exclusively — the
interests of the indigenous population.
If this clause were suppressed, would not the whole substance of "C" Mandates
be destroyed — everything which gives them a juridical value of their own? I
venture to draw the Committee's attention to this clause, because it has a decisive
influence on the conditions governing "C" Mandates, whi(^h are connected with our
present enquiry; and as the Economic Committee is dearly the most qualified body
to decide if the regime of equality in exchange and ((uumerco is beneficial to the
population to which it is applierl, it seems to me that it would be very desirable to
obtain their opinion on this point.
In view of this Article, it seems unnec^essary to have recourse to other arguments
based on the Articles of the Treaty of Versailles dealing with the German colonies.
But as reference has been made to them in I he llaliau press, I think it may be
advantageous to consider these Articles alsd.
With refenuice to th(! German colonies, .Artii^le 121 of the Treaty of Versailles
lays down that "the provisions of Sections I and IV of Part X (Economic Clauses)
of the present Treaty shall apply in the case of these territories whatever be the
form ot Government adopted U>v I hem." Secticms I and IV of Part X of the Treaty
contain provisions concerning Germany's obligations to her territories, obligations
imposed upon Germany in the interests of the Allied and .Associated States* and
the most plausible interpretation, we are told, of Article 121 is that it was designed
in the interests of the ,\llied and Associated States to extend these same obligations
to the Mandatories administering the former German colonies.
— 39 —
In Section I of Article 265 we read:
"Germany further undertakes that, in the matter of the regime applicable
on importation, no discrimination against thecommerceof any of the Allied andAsso-
ciated States as compared with any other of the said States or any other foreign
country shall be made, even by indirect means, such as customs regulations or
procedure, methods of verification or analysis, conditions of payment of duties,
tariff classification or interpretation or the operation of monopolies."
According to this interpretation, in the German colonies and, therefore, in
the territories placed under "C" Mandates which form a part of them, the Allied and
Associated Powers should enjoy the most complete equality in trade and industrial
concessions, not only on the basis of Article 22 of the Covenant, but also in accor-
dance with the Treaty of Versailles.
There is still less doubt in regard to "A" Mandates.
There is nothing in the terms of Article 22 which could ofTer a pretext for a
limitation of the obligations of the Mandatory imposed by the preamble quoted
above, and consequently of the equality between the various States in regard to
commercial relations in these regions. It should be noted in this connection that
the three categories of Mandates, "A," "B" and "C," constitute a progressive scale,
in which, passing from the first to the last, ever-increasing powers are given to the
Mandatory. If, therefore, in category "B" the Mandatory is explicitly bound to
guarantee to the other States Members of the League equal opportunities for their
exchange and commerce, the Mandatory with an "A" Mandate is even less able
to reserve any privileges for himself in this respect. This principle has been recog-
nised in the Mandate schemes of the "A" type drawn up by France and England,
and published by the press. Direct action, however, on the part of the League
of Nations would certainly be desirable in order to make certain that the stipulations
regarding commercial equality should not remain purely platonic declarations. The
discussions to which the present regime of oil concessions in Mesopotamia have given
rise are too well known for such questions to be ignored.
5. Possible action in respect of transport.
Measures relating to transport are connected, on the one hand, with the prob-
lem of the distribution of raw materials and foodstuffs, since the inadequacy of
the former may become a danger to the latter, and they are connected on the other
hand, with the problem of production, since the reconstruction of some regions,
and the increasing value of others, may be dependent on the development of an
adequate system of communications.
There is no reason to complain of lack of maritime transport. There is indeed,
at the present moment, a crisis due to its superabundance which may be
attributed, at least in part, to the crisis in foreign markets and the consequent dimi-
nution in trade.
But there is, on the other hand, a serious deficiency in land transport. A
crisis of this kind occurs indeed after every war, as, in every war, means of transport
either deteriorate or are destroyed. The inhabitants of Western Europe — where
there is practically no such crisis — perhaps scarcely realise the intensity of this
crisis in the Eastern States (the Baltic States, Hungary and, above all, the Balkan
States and Russia).
In these countries, the distribution of raw materials and foodstuffs, and also
general reconstruction, are hampered chiefly by the disorganised state of the trans-
port system. And since, as we have seen, the present crisis in foreign trade is
largely due to the lack of production in these States, this crisis may be said to be
partly the result of a transport crisis. Even Russia at the present time, according
to information obtained in Poland, would be in a position to contribute to inter-
national trade to a considerable extent, in spite of her notorious state of disorga-
nisation, if she had means of transport at her disposal. Indeed, a brisk trade is being
— 40 —
carried on even now on the frontier between i'olaml and the Ukraine, the peasants
bringing grain, which is produced in abundance in that part of the country, and
receiving in exchange principally petroleum and clothing.
The transport crisis is due to two very diflerent circumstances.
It is due principally to the scarcity and bad condition of rolling-stock, parti-
cularly in Roumania, but also to a very considerable extent in the other Balkan
States, and in certain of the Succession States of Austria. The scarcity is intensified
by tlie unsatisfactory distribution of tlie rolling-stock itself; locomotives being
greatly in excess of wagons in one Stale, while in another the former are scarce as
compared with the latter. This condition is accentuated in some States — parti-
cularly in Roumania — by the lack of workshops, which are inadequate to carry out
the necessary repairs to deteriorated railway material. Moreover, a large propor-
tion of the tank-wagons required for the transport of petroleum from Galicia are
in the other Succession States, which cannot make use of them.
The second cause of the crisis is the lack of international co-operation, and this
in its turn is due to various circumstances.
Some of these are presumably of a temporary nature, as for instance the disputes
regarding Upper Silesia and Vilna, which are holding up traffic between Poland and
Germany and between Poland and Lithuania, as also the delay in arriving at an
agreement concerning the distribution of rolling-stock belonging to the former Austro-
Hungarian Empire.
In consequence of this state of affairs, one State will not risk allowing individual
wagons, coaches and locomotives to enter another State, as it fears — and not
groundlessly — that the latter will keep them till the settlement takes place. The
Austrian Succession States are expecting that the Conference of Porto Rosa will
provide a settlement of this vital question. In the meantime, the agreements
already concluded by various States, such as Czecho-Slovakia, with the neighbouring
States cannot, for the most part, be carried out. The conditions in which Russia
is placed have had almost similar consequences. The Polish Government, which
desires to stimulate trade with Russia and Roumania, thinks it necessary to send
whole trains with Polish crews, as it considers that by this means the trains will
certainly be brought back safely.
Apart from the temporary causes to which the crisis is due, there remains
one of a more general nature to account for the disorganisation which extends over
the whole of Europe; this is due to the lack of international agreements and organi-
sations allowing the rolling-stock of one country to cross — in safety, and without
formalities — the frontiers of other countries, thus effecting great gains both in
speed and economy Before the war, international railway traffic was greatly
facilitated by the Berne Convention, but there also existed an international asso-
ciation, with its headquarters in Germany, the usefulness of which was indisputable.
Various circumstances appear to have hampered and to be still hampering, the resump-
tion of co-operation of this kind the lack of mutual confidence between the States
which have just emerged from the war, and — according to one view — the opposing
interests of national railway organisations which had been formed and developed
during and after the war, and, finally, the fluctuations in the rate of exchange which
complicates estimates and renders uncertain the extent of the llnancial burden
which would be incurred by those who avail themselves of foreign rolling-stock.
In this field, it would be desirable if the League of Nations could with success
take steps either to demand strict observance of the Treaty of Versailles by States
which, in virtue of that 'freaty, are bound to grant free transit to foi'eigu goods, or
above all to revive the organisations for the international use of rolling-stock, which
were put an end to during the war.
The question of transport is not confined to Europe alone, but applies also to
certain extra-European territories which, being particularly favoured by natural
conditions, might contribute largely to the production of cereals and other food-
stufl's and raw materials, if this produce could be transported by rail to the nearest
ports. Such, for instance, is the position in Angola, the plateau of which, as we are
— 41 —
assured by Portuguese authorities, offers exceptionally favourable conditions for
the cultivation of cereals. But it is doubtful whether, in this matter, the League
of Nations could usefully take any action other than to call the attention of capita-
lists to the opportunities offered by enterprises of this kind.
6. Possible action in respect of the length of the working day.
Besides the reorganisation of transport, there are other steps which the League
of Nations might take, with a view to helping to revive production — steps referring
principally to labour legislation and credit.
Labour legislation is, as we know, the duty of the International Labour OfTice,
which, on the initiative of the employers, has already instituted a far-reaching
enquiry into the problems of production. The results, which will shortly be
published, will undoubtedly arouse great interest. I do not know the precise
nature of the relations which exist between the Provisional Economic and Financial
Committee and the International Labour Office, and whether — owing to the division
of duties between the two bodies — the Committee can avoid any discussion of a
problem which is connected with the crisis in raw materials and foodstuffs. In
any case, as an expert, I have not felt justified in avoiding this question.
Before the war, the length of the working day was fundamentally different in
the Northern and the Southern countries. This was probably not entirely accidental,
but rather the result of a natural adaptation to climatic conditions. We all know,
indeed, from experience that, in a cold climate, intensive work may be done with
more ease and pleasure, while in a warmer climate work is necessarily slower, so
that in order to achieve a given result, it is preferable to take a longer time and to
work with less intensity, rather than to take shorter time and work with a more
concentrated effort. Physiological research on the subject of food and the output
of the human machine, which during the war saw so great a development, gives a
scientific explanation of this experience; the explanation is that the food which is
best adapted to the living organism in northern countries is also more conducive
to intensive work by this organism, while in warmer climates the diet that is more
suited to good health is different and is less adapted to strenuous labour.
The reason that the adoption of the 8-hour working day is advocated, and that
it finds such wide acceptance, is the desire to standardise the conditions of labour
of the working classes, and to make them conform to the conditions which have
proved to be most suitable for the countries of the north. It is in those countries
that the researches have been carried out — for the most part favourable to a short
working day — regarding the variations in output as compared with the length of
the working hours. And the fact that the workers' organisations are more powerful
in the North explains why the movement in this direction was first seen in these
countries. But this by no means signifies that what has proved useful rather
than harmful in these countries would be so equally in Southern countries; and
this apart from any differences in the technical organisation of the industries,
which, too, may be factors of importance. Indeed, the general impression gained
from the results which I noted and of the information collected in the various States
is that the adoption of the 8-hour working day had not greatly affected production
in the Northern countries of Europe, but that, on the other hand, it was attended
by considerable loss in the Southern countries (the Iberian, Italian and Balkan
Peninsulas). It may be noted that, with the exception of Spain, these countries
are among those whose economic conditions have been most adversely affected by
the war. By thus decreasing the production of the economically weaker countries,
and therefore also their purchasing power, the adoption of the 8-hour working day
has certainly contributed, if the above impression is well founded, to the present
crisis in the markets.
At the present moment, the question is not of practical importance, since, as a
result of the crisis itself, the 8-hour day represents a limit which is attained in one
or two States and only in very few industries. But the question will again become
of practical interest when production is revived.
— 42 —
With this in view, it would be desirable that the enquiries into the influence
of the various lengths of the working day should be resumed on a larger scale, and
should be extended to the Southern countries; it should be carried out with all the
care enjoined by science, and the various industries, mode of remuneration, the ages
of the workers, seasons, and States, the different degrees of technical organisation
and the various climates should be taken into consideration, and the conclusions
should be based only on the most carefully weighed facts. Even if it were not
possible, for political reasons, to apply the scientific results of such investigations, it
would in any case be interesting to know what sacrifices have been imposed upon the
economic systems of the different States by a standardisation of the working day.
The Committee will be in a position to decide whether there is any need to insti-
tute an enquiry into this subject, or whether a statement of its desires should
be submitted to the International Labour Office.
7. Possible action in respect of international credits.
It is treading on somewhat delicate ground to enter upon a discussion regarding
the connection between the problem of the supply of raw materials and food and
the question of international credits, since the latter has for some time past been
under the consideration of a special Committee. This problem is, however, of
such vital importance to the subject-matter of this report, and the information
collected in the various States is, if I am not mistaken, of such interest, as to call
for a discussion, however summary, of this question.
In this connection a distinction must be drawn between credits intended for
the purchase of raw materials and those granted for the purchase of foodstuffs.
The former, as a rule, foster production which will yield quick returns, while the
latter are intended for feeding the population and, from the economic point of view,
only show their utility at a more remote date. From this point of view credits
for purchasing foodstuffs may be viewed in the same light as credits granted for
clothing the population, for the renewal of railway material, agricultural machinery,
or for the exploitation of water power.
With regard to credits for raw materials, a further distinction must be drawn
between those intended for the industries whicli work for export and those which
are designed to support the industries which work for home consumption.
Industries of the first category find no difficulty whatever in obtaining credit
when they have orders for finished articles, and this holds good particularly in the
case of countries whose exchange is depreciated. The unfavourable exchange
which enormously increases the cost of raw materials in the interior of the country
is in fact neutralised by the high prices obtained in the currency of the country
by the sale abroad of finished products. The low cost of living and consequently
of labour (low, that is, when reckoned in a sound currency), which goes hand in
hand with the depreciation of money, obviou'sly constitutes an advantage, since
it lowers the cost of production reckoned in foreign currency. Even in Austria,
the country to which the attention of the League of Nations has chiefly been directed
for the organisation of international credits, the industries which work for the
foreign market — and these by all accounts form the greatest part — find no diffi-
culty in obtaining the necessary credit for the working of their business when
they have secured a market for their products.
The conditions are very different whore the industries working for home
markets are concerned. In their case the difficulty in obtaining credit arises
from the fact that, in the countries whose currency is depreciated, they work under
unfavourable conditions on account of the low level of the jtrices as expressed in
the terms of a soimd currency. Where the cost of the raw material, compared
with tliat of tiie finished article, is small, as in the case, for instance, of fertilisers
as compared with agricultural produce, this fact cannot constitute a serious dis-
advantage, but where, on the other hand, a great part of the cost of the finished
product is represented by the cost of the raw material, an industry may find it
very ditricult to make a profit, since prices in the home market do not rise in pro-
portion as the exchange falls, and as, in consequence, the price of raw materials
rises. In Poland, for instance, as soon as the war was over, foreign capital began
to enter the country, either in the form of loans or of investments, but, with the
gradual fall of the exchange, the revenue from such investments decreased propor-
tionately, and the return for these loans does not appear to be any jafer. In Poland
today only the important firms of unquestioned economic soundness can, at the
present moment, obtain credit from abroad for the industries supplying the home
market.
Industrial combines obviously find it easier to obtain credit than private
industries, inasmuch as the former give sounder guarantees of solvency; but such
industrial combines are less difficult to establish in small States than in large ones,
either because an agreement is more easily reached between a small number of
firms, or because in small States there are generally no great industries which need
to have recourse to such measures; moreover, on account of competition, they
are reluctant to link their fate with that of smaller industries which find it more
difficult to pay their way. Thus it was possible to establish and to ensure the success
of such combines in the Vilna territory, while it was not possible to do so in
Poland.
In order to safeguard the creditor, a scheme was evolved, commonly called
the finishing-credits scheme, under which the raw material purchased continues
to serve as a guarantee for the creditor throughout the various transformations
which it undergoes, while the price realised by the sale is employed in the first
place to reimburse the creditor. The carrying out of this scheme does, however,
present certain difficulties from the legal point of view, since it appears to be incompa-
tible with the law in force in many States, and even more so from the practical point
of view, since it involves the supervision of the debtor and the identification of
the product. These difficulties are increased when various materials supplied by
several creditors are required for any given product. Austria has issued a special
decree in order to render possible the carrying out of this scheme, but, when there
are a number of creditors, the guarantees which the decree offers are not considered
adequate. It has, however, once or twice been applied in the past in respect of several
deliveries of wool, cotton, leather and copper. The finished products were partly
re-exported in payment of the loans ; the rest were sold in the home market When
the products can be re-exported, the difficulties involved in superintending the
creditors and identifying the products are obviously lessened. This applies, how-
ever, only to products for which there is a demand in the foreign market. But,
as we have already said, it is not the industries which are able to export that find
it difficult to obtain credit, but those which work for the home market.
In order to offer securities for the desired credit the producers might also
mortgage their property, either directly to the persons or public institutions supplying
them with the necessary funds, or to the State or other bodies, who, in return,
furnish them with bonds. These bonds, guaranteed by the Government itself,
are negotiable in the foreign market; they are then offered by the debtors to the
creditors as a security for the credit granted. Such a guarantee by the Government
is obviously not unfair, since the difficulties of obtaining supplies for these industries
are due principally to the low rate of exchange, and this, in turn, is due to the over-
issue of money, for which the Government is responsible. From the practical point
of view, however, there is no doubt that this is bound to affect unfavourably the
financial position of the Government already precarious — since the Government
thus assumes the financial responsibility for the operation of the industries which
work at great risk, if not at an actual loss. It is true that the Government may
— at least in theory — - recover any loan out of the mortgaged property of private
persons when these do not pay their creditors, but the possibility of putting such
a provision into practice obviously depends on the extent of the confiscations
which would have to be made. Thus it may be said that such securities have a
practical value only if the number of creditors is limited and the risk involved
in the loans not excessive.
Foreign creditors, for Iheir purl, will certainly lie ai)le to retain sufficient safe-
guards if the Slate allocates a certain portion the of its revenues for guarantee
of the bonds issued or guaranteed. These, however, will have a definite value for
foreigners only if they consist of commodities or enterprises producing commo-
dities which are in demand abroad, such as coal, petrol, or mineral ore. In cases,
as most frequently happens, where the State domain does not contain such resources,
and where the State must ofTer its own revenue instead, as guarantee for the bonds,
we are faced with the ditliculty of the depreciation of currency, which, if progressive,
causes the value of sucli revenue to he a matter of uncertainly to foreigners. In
order to overcome this dilficulty, the rates of exchange would have to be stabilised;
but if this is possible the necessity for all such guarantees would gradually disappear.
In these circumstances, indeed, the level of prices in the home markets after
some time, account being taken of the rates of exchange, would nearly equal the
level of prices abroad, and the fundamental difficulty in the supply of credits for
industries serving the home markets would tend to decrease.
The fact is that all the expedients already indicated, and others which may be
suggested, for the purpose of providing credits for the industries which serve the home
markets in states with depreciated currency, still leave unsolved the primary and
fundamental difficulty that the working of these industries ift such States, when
they need to import raw materials from States with a high exchange up to a con-
siderable proportion of the value of the goods to be manufactured from such raw
materials, is carried on with risks, if not actually at a loss. Such difficulties of a
general character may be increased, moreover, in certain States by reason of labour
legislation, as for instance in Austria, where employers, according to my information,
even though they may be working at a loss, are not free to close down the works.
Naturally, although in States with a depreciated currency the operation of
industries serving the home markets, and obliged to have recourse to large impor-
tations of raw materials, is in general hazardous, and more or less completely un-
remunerative, there are nevertheless a great number of cases, closely connected
with a variety of circumstances and contingent upon local and personal factors,
which entitle certain industries to secure credits, and to afford in return a guarantee
of reasonable profits, while other industries are of such a nature that credits must
in prudence be refused to them. It is therefore necessary to ditTerentiate credits
on the basis of personal knowledge of tlu^ claimant, and this is therefore a reason
for leaving the granting of credits for raw .materials to private initiative, rather
than to State or inter-State organisations, which display, more or less, the notorious
disadvantages attached to bureaucratic methods.
Different again are the conditions as regards the granting of credits for food
supplies, or for the services or enterprises from which capital can only become
profitable after a considerable length of time, and which are of public interest.
Naturally in such cases the request for credits shouUl come from the State, and
shoidd be guaranteed by it out of public revenue. Here it must be repeated that
the operation presents no difficulty when the Government can offer as guarantee
resources which are of international value (for examj)le, foreign stocks for which
there is a market), or goods with an assured market abroad (raw materials, for ex-
ample, which ari^ in gcneial demand), or the industries which produie them. Difficulty
arises when the State has at its disposal only such raw materials as are not in demand
abroad, as is at present the case in regard to timber, or resoiu'ces the value of which
rises and falls abroad with the exchange rates. Foreign capitalists in such cases
are naturally indisposed to grant credits unless they can form an exact idea of
the value of the resources offered to them as guarantee. It can therefore be under-
stood that they make the stabilisation of the exchange rates the contlilion of the
granting of credits.
In the Baltic countries and I'olaud several plans have becui put forward and
partially carried out for supplying these countries with the raw materials necessary.
The essential characteristics of such plans arc worth description.
In Latvia, Mr. Kaliniiig, tl c Minister of Kiuancc, with a view to obtaining the
fertilisers of whi<h tlxi countfy stands in such great mu'd, has made the following
— 4n —
proposal to certain Dutch capitalists: The Agricultural Co-operative Societies would
obtain the fertilisers in question, 10 % of the price of which would be paid imme-
diately by the Co-operative Societies themselves, and 10 % of which would be paid
by the Latvian Government. For the remaining 80 %, the debt would be guaranteed
by the Latvian State and the solvency of the latter would, in its turn, be guaranteed
by the Netherlands Government. The Latvian State would require an undertaking
from the Co-operative Societies that they would not re-sell at lower than cost
price, the fertilisers that had been obtained, and that the proceeds of the sales,
when reaHsed, should be lodged in banks to be named by the Government, and
should serve as security for the credits that the latter might have advanced to the
Co-operative Societies themselves. At the time of my visit to Latvia the negotia-
tions were well advanced, and the only important point — a fundamental one,
I think — in respect of which an agreement had not yet been arrived at was that
of the time-limit of the credits, which the Dutch capitalists wished to reduce to
three months, but which Mr. Kallin requested should be extended to a year and a
half, so that, with the coming harvest, the sum to be repaid could be easily raised.
For this scheme to be carried through it is, of course, a necessary condition that
the agricultural workers should, almost without exception, be organised in co-oper-
ative societies.
The organisation of the producers in syndicates is, moreover, the essential
condition of another scheme which l^as been introduced into Central Lithuania
(Vilna) by Count Wieloglowski, Director of the Department of Commerce, Industry
and Reconstruction of that territory. He has been able to organise in syndicates
the homogeneous industries of the region, and, on behalf of the syndicates, he was
able to obtain the requisite credits — guaranteed by the Government — for the
importation from abroad of the necessary raw materials.
In Poland, as I said above, the formation of such syndicates with the same
objects presented, however, serious difTiculties, and would indeed appear to be
impossible, inasmuch as the great industrial firms, which are really powerful concerns,
are able to obtain the credits they require without having recourse to these methods,
and are little inclined to join with the smaller undertakings, which they regard as
competitors.
Another scheme was, however, put into practice in Poland and was there consid-
ered — in my view rightly— as a preferable alternative to the Ter Meulen scheme,
of which Shall speak later and which the Poles refused to apply. By offering
as a security their industrial property valued in gold, on a conservative basis,
the members of the Association of Polish Manufacturers are able to obtain from
a bank, set up by them, bonds, also valued in gold, for an amount not exceeding
half the value placed on the property. Such bonds are guaranteed by the Govern-
ment, and are, I am assured, accepted without hesitation by foreign merchants,
thus enabling the manufacturers to secure credits abroad. The Government
guarantee would naturally lose in yalue if it were extended to other and larger
categories of persons, and would correspondingly reduce the confidence in the
bonds issued. Hence it is not considered possible for similar guarantees to be
offered to traders and agriculturists.
The Ter Meulen scheme is so well known that I need not explain it here, even
in its broadest outlines. The basis of the scheme is, if I am not mistaken, the idea
that the citizens of a State in need of, and deserving, foreign credit are to obtain
the confidence of their Government and of an appropriate International Commis-
sion, set up under the auspices of the League of Nations more easily than that of
foreign capitalists. Hence, instead of going directly to foreign capitalists to obtain
credit, ofTering their own property as security, they obtain the credit from the
foreign capitalists in question, ofTering their property as a guarantee to their own
Government, and obtaining, from the Commission referred to, bonds bearing a lien
on certain revenues of the Government, and which they oft'er to the foreign capitalists
as a security for the credit obtained. These securities will be administered either
by the Government or by the International Commission as may be decided, on the
proposal of this Commission, by the Council of the League of Nations. In the
— 46 —
first case, however, the Commission will be able, if it so desires, and will be obliged
if it is of opinion that the State is not fulfilling its duties — to require that the
Government should hand over the administration of the securities.
The scheme presupposes therefore:
(a) That the Government, which demands the guarantees from private persons,
or the CoMunission of Control, which issues the bonds to them, has a better know-
ledge of the economic position and of the productive capacity of the natives of the
country who are in need of credit than foreign creditors can have. The strength
or weakness of this supposition depends on the composition and working of this
Commission and of the Government department concerned. It would depend also
on the size of the State and the consequent possibility of members of the Government
department concerned having a personal knowledge of possible debtors. Certainly
a private institution composed of the debtors themselves, similar to that contem-
plated by the Polish scheme, is in a better position to know the needs and the
solvency of the debtors, and, above all, to judge whether credits are profitably
employed, than a Government organisation or a national or international commis-
sion. From this point of view, it seems to me that the Polish scheme possesses
advantages over the Ter Meulen scheme.
(b) That private persons will be ready to offer their property to the Government
as a security. The possibility that the Government requesting the security may
utilise the knowledge obtained from the declaration for purposes of taxation may
be a reason for hesitation on the part of those of its own subjects who desire credits.
This reluctance will vary according to the burdensomeness of the taxes and the
exactitude of the assessments. It will be very difficult indeed to persuade tax-
payers to declare that the value of their property is greater than its assessment for
pur])oses of taxation. If tha fiscal assessments, however, are up to date, this diffi-
culty will not be a serious matter, but if they are in arrears — as is usually the case
in countries with a depreciated currency — subjects of that country will be able
to obtain credit only for a sum much below that for which their property would
actually furnish security. In any case, it is certain that private persons would
much more willingly give their property as security to credit institutions, rather
than to the State, and this is a second advantage possessed by the Polish over
the Ter Meulen scheme.
it might be said that the Government can confine itself to asking for a banker's
guarantee, without itself exacting security on the possessions of the debtor. But
the question may be asked in return whether, with a guarantee from a respectable
bank, a private individual could not obtain credits abroad directly, without having
to go through the bureaucratic formalities necessary to obtain Ter Meulen bonds.
The only advantage of the Ter Meulen system would seem to be in a case when
the foreign market was, because of some unfounded suspicion, more unwilling than
the State to accept the bank guarantees of a particular country.
This is certainly a possibility, though it cannot be denied that, in general,
business men have a much sounder knowledge than Governments possess of which
banks deserve and which do not deserve to be trusted.
(c) That foreign creditors will be satisfied with the Government guarantee for
the bonds issued and the interest on them, will, as has already been stated,
probably happen only if the Government oilers as this guarantee property having
an internal ional value or revenue with a clearly deternuned value for foreign
creditors. This last coiulition presupposes the stabilisation of the currency.
Certainly, in order to obtain this, the State could take certain measures required
by the creditors, but it is one thing to take measun^s of this kind, anil nnother
to achieve the stabilisation of the currency. .As regards the general mortgage
which, it has been suggested, the Government should put upon the whole of the
real property of the nation as security for credits, it is difficult to see any economic
significance in such a proposal. A mortgage is of value only in so far as the
property mortgaged can be sold in the case of the insolvency of the delator, and
it is inconceivable that the whole of the existing iivd properly in a country could
be sold if the Giivernrnent became bankrupt.
— 47 —
(rf) That the State agrees to entrust the administration of part of its domain
or its revenue to an international Commission, or at least submits to Ihe possibility
of being called upon to do so by such a Commission. It is clear that this condition
might offend national susceptibilities. It would mean indeed that the State would
place its financial administration under the control of the League of Nations.
The attempt to apply the Ter Meulen scheme to Austria has clearly demonstrated
the difTiculties involved.
Austria, it is true, owns vast forests, but wood is not, at the present time, a
commodity for which there is a steady demand in the foreign market. With the
continued depreciation of the currency, the value of revenue from customs, mono-
polies and taxes is dwindling to vanishing point. The Committee which is entrusted
with the task of carrying out the financial reconstruction of Austria has, therefore,
very wisely asked the Government to take financial measures in order to put the
Budget upon a sound footing, and thus to stabilise the exchange. The Government
has promised to do so and is probably carrying out its promise, but • — as the
Austrians remark with some truth — it is one thing to take measures and another
to achieve the stabilisation of the exchange.
The manufacturers who work for the foreign markets, however, do not need
to have recourse to the Ter Meulen bonds, since they find no difficulty in obtaining
credit in the open market. Those who work for the home market, on the other
hand, will hesitate to avail themselves of these bonds in view of the disadvantage
of having to expose their commercial activities to Government interference, and,
moreover, they would find difficulty in obtaining these bonds if the Commission
which is entrusted with their issue and the Government authority whose duty it is
to demand the securities should proceed in cautious and exacting manner. Unless,
however, such caution is exercised, the Exchequer will, in addition to all the other
burdens, incur losses arising from unremunerative industries.
The Government itself might certainly have recourse to the Ter Meulen scheme,
with advantage, for supplying the population with clothing, or foodstuffs, or for
restoring the railways or for the exploitation of sources of energy, the financial
needs of which cannot be supplied out of private capital, since the advantages
can only be reaped after a long period of time.
This was obviously not the principal object of the scheme, which was intended,
above all, to furnish credits for private industries, especially exporting industries,
with the revenues of the State offered as security. On the other hand, if these
are considered acceptable, the State may easily obtain the credit direct, without
having recourse to any complicated systems of bonds.
As a matter of fact, the Committee charged with the task of the financial
reconstruction of Austria, recognising that a foreign loan for Austria is an indispen-
sable prehminary measure for the reconstruction proposed, has suggested that such
loan should be floated without waiting for the application of the Ter Meulen scheme,
the State assigning certain securities as guarantee.
It is my impression that the unsatisfactory results of the Ter Meulen scheme
were clearly foreseen by the experts in Vienna. That the Austrians wish the scheme
to be applied is, in my opinion, chiefly due to the hope that it will prove a means
of suspending or possibly postponing indefinitely their obligations in respect of
reparation.
Apart from that, the Austrians have no great inclination for the scheme,
which many of them regard as a device by which the States suffering most from
the lack of markets hope to sell their goods.
In my opinion, all this does not, however, mean that the attempt to apply the
Ter Meulen scheme or the plan of financial reconstruction which has been
substituted for it to Austria has not proved ■ — and does not stifl prove — extremely
useful as a stimulus to the financial reconstruction of a nation which does not derive
sufficient inspiration from its somewhat undeveloped sentiments of patriotism.
It is, however, just this lack of patriotism on the part of the Austrians (a defect
which many impartial Austrians acknowledge, and one only too easily explained
— As-
hy tlicir pdlitical vicissitudes) wliicli is responsible for the fact tliat no obje-ction
has been raised to tiie adoption of the scheme, and tliat I here lias lieen no manifest'
rehictance to iiand over even thr administration of tlie connlry to an international
Commission.
It is not every State which is so situated. There have been other instances
certairdy, in recent times, of States allowing foreign Commissions to administer
their revenues. \Vi' may mention Turkey and (^hina. What has been said about
the |)atriotism of the Austriaiis may, however, very likely also apply to those coun-
tries. It is, however, doubtful whether any other European people would submit
to such interference, whatever might be the difficulties of their financial situation.
I am not prepared to discuss whether they are right or wrong, but national sentiment
is a fact which must at all events be taken into account.
Another plan for fa('ilitatiiig exjiorts, not only of raw material, but also of other
goods produced in the United Kingdom, has recently been the subject of two laws
passed by the British Parliament, June and July 1921.
A Government department (the Export Credits Department) guarantees
u]) to a sum total of .£26,000,000 the bills drawn against the despatch of goods from
the United Kingdom to certain countries, in a proportion which is established by
the Department itself, but which can in no case exceed 85 % of the total value
of the bill. A security, accepted by the Department, may be deposited by the
importer, but in all cases, whether or not he gives security, he must furnish the
guarantee of a bank of his own country which is considered by the Department
to be of sufficient standing. If the importer does not pay the whole of his debt,
and if the security is not sidlicient to cover the deficit, a part of the loss (ordinarily
half, but in certain cases even greater) is borne by the Department: the balance
must be repaid to the Department by the exporter. The object of the scheme is to
facilitate exports from the United Kingdom to Finland, Latvia, Lithuania, Esthonia,
Poland, Czecho-Slovakia, Serb-Croat-Slovene State, Armenia, Bulgaria, Austria,
Hungary and to the various parts of the British Empire, including Protectorates
and Mandatory territories, except India, Ceylon and the British possessions in the
Far East.
The possibility of putting tlie scheme into execution clearly depends on the
readiness with which the banker's guarantees of the. importing countries are accepted
by the De])artment. It would ap|)ear that there is no vei'y great readiness in this
connection. The attemjits on the ])art of l^atvia, Lithuania and Poland to profit
by the scheme have so far, accoiding to my information, come to nothing, since the
Department has not considered that the banks which were ready to give guarantees
were of sufficiently good standing. In some cases the Department would appear
to have asked for a guarantee not of a single bank hut of two banks.
It should also he observed that, if the importer can obtain the guarantee of a
bank whose standing is recognised abroad, he woidd also be able to obtain credit
anywhere, w'ithout having recourse to the British Government. Consequently,
importing countries; and even exporters themselves, have no very great confidence
in the possibility of profiting by the scheme, although the Department does not
pursue a more liberal policy. We hear from the newspapers that, faced with the
economic crisis caused by uncmiiloymrnt . the British Government is actually
considering a modification of the existing system of credits, in order to encourage
export.' The existing ditlicidties, however, do not spring from the letter of the
law, hut from Ihc rigid int rrpri'l al iou given to it hy the Government Dcjiart iut>nt.
It would not he siii'pi'isim,' if these ilitlirult ies wei'e to continue in the future.
' In his speei-h of Ocli)l)cr 1 0th In the House of Commons, which 1 have just read while
correcting the proofs, Mr. Lloyd George defines more clearly the proposed modifications: a
guarantee on tlie pail of the Slate to the exieni of 100 "„, witli a claim on the exporter for
•'>' 54 %; t'"' t'slalilishmenl Ijv a comniittiH- of experts of a maxinuini credit for each exporter,
within the limits of which ho may rely on the Slate guarantee, without re(iuiring to obtain
the consent of Ihc nflice for each Iransaclion ; an extension of the list of countries to which
imports are consigned; a prolongation of the period of the credit, which might last .'i or even
(> years.
— 49 —
The lack of olastioity in Government departments, even the best, in comparison
with private enterprise, is well known, and the problem of credit is one of those
where elasticity is the most necessary.
Latvia has far more confidence in a Credits Convention which has just been
introduced into the draft Treaty of Commerce with Germany which is now being
concluded. The maximum credit involved is 500 million German marks, and the
object of the Convention is to supply Latvia with raw material and machinery of
German origin, necessary for the reconstruction of the country and for its economic
development.
With this end in view, one or more industrial organisations will have to be set
up in Germany under the direction of the Government of the Reich. These organi-
sations will guarantee to importers regular deliveries on the part of German sellers.
Latvian importers (individual, State or Communes) will, after receiving
this guarantee, be able to make individual contracts with German sellers. Contracts
will then be submitted to the Latvian Government, which, if it judges the contract to
be expedient and in harmony with the objects for which the Credits Convention was
established, will guarantee that part of the payment which is not immediately
effected.
The Latvian Government and the German organisation will appreciate freely
on the merits of each case whether their guarantee should or should not be granted.
The maximum time-limit for payments guaranteed by the Latvian State varies
according to the goods involved and in certain cases may be as long as 10 years;
the rate of interest must not exceed by more than 1 % the discount rate of the
Deutschebank (Banque Allemande).
The same observations may be made in respect of this scheme as were made
above (paragraphs a and b) in respect of the Ter Meulen scheme, but it should be
observed that, in tlie case of Latvia, there are several circumsiances which render
the difficulties in question much less important. Above all, Latvia is a little
country, where it is easy for Government circles to obtain a personal knowledge of
importers. Moreover, .Latvia is a new country, where Government circles consist,
not of bureaucrats who have led an exclusively administrative life, but of persons
who, until quite recently, were, most of them, concerned in the economic life of the
country. This condition of the country is naturally not without its difficulties;
but, from the point of view which we are considering, it has the advantage of allowing
the Government to obtain knowledge of economic conditions and of the personal
qualities of importers. It should also be observed that the import requirements of
Latvia arise from the facts that the factories have been cleared by the Russians,
and that the countryside has suffered considerably from the invasions. The chief
imports required are mechanical tools, agricultural machines and fertilisers. Once
such goods are imported, all the other factors of production are to be found in plenty
(good and cheap labour, factory buildings intact, fertile land). In most cases,
therefore, it would be easy to count with certainty on a profitable use of the credits.
One advantage of the Latvian-German draft Convention, in comparison
with the Ter Meulen scheme, lies in the fact that the State is not
bound by any clause which limits its powers of disposing of its revenues, thus anta-
gonising national sentiment. Care has even been taken to balance the obligation
of the State to guarantee the debts due to exporters by the obligation laid upon the
German organisations to guarantee the regularity of their deliveries. This obliga-
tion has not only a practical but also a moral value, inasmuch as the two contracting
parties are placed upon the same footing. Certainly it cannot be denied that in
this scheme, as in that which has been put into execution in Poland, the guarantees
for creditors are less substantial than those provided for in the Ter Meulen scheme,
but it is well known that credits on a large scale are fostered not so much by material
guarantees as by individual confidence in the debtors and the guarantors.
The impoverished States of Europe might perhaps hope for more considerable
credits from America. The Federal Government of the United States has endea-
voured to facilitate export from America by means of the Edge Law, but although
4
— 50 —
this law has been in force since December 1919, its results are not yet appreciable.
The Edge Law authorises the establishment of banking institutions of two classes,
both classes destined solely to finance foreign trade. The first class of bank employs
the usual banking trade method of accepting the exporters' bills, with this advantage,
however, that the acceptance may be for as long a period as 12 months. The
other class is empowered to give credit to foreign importers for a considerably longer
period, taking, as guarantee for the credit, securities deposited with them, and,
on the strength of these securities, issuing bonds for the sum total of the value of
the securities. In reality, it is the purchasers of the bonds who, in this manner,
through the medium of the bank, give long-term credits to foreign importers. Two
banks of the first class have been founded; and a third, much larger, of the second
class, is projected.
The system seems good. Above all, banks of the second class could be of
real use in allowing small savings to take a share in long-term loans. But the fault
of the system lies in the slowness of its application. It should also be observed that
the establishment of the last bank, which should be much the most considerable
in size, has encountered in practice many difilculties, in which it has appeared that
the American people evince no very great sympathy for the granting of credits
abroad. This is a difficulty which, obviously, no law can remedy.
These and other considerations I have mentioned will, I think, serve to show-
that there cannot be an international credits scheme for the supply of raw materials
applicable to all countries indiscriminately. Each country has its own require-
ments, governed by its needs, its technical and social organisation, its psychology,
the standard of its industries, its markets, its size, and many other considerations.
The organisation of international credits must, in order to succeed, take all these
into account.
8. Possible action in respect of exchange.
We have seen that the disequilibrium of the exchanges forms a grave obstacle,
both to the maintenance of freedom of trade and to the granting of international
credits. The difficulties in organising transport from one country to another are
also increased by the instability of currency values. The importance of the award
of certain territories, according to the nationalist programme, is further variously
estimated according to its effects upon the exchange. This serves to show how
vital is the effect of exchange questions on the problem of the supply of raw material
and foodstuffs. We shall see from the following observations that this question
is in reality the key to the whole situation.
The difficulties brought about by the present condition of the exchange market
in connection with the supply of raw materials and foodstuffs may be divided
into three classes, according as they result from fhictuations of the exchange which
are of brief duration and more or less periodical; or from persistent variations
in one or the other direction of the quotations of certain currencies; or, finally,
from what we call the disequilibrium of the exchanges.
Fluctuations in the exchange occurred also before the war and are, to a certain
extent, inevitable. But when currency based on the gold standard was replaced
by a non-convertible paper currency, these fluctuations increased in intensity and
duration in proportion to the reduction in the scope and speed of the mechanism
of compensation. There also exists an impression, probably well founded, that
fluctuations of a currency are more market! in proportion as its exchange rate
is unfavourable.
.Such fluctuations are due to variations in supply and demand, to speculation
and to the effect of political events, which give rise in foreign countries to impres-
sions which are not justified — and are therefore transitory — of distrust or trust
in the political stability and therefore in the financial solvency of the State. All
these causes have not merely a transitory elTect, but also tend to set in motion
compensatory forces. The effects of speculation and the possibility of panic caused
— 51 —
by political events have, it is evident, a greater chance of exercising influence in
proportion as the exchange is unfavourable; this may account for the fact that
such fluctuations are, according to current opinion, the stronger in proportion
as the currency is depreciated.
In this respect it may be noted that the effects of speculation are fundamentally
dilTerent when the exchanges show only periodical fluctuations, for example, as
a result of seasonal changes in international commerce, without being subject to
systematical variations in a determined direction, and when fluctuations in no
determined direction or systematic variations in a given direction are added to pe-
riodical undulations. In the former case, speculators may safely make a corner in
foreign bills of exchange, whenever the latter are at a low rate of exchange, with a
view to re-selling them when there is a greater demand for them, and in this way
they help to stabilise the exchange; before the war this was done \vith success in
Brazil, and probably in other States also. In the second case, on the other hand,
the eflects of speculation may be of various kinds. For example, by making a cor-
ner in foreign bills of exchange when the latter are at a high rate, in the hope of
a further rise, speculators may contribute for the moment to drive the exchange
down; but this fall may later give way to a rise, when, the rate having reached
a level which is considered sufficiently remunerative, the bills of exchange are re-
sold; in this case, in addition to systematic variations, speculation would have
the eflect of adding a fluctuating movement to the systematic variations of the
exchange in a given direction.
Steps which are taken to control exchanges — as was done extensively by
European States during the war and after the war — are introduced with a view
to checking such fluctuations. Such measures eventually succeed in limiting specu-
lation, but, on the other hand, they involve well-known inconveniences, which are,
according to the popular impression, greater, at least in time of peace, than the
inconveniences which they succeed in removing. It is for this reason that such
a control has already been abandoned by many States; other States also are think-
ing of abandoning such measures.
The persistent variations in the rate of exchange, in one definite direction,
may depend on modifications which become more marked throughout a long period
of time — in the confidence which the foreign market has in the particular State,
or in the demand made by such market for the currency of that State, or in the
supply of such currency on the foreign market, or, finally, from the variations
in the purchasing power of the currency in the home market, as compared with
the purchasing power which foreign currencies have in their respective national
markets.
Serious inconveniences arise from such a state of affairs when a considerable
period of time elapses between the ordering of goods and the payment for such
goods; and the inconvenience is naturally greater in proportion as the period is
long and the variation considerable. An element of uncertainty thus arises, which
hinders and renders hazardous exchanges, transports, or contracts for labour and,
by reason of the conflicts which it causes between Capital and Labour, thus not
infrequently creates social unrest.
Many remedies have been suggested and tried. The most radical is that which
was practised during the war, and during the period immediately following, by the
Allied and Associated Powers; this consists in fixing definite relations between
the valuta of the different countries, for the purpose of mutual exchanges, which
are maintained artificially fixed by Government loans.
A Government would borrow foreign currency and sell it at the established rate
of exchange to those of its nationals who were to make imports, or it would use it
for buying back national securities or currency, of which there was an excess on the
foreign markets on account of the deficit in the balance of the payments of its
nationals, so as to restore the exchange to the level previously fixed. By one method
or by the other, the State none the less increased its debts abroad by the amount
corresponding .to the deficit in the balance of the payments of its nationals. This
was a first disadvantage, but another supervened when, as actually happened, the
— 52 —
relation between the currencies of the two countries was more favourable to the
more depreciated currency than should have been the case, in view of the level
of prices in the two countries. In practice this method favoured the importers of
the countries the currency of which was most depreciated and thereby laid the
cost on the State, that is to say, on the community.
These disadvantages were not very important during the war, since the deficit
in the balance of payment of private persons was not great, on account of the restric-
tions imposed by circumstances or by the State itself on their imports, but it would
have acquired an extraordinary importance after the war, when the importation
by private persons vastly exceeded their exports. When the war came to an end
the stability and level of the exchanges lost the political importance ascribed to
them, in order to keep up the moral of tlie population. There were good reasons,
therefore, for abandoning this method at the beginning of the year 1919, and there
should be no question of introducing it again.
Another expedient consists in regulating the currency circulation, which would
be increased or diminished according as the exchange grew more or less favourable.
Such a procedure presupposes that the State is in a position to restrict the circu-
lation at will, a course which is impracticable in present circumstances for almost
all States.
We shall have occasion to touch on other proposals, such as the introduction
of an international gold currency and the devaluation of money.
The aim of all these measures is to stabilise the rate of exchange; others are
designed simply to enable business to be carried on in spite of the instabihty of the
exchanges by the employment of commercial methods which evade, or at least
obviate or limit, the risk of instability.
A method which is attempted for elTecting exchanges between States whose
respective currencies vary too greatly or are very unstable is that of barter, produce
being directly exchanged for produce. The disadvantages of such a system of ex-
change, as compared with an exchange of currency, are too obvious to need pointing
out. The fact that such expedients are resorted to only serves to show how great
the inconveniences of variations in the exchange level may often be — so great
as to surpass the inconveniences of the barter system.
A practical proposal which has been made in Italy, and which was, if I am
not mistaken, brought forward at the recent Conference of the International
Chamber of Commerce, is that exporting States should establish depots in
importing States, whereby purchasers may be able to obtain delivery of goods
and pay for them within a very short time of giving the order. The inconveniences
caused by the fluctuations in exchange, althougii they would not completely dis-
appear, would thus be considerably reduced. Such a procedure would be a great
advantage for the importers, but is not in itself favourable to exporters. The latter
would be obliged to accumulate large stocks of goods far from the place of produc-
tion, bearing at their own risk the cost of transport, and placing themselves in an
unfavourable position in regard to selling transactions. For it is evident that it
would be very difficult for exporters to secure a profit if they brought back to their
own country the goods which had thus been accumulated; they might therefore
lind themselves obliged to sell them at uniemunerative prices. In the present
circumstances, however, in which exporters find markets difficult to obtain and
are therefore even prepared to accept conditions which are unfavourable, the pro-
posal appears to be of a practical nature. It would naturally be difficult to carry
into effect in States in wliirh political conditions appear particularly unstable —
which are those whose exchange rate is the most unfavourable — for exporters
would lack security for the goods accumulated in such States. But importations
into such States might be made easier by the accumulation of stocks in neigh-
bouring countries.
Plans have recently been considered, in connection with export credits, for
insurance against risks arising out of exchange variations. Such insurance could
easily have been elTected under pre-war comlitions, \\hen the exchanges showed
— 53 —
only irregular fluctuations about a fixed point, but it is difficult to see on what an
insurance company could base its estimates at tlie present time, when the exchange
of many countries varies systematically with an intensity determined in large mea-
sure by the financial and general policy of the Governments.
The greatest difficulty, however, which is experienced by importing States
in obtaining raw material and foodstuffs is that which arises from the unfavourable
exchange rate. In Poland, Austria, Portugal, in the Baltic States, it is this circum-
stance above all which is held to be the cause of the difficulties in obtaining raw
materials or foodstuffs; in fact, owing to the unfavourable exchange, such goods
are now said to cost fabulous sums. In reality, what is important is not the high
exchange in itself, but the fact that the relation between the valuta of the two
countries does not correspond to the relation between the level of prices in the two
countries. If such a correspondence existed and if the exchange rate corresponded
to what may be called the parity of purchasing powers, no difficulty could arise
for international exchanges. In reality, however, such a correspondence never
elxists at the present time in countries with depreciated currency; it is just this
ack of any such correspondence to which I refer when I speak of "disequilibrium
of exchanges."
If we consider the statistics with regard to price levels in the home markets
and with regard to exchange rates, we shall see that, as soon as the practice of
fixing the exchanges in the Allied and Associated countries was abandoned, a ten-
dency arose for the quotations of valutas which were depreciated to remain below
the level of purchasing powers — that is to say that, expressed in a given currency,
prices are lower in countries whose currency is the more depreciated. The visits
which I have recently paid to seventeen countries of Europe, differing greatly in
currency conditions, have convinced me of the correctness of this generalisation,
to which there are only a fiew exceptions. Between Sweden or Switzerland on the
one hand, and Poland on the other, which, as regards European countries, stand
at the extremes, there is a difference in the cost of living of at least three to one,
and prices gradually rise as one passes from Poland to Austria, Latvia, Esthonia,
Portugal, Czecho-Slovakia, Italy, France, the United Kingdom, Switzerland.
This may give rise to the impression that, in this field of inquiry, the facts do
not correspond to the theories of economists, who state that the relation between
the valutas of two States necessarily varies in accordance with the purchasing
power which these valutas possess in the respective national markets. The fact
is that such a statement is definitely dependent upon the hypothesis that there
exists complete freedom of trade between the two States, while in fact this hypo-
thesis is never a reality. But in my opinion commercial restrictions are not alone
sufficient to explain the discrepancy between the facts and the theories. Various
other circumstances, which I shall now explain, assist in producing this result.
There are, in the first place, certain circumstances which cause the relations
between the values attributed to the two valutas in the home market to differ from
the relations between the values which are attributed to them in the foreign market.
(a) Some of these circumstances have only a transitory effect, such as the
greater economic sensitiveness of the valutas in the foreign market as compared,
with the home market.
The sudden fall in the exchange, unaccompanied by a corresponding rise in
prices at home, is sometimes explained by the fact that the consequences of poli-
tical or economic events, or of future financial measures, are foreseen and discounted
abroad. For example, at the news of a military defeat or of political crises, or of a
serious struggle between Capital and Labour, the foreign holders of valutas of the
vanquished or disturbed country foresee that the affected country will have to
import to a greater degree and will export to a lesser degree, a state of affairs which
will result in a relative excess of its valutas abroad; foreseeing this, they therefore
lower the rate of exchange on this country or, learning that the Government has
decided to issue fresh paper money, they know that such a measure will result in a
rise in prices in the home market ; or, more generally, foresee that the general policy
of the Government will be deleterious to the economic conditions of the country
or may result in a war, and they therefore operate in such a way as to cause the
value of the currency to fall as a precautionary measure. All this is true, but it must
bo remembered that the same provisions and the same calculations may be also made
by the citizens of the State, who should raise the prices in the home markets ia
the same proportion. If they do not do so, or do not do so in the same degree,
or only do so later, the reason will be found in the fact that those who mani-
pulate exchanges are in general better acquainted with economic causes and results,
and pay more attention to the circumstances which may bring them about,
than average citizens.
The difference in economic sensitiveness does not, in fact, appear as between
foreigners and nationals but between speculators (both foreign and national) in
exchanges and the average citizens.
This circumstance can, however, only furnish the explanation of a transitory
instability of the exchanges, since the provisions made will either be shown to be
mistaken and, after a certain time, the value placed upon the valuta will rise;
or they are shown to be well founded and the value which is placed upon the valuta
in the home market then conforms to the quoted value of the valuta in the
foreign market. But we shall nevertheless have occasion to obseYve certain factors
which delay adjustment in the last-named case (cf. pp. 58-60). There is, moreover,
the possibility that a new unfavourable incident or a new pessimistic forecast
may produce a subsequent depreciation of the exchange before the adjustment
is completed.
It is hardly necessary to add that this explains, not only the sudden fall of
exchanges, independently of the level of prices, after unfavourable events, but
also their improvement after favourable events.
(b) Other circumstances have a more or less lasting effect, such as the contin-
uous lack of confidence abroad as compared with at home, in the political stability,
and therefore in the solvency, of the countries whose currency is depreciated.
Such a state of circumstances is quasi-normal and is to be explained either by a lack
of information abroad upon the national resources or by the patriotism which tends
to blind nationals to the true state of affairs. The effect of the first of these
conditions may be greatly increased by propaganda carried out by agents of
enemy States.
(c) The same effect may result from the circumstance that certain series of
notes which^cannot easily be recognised, or their value determined with certainty, are
current only in the interior of the country. This creates suspicion in the foreign
exchange offices, which are unwilling to accept currency of that country in the
fear that they will find themselves in possession of series of notes which can only
be exchanged with ditfi( ulty abroad.
This assertion is made by the Viennese exchangers with regard to certain issues
of Polish notes — for example. Issue N^ III of the white series of 1,000-mark notes,
and this makes it difficult in Vienna to exchange any Polish 1,000-mark notes.
As a result of investigations it appears that this assertion is not borne out by the
facts, in the sense liuit all Polish notes are legal tender both in Poland and abroad.
f5ut it i.s, however, easy to iiiulerstand how this belief originated. A considerable
number of forged 1,000-inark notes, white series, has been printed abroad. As
these notes are, so it would appear, cleverly counterfeited, the issues to which
these forged notes belong are naturally refused by foreign money-changers; practi-
cally, therefore, they have no circulation abroad. On account of the very limited
exports of Poland as compared with her imports, it is easy to understand, again,
why these forged notes have not penetrated into the country in any appreciable
quantity. The corresponding series are, consequently, always accepted in Poland.
{(1) These facts bring into relief another circumstance, which may indeed contri-
bute powerfully to bring down tiie exchange of a country, viz.. the printing abroad
on a large scale by private persons, or even l)y another State, of notes of a State
which are easy to imitate. That is perhaps oiw of the causes of f he fall of the Polish
nuuk. In the areas bordering on Russia 1 have also heard the suspicion voiced
— 55 —
on several sides that the Soviet Government has counterfeited the notes of several
States and employed them to make payments abroad. It is of course impossible
to determine the accuracy of such a suspicion.
These circumstances (a), (b), (c) and (d) naturally affect the exchange between
two valutas, but only in so far as they are unilateral, that is to say, harmful only
to the currency of one country or more harmful to that of one than to that of the
other. If, on the contrary, they are present to an equal degree in both countries,
their effects are naturally neutralised.
It is, however, easy to understand that the lack of confidence would have a
deleterious effect, particularly on that valuta which is the more depreciated.
(e) These observations lead us to the consideration of another circumstance
which may contribute to the disequilibrium of the exchange — the different
use which can be made of the currency by foreigners and by nationals.
Whilst all goods may be purchased with the national currency in the home
market, foreigners not residing in the country cannot make use of this currency
to purchase many perishable classes of goods, and are, moreover, in a less favour-
able position than the nationals for acquiring, with this currency, other property,
real estate, for example, which they must administer from a distance, or personal
estate upon which they have to pay duties, either in the country of origin, or at their
own frontier, in addition, always, to the expenses of transport. It would, however,
be a mistake to regard such circumstances, as they are regarded by several
authors, as a reason for the depreciation of the exchange as compared with the
relations between the level of prices, since that reason affects all the valutas, and its
effect upon the exchange is therefore cancelled. Such a circumstance becomes of
importance only when the field of utilisation of the valuta of a country is
restricted in regard to foreigners to a greater extent than in the case of other
valuta, by reason of the difficulties placed in the way of investments of foreign
capital, or by reason of prohibitions or restrictions or difficulties or special
transport expenses or taxes placed by the country upon its exports, or by reason
of import duties placed by other countries upon these exports. Countries with
a depreciated currency tend in general to oppose the purchase of landed property
by foreigners; they often prohibit or restrict the export, above all, of foodstuffs,
and they raise the duties on the exportation of various merchandise, whilst
countries in which the currency is sound often place special customs barriers on the
imports from countries with a depreciated currency.
Among these measures it is possible to distinguish between those which result
in the restriction of the field of utilisation of the currency by foreigners, as is the
case with prohibitions of or restrictions upon exportation and investment, and those
which result in the raising of cost prices for foreigners, as, for example, special taxes
on purchases made by foreigners in the country, or export duties or additional
lax imposed by other countries on imports. Both types of measure tend to increase
the disequilibrium of the exchange.
(/) Here we must take into consideration a factor to which the public and
certain authors tend to attribute much importance in the determination of the
disequilibrium of exchanges: that is, controlled prices. The existence of controlled
prices, it is observed, causes the maintenance of the prices of certain products at
a lower level than would be the case if trade were unrestricted. On the other hand,
the products in question are products which feed the home market. We have here,
therefore, a factor which renders the prices on the home market lower than the
prices on the foreign markets.
In analysing this observation, we must distinguish between the question of
the influence of controlled prices on the general level of prices, and the question of
their infiuenoe on the disequilibrium of exchanges.
With regard to the first question, it is commonly observed that, if the control
succeeds in keeping down the price of certain goods, it tends, on the other hand, to
accentuate the rise in price of other goods for which the demand becomes increased
by reason of the greater purchasing power which has accrued to the consumers.
— 56 —
But we must consider whether this increase does or does not neutralise the lowering
effect of the control. Here it is well to recall the equation known as the equation
of exchanges, which exists between the general level of prices, the total amount
of money, the velocity of circulation of money and the volume of transactions.
According to this equation, the general level of prices, measured by the weighted
average of all Ibe prices of all the transactions into which money enters, must
correspond exactly at any given moment to the total of money (and its substitutes)
in circulation multiplied by the velocity of circulation and divided by the volume
of transactions into which money (and its substitutes) enters.
Before it could be admitted, therefore, that controlled prices have an influence
on the general level of prices, it would be necessary to demonstrate that they cause
an increase in the volume of transactions or a permanent decrease in the velocity
of circulation of money (or its substitutes), and for my part I cannot imagine how
this . onld possibly happen, at least if the quantity of goods freely exchanged
continues to be relatively large, in comparison to those of which the price is
controlled. We must therefore conclude that the lowering of the prices of certain
goods efTected by controlled prices is neutralised by the rise in price of other
goods which are exchanged, if these continue to be relatively large in quantity,
without altering systematically the general level of prices.
What has been said with regard to controlled prices may also be said in regard
to other circumstances, such as the permanence of certain contracts, which are
also represented as curbs upon the rise in prices. As for the restrictions on home or
international trade, they clearly cause direct or indirect diminution of the volume
of transactions into which money enters, and they must consequently have the
ellect of increasing and not diminishing the general level of prices.
Must we then conclude thai controlled prices or analogous measures have no
effect on the disequilibrium of exchanges ? This conclusion would not, in my view,
be correct. We must admit that when we speak of "parity of purchasing powers"
as a condition of the equilibrium of exchanges, we are using an expression which
is rather vague. What purchasing power do we actually mean ? Is the equation of
the exchanges therefore dependent upon the "general relative purchasing power" —
that is, upon the inverse index of the weighted averages of all the prices of all the
transactions into which money enters ? This is the general interpretation which is
given to this expression, but if the question be carefully analysed it will be seen that
in Irulh the factor of importance in the deterniinalion of the rates of exchange
between two currencies is the factor of the purchasing powers of the said currencies
in respect only of such goods and servic<\s as are taken into accovmt in the balance of
international payments. It follows t hat if the control of prices or any other measure
adopted by a country has the elTect of lowering the prices, particularly of goods
absorbed in the honu' market, and of raising, as a i-eaction, the price of exported
products, they will tend to determine a disequilibrium of exchanges — that is to say,
a rate of exchange which de])arts froTu tht> relation between the general price-levels
on the home markets. But here also we must not restrict ourselves to considering
the queslion frcuu the point of view of one comitry only. Controlled prices can only
have an eflVct on the exchange rales between the luouisy of two countries if they
have more influence on prices in one country than in the other. If they have more
influence in the country where the currency is more depreciated, it may be admitted
that they conti'ihule to determining in that country a general level of prices which
is relatively lower lliau thai whirli luight lie expected from the rate of exchange.
It should lie noted I hat in |)ratlice it is not possiiile to measure the general
level of prices by the weighted averages of all tlie price's of all transactions. Often
the average of the cost of living is substituted. 'I'he two indices may be quite diflerent.
If the cost of living bo taken as a measurement, the controlled commodities make
themselves felt with much greater weight, particularly when it is a question of the
cost of living for laboiu-iug families. If the rate of exchange is compared with the
relation between the cost of living in two countries, the disequilibrium of the exchange
may then be exaggerattul by I'eason precisely of the nuu'e marked influence of the
controlled prices in the country witii depreciated exchange; but this is only an
— 0/ —
illusion resulting from the inaccurate method adopted for the measurement of the
general level of prices.
{") The relation between the utilities attributed to two currencies depends
clearly also on the relation between the supply and demand for each. On the national
market there is rarely a disecjuilibrium between the demand and supply of currency,
and when this disequilibrium occurs it is generally rapidly .adjusted, but this is
not so in the case of foreign markets.
It should be noted that among the circumstances which we have examined in
the preceding pages there are some, such as a lack of confidence abroad in the
stability and solvency of a State and the presence in foreign countries of notes which
there is reason to mistrust, which only play an important part in explaining the dise-
quilibrium of exchanges when there is a superabundance of the national currency
abroad. If, on the other hand, the national currency is scarcely sufficient to pay debts
due, foreigners use it for this purpose without paying any particular attention to
the political and financial conditions of the country, and it is not probable that
any appreciable quantity of the country's money actually remains abroad. In such
cases the excess of the supply of the national valuta above the demand represents a
concurrent factor of the disequilibrium; but it may also have an independent
influence, as we shall have cause to observe.
The factors influencing supply and demand of a valuta, already complicated
in normal times, have become still more complicated in the exceptional period
following the war. In determining the mass of imports and exports, importance
attaches to-day not only to the quantity of foreign goods which the country desires
to purchase in foreign markets, and the quantities of goods available at home
and demanded from abroad, but also to the regime of commercial restrictions
which may definitely favour imports as compared with exports, or vice versa.
Generally speaking, the countries in which the currency is depreciated place a bar
upon certain imports, particularly those of luxuries, but the effect of such measures
may be considered as a rule to be more than counterbalanced by the effect of the
prohibitions on the export of other goods, notably of foodstuffs, thus tending to
prejudice the relation between supply and demand of the national currency in the
foreign market. The payment at home of revenues in foreign currency acquired
outside the territory of the country and belonging to nationals or corporations of
the State or to the State itself, and, vice versa, the payment abroad of incomes in
national currency acquired in national territory and belonging to foreign indivi-
duals or corporations or to other States, is influenced by the fiscal system, and
since this has, or may seem to have, a tendency to become more burdensome in
countries where the currency is depreciated, it constitutes another circumstance
which tends to have a deleterious eflect abroad upon the relation between the supply
and demand of the most depreciated valuta. At the present time, in fact, the
appreciated valutas may assume a special importance independently of their power
to procure foreign goods, in so far as they are applicable to the payment of indem-
nities to the enemy, or represent continuously a safe investment as compared with
the national currency, whose actual value decreases with the fall of the exchange
(in countries such as Austria, which have little faith in their future, there is conse-
quently a great demand for them), or, as representing a safe investment abroad
which, while paying interest, is protected from predatory taxation (this is the case
when national capital is exported from the countries where there are grounds to fear
a capital levy or other severe fiscal measures, and is converted into foreign cur-
rency; the amount realised is then deposited in foreign banks or used for invest-
ments abroad). And it must be realised that countries with the most depreciated
currency are precisely those which make a greater demand on more stable currency
for this purpose. Various circumstances, therefoie, tend to make the relation
between supply and demand on the foreign market react unfavourably on the
most depreciated currency.
It must certainly not be forgotten that other circumstances can tend to an
opposite elTect — for instance, if foreign capital were to seek investments in securities
O'
8
or in other national property, or should tend to accumulate national currency for
speculative purposes, or, finally, should favour the opening of credit to private indi-
viduals or to national corporations or to the State. Now, it may be that the foreign
market, having confidence in the improvement of the currency or the securities
of a nation, or in its economic development, may adopt such an attitude, but it
is clear that tliis state of affairs can only arise in exceptional circumstances — above
all, at a time when the exchange of the country has been depreciating for some consid-
erable period. Indeed, the greater and more prolonged the depreciation in the
exchange the more difficult it is to count upon a rise in I he near future, and the
more speculation is discouraged. For a long time jturchasers were found for
Austrian crowns, but now no one wants them; and the situation in regard to
the German mark is the same. Moreover, the more a currency is depreciated the
more drastic must be the financial measures which — as it is reasonable
to anticipate — are required to adjust the budget, and the smaller the encourage-
ment to foreigners to invest. Some other circumstances, finally, such as the
influx of foreigners in countries where the currency is depreciated, and where the
cost of living is low, have certainly the effect of diminishing the excess of supply
of national currency on the foreign market. But this is usually of secondary
importance.
Normally, therefore, it is to be expected that the relation between supply and
demand on the foreign market will react unfavourably on depreciated currency —
above all, if the depreciation continues, thus tending to strengthen the disequi-
librium in the exchange.
I have not yet referred to the disturbances which occasionally occur in the
exchange market by reason of the sudden offer of a great quantity of the country s
currency, either as a result of a shaking of confidence in the future of a currency
(or, more generally, in the future of the country itself) and of the panic which then
occurs among foreigners who have accumulated the said currency, or as a result
of an operation which aims for political purposes at provoking artificially such
disturbance's and such panic in order to discredit the country itself. Moreover, it
will probably be the most depreciated currencies which will suffer from these
disturbances; not only because such currencies are most easily discredited, but
also because it is of the most depreciated currencies that the largest stocks exist
abroad and because for several of these currencies there are hardly any markets at
all, so that a sudden offer of a relatively small amount is sufficient to drive their
exchange down to a noteworthy extent.
{h) Another class of circumstances — in my opinion of great importance — arises
from the inertia of prices. By this I mean the fact that, when the exchange rate
between two valutas changes, for reasons apart from their relative purchasing
power in their respective home markets, prices also vary correspondingly, but not
at the same rate and only after a certain delay.
Let us suppose that, owing to the growing lack of confideni'e abroad in the eco-
nomic solvency of a State, or owing to the persistence or growth of a deficit in the
balance of its payments, or owing to the announcement of an increase in
circulation, orofpoliticaltrouhles, its exchange, which was formerly, let us suppose,
three to one holow par, has fallen within a few months to six to one.
If a merchant lias p\irchased abroad certain goods for a sum of 100 a few-
months ago, to-day, owing to the subsequent depreciation in the exchange, he
would have to pay in the currency of the country, 200. He will certainly not
place his goods on the market at the price of 100 plus .r, i.e., the amount necessary
to repay interest on the capital during the interval and the expenses of the
operation - but he will not even place the goods on sale at 200 plus .r. Such a
course, however, is ofti'ii imposed by an olficial fixing of prices, but this does not
afTord a complete explanation, for the fixing of maximum prices, if the price of
certain goods is thereby lowered, causes, as wc have seen, the prices of non-con-
trolled goods to increase still more. fliis plicnonienon occurs independently of
all fixing of |)ri(^es as the result of a certain cautiousness which, perhaps
uncdnsciously, is displayed by all merchants.
— 59 —
Certainly if the merchant who has borrowed 100 in order to purchase goods
months ago had to repay, apart from interest, no longer 100 but 200 at the moment
of sale, this state of affairs would not arise; but since his debt does not vary nomi-
nally with the variation in the exchange, in practice the merchant is content to
realise a price which is lower than the cost of a further supply of goods, from abroad
at the moment when these are sold, because even in this way, when he has repaid
the capital borrowed and paid the interest, he will still be able to realise a consider-
able profit. It is true that, when the level of prices rises, the rate of interest is,
or at any rate should be, higher, if it is not artificially controlled, but the difference
is certainly not sufficient to compensate for the diminution in the purchasing power
of capital in the home market, which arises from the increase of prices, and still
less for the diminution of its purchasing power in the foreign market, which
arises from the depreciation of the exchange.
The goods, however, which the merchant purchased abroad at the existing
rate of exchange will naturally come to be sold on the market at a subsequent
period at a price which, compared with the actual selling price, is increased in
correspondence with the increase, in the national currency, of the price of their
purchase abroad. But it is possible that at that moment the exchange will have
subsequently depreciated in such a way that then also the rise in prices, as
compared with the original situation, will not correspond to the degree of
depreciation of the exchange. The increase in the price of imported goods then
feels to the full extent the influence of the deterioration of the exchange, but
only after a certain period of time.
Home-produced goods, of which all the component elements are supplied
from the home markets, do not, on the other hand, feel directly the influence of the
depreciation of the exchange; but at a later period they none the less increase
in price, because consumers avoid imported goods, which are dearer, and turn
to home-produced goods, which are cheaper, so that equilibrium is re-established
between the demands and the prices. The influence of the depreciation of the
exchange upon such goods is felt much more slowly.
Finally, goods which are produced at home, but partly from materials acquired
abroad (raw material, tools, etc.), are affected to an intermediate extent. The
influence of the depreciated exchange is then felt directly on the cost of those
materials which are imported and indirectly on the cost of materials which
are home-produced.
In such cases the divergence between the home selling price and the cost of
the imported article can be such that there is a profit to be made by purchasing
the goods in the market of the importer and re-importing them to the market of
the exporter. Thus in Italy there was a certain period when Gillette razor
blades, originally purchased in England, were sold at a price so much lower than
that at which, at the current rate of exchange, they could have been purchased
in England, that purchases were made on a large scale for the purpose of
re-exporting to London, where they were sold at much higher prices. In order
that there may be a profit in such operations, it is naturally necessary that the
difference between the home price and the cost of purchasing abroad shall be so
great as to compensate for the cost of transport and the possible duties imposed
upon the goods. It is naturally only in exceptional cases that the difference is
sufficiently great; but without reaching such a point it may be considerable.
There was a long period during which many articles were to be purchased in the
Italian markets at a price lower than would have been possible for goods newly
imported. Merchants were therefore able to state with certainty that goods
which were arriving would soon be sold at a higher price, and this was one of the
circumstances which led consumers to make purchases at once. A similar state
of affairs was probably noticeable in many other countries. As regards home-
produced goods, and in particular foodstuffs, the difference between prices on the
home market and prices on the foreign market may become still greater, not only
because prices in the home market only feel the effect of a depreciation in the
exchange more slowly, but also because prohibitions on exports, and the
— 60 —
perishable nature of certain products, prevent the direct action of the compen-
satory forces.
It is this process of adjustment which often leads economists to state that,
if conipi(!te free trade were the rule, the exchange between two countries would
tend to correspond with the level of prices oh the two home markets. These econo-
mists point out, indeed, that if the level of prices in one of the two countries comes
to be lower than it should be, in comparison with the exchange rate, the valuta
of this country which is held abroad will flow back into the country, by means
of purchases which are elTected at a cheap rate, until perfect equilibrium is arrived
at. In reality, as has been seen, perfect equiiilu'iiiui, even with complete freedom
of trade, cannot be attained, because of the cost of transport and the perishable
nature of certain goods. Equilibrium would, in any case, only be attained after a
more or less long period, which might in practice be of great importance. But it is
essential to note that this interval may be prolonged indolinitely, if the cause
which gave rise to the disequilibrium is a persistent one. If in any one country
the urgent need for imports continues to be greater than its capacity for export,
or if the lack of confidence felt by foreign markets in its political stability
and solvency becomes more pronounced, it may well happen that the
depreciated level of prices in the home market of the country does not enable
it to secure, even though trade bo unrestricted, sufficient valuta to re-establish
equilibrium in the balance of payments. In such a case the compensatory
forces do indeed operate, it is true, but only to an extent insufficient to re-establish
equilibrium, in face of the persistent recurrence of the causes of the disequi-
librium; the rate of exchange grows worse, and the divergence between the
rate of exchange and the relation between the rate of level of prices persists,
and may even become accentuated. That has happened for a long period.
The low prices at which goods could be purchased by foreigners in Poland, Austria
and Portugal certainly stimulated export, but not to a sufficient extent to com-
pensate for the imports necessary to the country; thus the amount of money belong-
ing to these countries in foreign markets grew steadily greater; these markets —
also because of growing lack of confidence in the Government of the countries
referred to — retained such valuta with increasing want of confidence; the rate of
exchange grew worse accordingly, and the difference between it and the level of prices
persisted. It is no doubt true that the artificial restrictions have increased the
difiiculties, but it can scarcely be admitted that without tht^se measures the com-
mercial balance could rapidly have recovered its equilibrium.
It should bo observed that \\\u'u I speak hero and in the previous pagerj of
"artificial barriers to exportation", of the "exporting capacity of a country" and
of the "maximum of commorcial freedom", I refer to the cxpoilaliou of and the
trade in conuuodities other than gold; th(> circulation and export of gold are subject
to such general restrictions in Europe that it would bi' impossible to ignore them
without losing touch with realities. But it is nevertheless easy to imderstand that,
even if the circulation and export of gold luul been completely free, the disequili-
brium (if exchanges could not thereby have been prevented, though it would have
been delayed.
lu'onomisls observe in this connection that if there were complete freedom of
export of gold between two countries, the rate of exchange betwecui their currencies
coidd not depart from the reflation between (he levels of the prices on the home
inarkols fnrtlicr than I lie distance represenl<'d by the cost, of transport, of gold
from one country to anollioi'. If the valuta of one of these countries is at a premium
on the basis of this relation, the nationals of the other country who re(]uire this
valuta will gain iiy buying it (udy up to tlio point where thi> promiuiu is not more
than the expense inciu'red in the dis|)alch of the correspoiuling quantity of gold.
But this supposes that lluuc is sufficient gold available in the country to meet the
deficit of the balance of payments. Now if we examine the gold available in the
various countries and lln^ ronditiou of their balance of payments during and after
the war, it is evident that, at any rate in the case of the majority of the countries
with depreciated currency, even the whole of the gold at their disposal would have
— 61 —
been insufficient to meet tlie deficit of tiicir balance, except for a limited period,
afte^ which the disequilibrium of exchanges would have inevitably appeared.
Neither could one count upon attracting foreign capital by raising the bank
rate. Even in normal times the rate would have to be very considerably raised to
achieve this result, and during the war it was considered necessary to avoid any
excessive raising of the rate of interest in order not to discourage industry; further-
more, even assuming that there had been no uncertainty in regard to exchanges,
the uncertainty of the international situation and the lack of confidence in other
countries would, no doubt, have been sufficient to drive away foreign capital.
It might be maintained in reply that, after the disequilibrium had become
apparent, gold would have returned, if it could have been freely exported from the
countries whose currency was sound and standing at a relatively high level to the
countries whose currency was depreciated and standing at a relatively low level,
and that this would have given further proof of the effective working of the mechanism
of compensation of which we have spoken above. But it would seem difficult to
admit that this would have taken place to a sufficient degree. For the reasons which
we have shown in the preceding pages, countries with sound exchange do not make
sufficient purchases in the countries with depreciated exchange to re-establish the
equilibrium, even though they can now use for the purpose the valuta and paper
money of which their markets have a superabundance. How, then, can we believe
that they would have decided to do so to a sufficient extent by exporting gold ?
As a matter of fact, the United States have raised the prohibition on the export of
gold since the month of June 1919; the level of prices reduced to the same monetary
unit on the basis of the exchange was higher in the States from the months of July
and August than in the majority of the European countries, and possibly than in
any European country; and nevertheless in 1920 the imports of gold from Europe
to the States were not only not less but were, in fact, greater than the exports
from the States to Europe.
It must be noted that, if the mechanism of compensation were sufficiently
active, the rate of exchange, setting aside accidental oscillations, would become
stabilised.
Afterwards, when the rate of exchange is stabilised, the difference between
it and the relation between price levels in the national markets tends to disappear,
both by the action of the process of adjustment referred to above, and because the
circumstances which tend to produce this difference cannot then persist, and their
influence tends to disappear.
The effect of the greater sensitiveness of the foreign markets and the inertia
of prices presupposes the fact that the exchange is getting worse. On the other
hand, these factors only cause a delay in the rise of prices; the latter, when the
depreciation of the exchange has been arrested, tend at length to reach a level
corresponding to that determined by the rate of exchange.
With a stable exchange rate, a diminished confidence in the country's valuta
in foreign markets may exist for a time; this is due to lack of confidence in the
stability and solvency of the country in question. But it may be understood that
after it has become evident that the level of the exchange has not depreciated for
a long time, such a lack of confidence must gradually disappear.
The presence among the national currency held abroad of considerable quan-
tities of false notes which cannot easily be detected has an effect which cannot
be removed by the stabilisation of exchange alone, but which tends to diminish
with the equilibrium of the balance of payments, an equilibrium which, moreover,
is normally a condition of the stabilisation of exchange. The disappearance of the
deficit in the balance of payments affords, in fact, more frequent opportunities for
the national money held abroad to return to its own country; in this way the false
notes are circulated on the home market and this tends to place the national currency,
from this point of view also, in the same position on the home as on the foreign
markets.
The excess of the supply of the currency of a country over the demand in the
foreign market is most marked, as has already been shown, when the exchange
— 62 —
of that country is falling, and since this has a ciiinulative eflect, it si ill further tends
to lower the exchange. Its effect differs, however, from that produced by. the
causes referred to previously, inasmuch as it does not automatically disappear
even when the causes have ceased to exist. When the excess of supply over
demand disappears and the exchange is steadied, the difference between the latter
and the level of prices does not immediately disappear: compensatory machinery
has to be set in motion in order to remove it. Where this is interfered with by
prohibitions or restrictions on international trade, the correspondence between the
rate of exchange and the level of prices is thus restored more slowly.
On the other hand, these commercial prohibitions and restrictions, duties on
exportation or importation, and controlled prices, in so far as they limit in a unilateral
manner the utilisation of the currency by foreigners and increase the cost price
for foreigners, render the rate of exchange less favourable than the relation between
the levels of prices. This result, and the other which arises from the fact that
certain series of notes are not recognised as valid in the foreign exchange market,
have a static and not a dynamic effect, and, unlike the effects of the other circum-
stances referred to, their consequences remain even when the exchange has
become stabilised.
We can conclude with the following propositions:
When speaking of the parity of purchasing powers or of the relation between
price levels as the condition of the equilibrium of the exchange, it is necessary to
make quite clear what is understood by th^se rather vague expressions.
The important factor in the determination of the rate of exchange is not exactly
the general level of prices, that is to say the average prices realised by all the trans-
actions into which money enters, and still less the cost of living; it is the average
of the prices of goods and services which are taken into account in the balance of
international payments. If, as is generally done, the relation between the general
price levels is regarded as the condition of the equilibrium of the exchange, and still
more if, as is often done, the general level is deduced from the cost of living, a per-
manent disequilibrium of the exchanges results every' time that controlled prices,
or other similar measures which play a greater part in one .State than in others,
cause the raising of the prices of the goods and services which are taken into account
in the balance of international payments as compared with the goods and services
which serve the home markets.
It should also be remembered that the important factor in determining the
rate of exchange is not exactly the relation between the prices paid on the home
markets by nationals, but, in the case of goods and services paid by country A to
country B, the relation between the prices in national currency which the nationals
of country B would have to pay to produce them on the home market, and the
prices in foreign valuta which they pay (after paying all the export and import duties,
the co-efTicients of increase, the expenses of transport, etc.) if they buy them abroad.
It follows that if we regard as the condition of the equilibrium of the exchange the
relation between the price levels paid for goods by nationals on the home market,
we observe a permanent disequilibrium of the (>xchange whenever prohibitions of
or restrictions on exportation or on investment, or whenever special duties, or special
transport charges, or similar measures, which play a greater jiart in one .Slate than
in others, have the elTect of restricting the field of utility of the national valuta for
foreigners, or raising for foreigners the level of cost prices.
Setting aside these causes of the disequilibrium of the exchange (and it may be
further asked if the disequilibrium in this case is not merely an apparent disequili-
hnuMi, in that it arises from a vague conception of the condition of e(]uilibrium of
the exchange) it may be maintained thai when the exchange between two States is
steady, or at least has not a constant variation in one direction, the relation
between the level of prices tends to conform to the rate of exchange, the rapidity
and completeness of this conformity being dependent on the freedom of trade, and
the activity of the international exchanges.
When the rale of exchange between two States has a constant variation in
one direction, and such variation is not determined by the previous variations
- 63 -
in the level of prices, the relation between the level of prices varies in the
same way; their variation is, however, slower and less intense, and then the
level of prices, expressed in the same currency, remains lower in that State
whose currency is the more greatly depreciated. The equilibrium only tends to be
re-established when the constant variation of the rate of exchange ceases, and
a state of affairs is reached similar to that previously mentioned.
Finally, when the level of prices varies in one of two States, and such variation
is not determined by previous variations of the rate of exchange, the exchange
tends to conform immediately to the new relations between the level of prices.
The latter case is, however, rare, and need not perhaps be considered ; it can
only, in fact, occur when the variation in the level of prices is brought about by
unforeseen contingencies. If, on the contrary, such contingencies are foreseen,
the rate of exchange falls before their effects are felt on the level of prices by reason
of the greater sensitiveness of the foreign market, and a result is reached similar
to that arising from our former hypothesis.
The above propositions explain the lower level of prices which exists in countries
whose currency is much depreciated. On the one hand it arises from the circum-
stance that it is not either the general level of prices or the cost of living which
must be regarded as the important factor in determining the rate of exchange,
but rather the prices of the goods and services which are taken into account in
the balance of international payments. This inferiority, therefore, is seen to be
more marked in the countries such as Germany, where the control of prices
is more efficient and foreigners have most to reckon with co-efficients of increase which
raise the prices of the goods and services which are taken into account in the
balance of international payments in comparison with the general level of prices
and of the cost of living within the country.
On the other hand this inferiority does not, properly speaking, depend
on the actual depreciation of the currency, but on the progress of such deprecia-
tion over a long period of time. If such a condition continues to exist, even in
States in which the exchange has remained steady for some time, the reason lies
partly in the fact that the lapse of time has not been sufficient to re-establish
the equilibrium; for, as has already been remarked, in the case of goods of home
production, the lapse of time necessary for such re-establishment is considerable.
Generally speaking, prices in countries whose exchange has not for some time
been subject to a constant variation are already notably higher than those in
States whose exchange continues to fall, or has only recently ceased to do so.
The disequilibrium of the exchanges, that is to say, the lower relative level
of real prices in countries whose currency is depreciated, is a characteristic
feature of post-bellum economies. Doubtless certain differences of prices existed
even in pre-war days. In rich countries, where purchasing power was greater, and
in cities, where demand was higher, prices also were notably higher. But this was
merely a result of the balance of supply and demand. To-day, on the other hand,
prices are higher in certain countries than in others although such a result may
not be due to a greater demand.
The differences of prices in pre-war days represented a balancing factor and
corresponded with an approximative agreement between the rate of exchange
and the monetary parities; the differences in prices to-day are, on the other hand,
the expression of an economic disequilibrium which persists throughout the world.
What essential differences from the economic point of view have then occurred
between pre-war conditions and the present conditions which permit of the contin-
uation of this disequilibrium ? In the preceding pages we have analysed the factors
which were an immediate relation to the disequilibrium of the exchanges; in endea-
vouring to reply to the question which we have just raised we shall endeavour to
throw light upon the more deeply seated causes.
These causes may be grouped as follows: —
(a) The excess in many European countries of the urgent need for foreign
goods over the goods which the home market can offer to foreign trade. This
— 64 —
is I lie fiindamcnlal cause. This is the direct source of the disequilibrium between
the demand and the supply of foreign valuta; and indirectly all the causes
which are shown under the following headings {b) to (/) also derive from this
source in a greater or a less degree.
(b) The adoption in nearly all the countries of the world of paper money
not convertible at sight, that is to say, of a fiduciary circulation which is not
accepted for payment except in the country of issue. Such currency is not
only a medium of exchange but it also has the character of an instrument
of credit, the payment of which, however, remains within the power of the
debtor. Confidence in this payment is clearly to a large extent subjective;
it is this subjectivity which gives rise lo the different valuations of the valuta
on the part of foreigners and nationals. The adoption of fiduciary currency,
moreover, renders possible the manufacture of money which is only valid for
home payments and makes forgeries easier and more remunerative, with effects
upon the disequilibrium of the exchanges which we have noted abovi The fact
that tlie currency is not accepted outside the country of issue makes it useless
as a normal means of meeting the deficit of the balance of payments or of
preventing or correcting speedily the disequilibrium of the exchanges. Paper
money is sometimes accepted, it is true, by foreign speculators, but as it cannot
circulate abroad it weighs heavily upon the rate of exchange, or at least it will
weigh heavily at the moment when the speculators replace it on the market.
(c) The impossibility, or at least the difficulty, of exporting gold from
countries with depreciated exchange. When there is a disequilibrium in ex-
changes the mechanism of compensation cannot operate by means of the
transport of gold from the country where the price of gold is relatively low
to the countries where its price is relatively high. The compensation can only
be effected by more expensive or slower means, such as the exportation of
other goods, or the sale abroad of securities or real estate, or by the emigration
of the population of one country to another.
(d) Commercial restrictions, such as hindrances to the exportation of
goods from countries with depreciated exchange, and the duties imposed
on such goods, — hindrances and duties imposed either by these countries or
by the importing countries; as well as all the hindrances to the purchase of
securities or real estate by foreigners, and all the measures and tariffs which
increase directly or indirectly the cost price of property purchased by foreigners
as compared with the prices of property purchased by the nationals of the
country.
These restrictions render tin; action of tlie mechanism of compensation
more (iifficult, slower and more onerous, and therefore less efficacious. Further-
more they accentuate the difTerences between the uses of money by foreigners
and by nationals, and in tiiis way, wlien they have more effect in one country
tiian in another, they contribute, as we have shown above, to the disequili-
iiriuni of the exchanges.
((') Restrictions on international emigration movements, cither emigra-
tion lo the countries with depreciated exciiaiige on the part of rich people
who spend more than they (uu'u, or emigration from these countries on the part
of workers who save more abroad than they can do in their own country and
send their surplus earnings home. These restrictions accentuate the defi-
ciency of the balance of payments and hinder the operation of the mechanism
of comptMisalion.
(/) 'I'he fear of a subsequent depreciation of the already depreciated
currency of a country or the fear that the country's economic conditions may
become worse, or that the fiscal burdens may become heavier. This tear acts
as a deterrent to foreigners wiio might desire to buy tiie country's valuta for
purposes of speculation or lo invest in the country's securities or real estate,
or to furnish credits to the country's industries. Hence arises a new dilliculty
ill the working (it Ijie ruerlianisin of compensation. If the nationals share this
— 65 —
fear, the national capital also flies abroad and there is a tendency for nationals
to buy foreign stocks and valuta, which causes an accentuation of the deficit
in the balance of payments.
(g) The more or less justified fear entertained by rich people who wish
to travel in, or emigrate to, certain countries with depreciated exchange that
their personal safety is not secure. In certain extreme cases a similar fear may
affect the rich people of the country itself, who emigrate in consequence.
These circumstances have results similar to those pointed out under heading (/).
The emigration of rich people from a country does not, however, contribute
to an accentuation of the deficit in the balance of payments unless they continue
to draw abroad the revenues which they previously drew within the country.
(h) The difficulty of anticipation (which to-day is incomparably greater than
before the war) of future movements of prices in the various countries and of
the economic and political future of the various States — circumstances which
give a quite special importance to the greater economic sensitiveness of the
exchange market as compared with the home markets for other goods.
(i) The importance of variations in the exchanges. These variations
destroy any hope of limiting the disequilibrium of the exchange by attracting
foreign capital by means of an increased bank rate. The variations in the
exchanges which occur from week to week, or even from day to day, sometimes,
in fact, exceed — as has been well observed — the amount of the profit which
could possibly be offered to the said capital. If the variations of the exchanges
occur for reasons different from the reasons which cause the variations in the
price levels, they have another important consequence. Because, in practice,
when prices vary, the selling price of goods does not correspond exactly to
their cost of reproduction but is half-way between the cost of production
and the cost of reproduction, the result is the phenomenon of the inertia of
prices which we have examined.
(/) The necessity of paying indemnities to enemy Powers, or of paying
to Allied Powers or neutrals the debts or interests which are the heritage of the
war. I mention this cause last because, in practice, no important payments
under this head have yet been made by the Powers with depreciated exchange,
except by Germany, and that only to an amount which is not yet very great.
After having analysed the causes of the disequilibrium of exchanges, let us
examine their consequences. These are of capital importance, both in relation to
production, to international trade and to unemployment. To-day the countries
with depreciated exchange can, since the prices of their foodstuffs, home
products and manual labour are lower than those in countries whose currency
is normal, produce the same goods for export at a lower price, and are thus in a
favourable position to compete in international markets. Such a condition does
not materially affect the trade of countries whose currency is normal, as long as
supply is just equal to, or lower than, demand, as was the case in the last crisis.
But it may be of the greatest importance at a time when, as now, there is a notable
crisis of markets. It contributes itself moreover by its influence to the accentuation
of the crisis of markets. It is for this reason that the crisis to-day assumes the largest
proportions in countries whose currency is normal, such as the United States,
Sweden, Switzerland, England, and in others to a less extent. Those countries,
on the other hand, whose currency has become still further depreciated, such as
Poland, the Baltic States, Portugal and Austria, are, one may say, unaffected by
the crises of markets, and if a certain measure of unemployment exists in them,
the reason is furnished by other circumstances; in the Baltic States, for example,
by the number of workers repatriated from Russia who have so far been unable
to find work, or in other States by a legislation which tends to favour unemployment.
The favourable conditions brought about in certain countries by the deprecia-
tion of their currency have given rise to a question as to the advisability, under
present economic conditions, of a policy of progressive depreciation of the currency.
Such a policy has been recommended in the case of Switzerland, and many consider
that it is deliberately practised by Germany.
5
— r.G —
Whether such a policy has been deliberately adopted by Germany is difTiciilt
to decide; it is, however, certain that in Germany the currency in circulation
increases, the sale of notes abroad continues, and the exchange falls: and that these
circumstances tend to keep prices, and therefore cost of production, expressed in
the same money, at a lower level, thus securing an advantage in foreign markets
and preventing unemployment.
It is clear that such a policy cannot continue indefinitely, since, when the
demand is no longer below the supply, the advantages enumerated above cease to
exist, while the losses resulting from inflation remain. For thi reason the condi-
tions of Germany were particularly difhcult when the last crisis of insufTicient pro-
duction was at its height. Whilst, on the other hand, a lack of markets exists,
the advantages derived from a policy of inflation may well be greater than its disad-
vantages.
The extent of such losses must not, however, be exaggerated. The economists
who have so rigorously opposed the policy of inflation practised by countries, although
they were right from many points of view, have at times allowed themselves to be
drawn by their zeal into exaggeration on this head. Theoretically it would be quite
easy to conceive a State so regulated that an inflationist policy would not produce
appreciable loss.
The first and most important disadvantage to which it would be liable is,
in fact, that of the uncertainty which would attach to all contracts and all financial
estimates. Such uncertainty could, however, be avoided by a regulation of the
issue of paper money, calculated to produce an almost constant increase of prices.
Before the war we were, in fact, accustomed to a period of almost steady prices,
and this was a further reason why our economic life was thrown into confusion by
the rise of prices during the war; but, theoretically at least, if prices vary in a
manner which can be measured, provision can be made with the same certainty.
The system of a sliding scale, based on the level of prices, which has now been put
into operation, may be also used to correct, to any extent, the influence of the varia-
tions in the purchasing power of money. It may indeed be applied, not only to
salaries, but also, as was proposed long ago, to all taxes and contracts. Should the
policy of inflation be adopted at a moment when the level of prices in the world
market is falling, it may prevent or retard the fall of prices in the State which
adopts it, and thus may be regarded as a factor of stability.
The other drawback which results from the policy of infiation, when such a
policy brings about a rise in nominal prices, is the levying of a kind of tax on all
holders of capital or creditors and on all possessors of fixed incomes, or incomes
which cannot immediately expand in relation to the rise of nominal prices. Such
taxation is all to the advantage of debtors, business men and those who
have to pay these incomes. Among these are employers if, as often occurs, wages
adapt themselves only slowly and incompletely to the general level of prices. Such
injustice could, however, only arise if the various classes of the population were
equally affected by taxation; but it is easy to conceive of a system of taxation
which would weigh less heavily upon the classes which suffer from the inflation of
the currency. In such circumstances, this effect of the inflation of currency is not
incompatible with the equalisation of burdens, but is a corrective to the system
of taxation. It may be added that, for various political reasons, a system of
disguised taxation on holders of securities, bonds, and capital, and on workers,
may be preferred to an open system of taxation; whilst it may be advanta-
geous for the nation to stimulate enterprise, even if such a result can only be obtained
at tlie jjrice of inequality of taxation. When the level of prices falls, the |)olicy
of inflation, by preventingor delaying the fall, prevents or limits automatic realisation
of profits by creditors, holders of capital, seciu'itics and bonds and by the possessors
of fixed incomes, and minimises or eliminates the difficulties of employers; such a
result cannot be said to be for the moment injurious.
In practice the disadvantage of a policy of inflation, adopted by a State which
is in financial difiicult-ies, may, according to circumstaiHcs, be more or less serious
than those which it would incur if it followed a dilTerent financial policy.
— 07 —
In considering the present condition of Germany, it will be seen that many of
the above-mentioned circumstances calculated to minimise the losses on the issue
of paper money, or to turn them to momentary advantage, are more or less present.
So that, whether the policy of inflation be carried out deliberately or no, whether
it be adopted for the benefit of the whole nation or for the benefit of a single class
of persons, particularly influential as regards the economic policy of the State, it is
certain that it may be adopted with advantage to Germany under present economic
conditions.
A financial deficit may result, since the depreciation of currency is more likely
to increase expenditure than revenue. This may certainly be remedied by the
adoption of a more elastic system of taxes, if not by the actual adoption of the
principle of the sliding scale in this matter also. But it is doubtful whether the
German statesmen really wish to balance the budget, or whether they do not
rather consider that the political interests of the country demand a display of
serious financial difficulties in the face of the neutral and ex-enemy Powers.
Even without considering such political contingencies, it is certain that the
particular advantage. which may be secured by a nation from a policy of inflation
does not correspond to general advantage in world economics. Indeed, the advan-
tage of one nation necessarily corresponds to the sacrifice of other nations, since,
owing to the crisis of markets, the exportation of one nation naturally diminishes
the possibilities of exportation for other States.
Another observation may be made, calculated to explain the close relationship
which would appear to exist between the depreciated exchanges, which sometimes
all fall at the same time, as a result of fresh issues of paper money on the part of a
single State. A portion of the new paper money is actually taken up within the
country or abroad by speculators, who, in order to purchase it, frequently sell paper
money of other States which they had previously bought. The supply of the paper
money of these States is thereby increased and the exchange consequently drops.
The present conditions of the exchanges are, therefore, economically harmful,
not only inasmuch as they prevent the furnishing of raw materials and foodstuffs,
and inasmuch as they place difficulties in the way of those remedies which might
be provided by international credit and by the adoption of a free-trade commercial
policy, but also in that they accentuate inequalities between the various nations,
some prospering by the loss of others.
It is therefore important from every point of view to endeavour to improve
this state of things.
Excluding the idea of an artificial regulation of the exchanges, which has been
shown to be harmful, in practice not less than in theory, at least in time of peace,
the only course is to attack the root of the evil and endeavour to obtain the re-esta-
blishment of a normal currency circulation. It is therefore advisable to return
to a circulation on a gold basis, such as was generally in use before the war. It is
clearly difficult for many States, and is certainly impossible for some, to return to
this method, at least in a short period of time, by means of the re-absorption of the
surplus paper money. It should be added that, even if the re-absorption was possible,
it would probably be harmful rather than useful, since it would give rise to a rapid
fall in prices or accentuate this where such a tendency is already existent; such a fall
in prices, always dangerous, would be absolutely disastrous under present economic
conditions.
A proposal has been put forward to introduce an international unit of account.
This would be an appreciated currency, in terms of which the contracts would be
drawn up, subject to the condition that, when the contracts lapsed, the payments
would be made in national currency reckoned at the rate of the exchange of the day.
Such a proposal was judged to be useless by the Brussels Financial Conference;
and this is indeed the case, inasmuch as an international unit of account already
exists in the form of gold or a currency such as the dollar, which is convertible into
gold. Certain countries, such as Poland and Latvia, have already had recourse
to this device.
— 08 —
An international unit of account is, however, useful in so far as it simplifies
accounts. Anyone who has been in the countries which have daily commercial
dealings in a dozen different currencies, from the Swedish, which is the highest,
to the lowest, will realise the extent of this advantage.
An international unit of account may also have another and more importantl
effect, which is to decrease the risk in contracts. If contracts are drawn up in the
money of the country, those concerned are liable to the risks caused by variations
in the purchasing power of the said currency during the period between the making
of the contract and its expiration; but if, on the other hand, contracts are drawn
up in the international unit of account the contracting parties are only subject
to the risks caused by variations in the purchasing power of gold. If the national
currency varies greatly, this second risk may be considerably reduced. For this
reason it will be understood that, wishing to offer reasonably secure guarantees
abroad, countries such as Poland and Latvia, where the purchasing power of the
national currency has rapidly diniinished, have been compelled to have recourse
to an international unit of account.
It will be understood also that prudent ministers of finance, who are obliged
to reckon upon safe revenues, have established their customs duties on a gold basis.
This was done in Latvia. The customs tariffs for imports and exports are valued
in gold francs and paid in Latvian roubles in accordance with the rate of exchange
of that day on the London Stock Exchange. The application of this system to
the taxes is under contemplation. Finland and Lithuania propose to follow this
example.
The introduction of an international unit of account would reduce the diffi-
culties caused by the fluctuations and systematic variations of the exchanges, in
so far as they depend on paper money, but it would not obviate the difficulties,
possibly more serious, which arise from the disequilibrium of the exchanges. These
difficulties, however, might be avoided by the elTective introduction into circulation
of an international currency — either a gold ctu-rency or a currency convertible
into gold — which would be destined for international trade and which would take
its place by the side of the national currencies destined for internal exchanges. There
woidd naturally be nothing to prevent traders of any country making their contracts
in an international currency, and there would also be nothing to prevent the nationals
of different countries establishing their contracts in a national currency. But,
with such a system in operation, the rate of exchange between two national currencies
would correspond to the prices at which, in the national currencies, the interna-
tional money could be purchased in the markets of the two countries. It would
always be possible to buy international currency with a national currency and to
exchange international currency for another national currency. But international
currency, if equitably distributed, would not have any systematically different
purchasing power in the two countries, so that the relation between the price of
the international currency expressed in terms of national currency and therefore
the ratio of exchange between the two national currencies would tend to coincide
with the proportion between their purchasing powers, and the disequilibrium of
exchang(>s would in this way disappear.
Let us examine how the system would operate. F.very country would have
at its disposal a certain (piantily of international currency. If this were a gold
currency, the State would have to provide or aceiuire the necessary gold; if it were
only exchangeable with gold, the Stati> would hav(> to olTer guarantees consisting
of a gold reserve, or of securities of interiuitioiud value, such as oil-wells or taxes
and customs revenue. It is easily understood that the adoption of this pro-
posal presupposes that a balance of payments with other countries is possible,
•because otherwise the international currency would leave the country. It might
even completely disappear from the country, but before this point had been reached,
there would no longer he that equitable distribution of the international
currency which is the londilion of its possessing the same purchasing |)ower in
the various (■(uuili'ii'S and liius prevent iui;' ilisrciiulihriuui in the exchange, liul this
is not the luiiy hypotlicsis essential In tin' wnrking of the system, for if, in fact,
— 69 —
a large quantity of national money is held abroad, foreign holders will always be
able to put it on the national market and to acquire there by this means interna-
tional money in exchange, which they can subsequently export. To be sure, there-
fore, that the international currency will not leave the country, it would also be
necessary to re-absorb the national money which may be held on foreign markets.
But there is no guarantee that, when such an absorption has taken place, foreign
markets will not later acquire national money for the purpose of speculation, and
will not throw it back again upon the home market at a time of panic, and withdraw
the international currency in its place. In order, therefore, that the system should
operate without danger, it is also necessary that a fixed proportion should be main-
tained between the international and the national currencies.
It is conceivable that such a result might be achieved by well-timed regulation
of the issue and the re-absorption of the national money; but I believe that the majo-
rity of economists and business men, who distrust on principle and from experience
any unnecessary State intervention, would prefer to confide the maintenance of
the balance to the automatic action of economic forces. There remains the alter-
native of fixing the relations between the national and the international currencies
on the basis of their effective purchasing powers; but this amounts in fact to the
putting into operation of the scheme of substitution, or, as it is more commonly
called, of the devaluation of the currency.
According to such a proposal, the depreciated currency which is actually in
circulation would be replaced at the current rate of exchange by a currency exchange-
able at sight with gold. This exchange could only be permitted for international
payments or also for the currency in the interior. In either case it would natu-
rally be advisable for the State to provide itself with a certain gold reserve. This
should clearly be larger in the latter case, and for this reason the former seems
more advantageous. In both cases, however, certain conditions are presupposed,
for, in the absence of such conditions, the reserve would be quickly exhausted
and the former economic conditions would again arise.
Once the conversion has been effected, it will, first of all, be necessary to stop
any further use of paper money. Otherwise the paper money would certainly
tend to fall below the stabilised rate of exchange, and, consequently, holders of
such paper money would demand its conversion into gold, either in order to make
purchases abroad which would yield them a profit, or, on the latter supposition,
in order to obtain a more reliable currency.
Secondly, there must be equality, if not a credit surplus, in the balance of
payments, for otherwise all the gold would ultimately be exported abroad.
Thirdly, the State must possess a certain political solidarity and consequently
inspire confidence abroad and at home, so that holders of paper money may not
make an excessive demand for conversion in gold. It is even a question whether
previous withdrawal of the paper money abroad would not be expedient. For
foreigners only hold the paper money of a given country because they hope for
its appreciation. The substitution of this paper money by a new currency
exchangeable at sight for gold would exclude this hypothesis. It is safe to assume
that foreigner holders of paper money would then prefer to have gold which has
purchasing power in all countries rather than paper which has purchasing power
only in a foreign country, and which, moreover, can no longer improve in
value. If therefore the State has not previously withdrawn its paper money held
in foreign countries it must be prepared to convert into gold.
When the conditions enumerated above are fulfilled, the devaluation
of the currency and its conversion into sound currency is a measure which
is certain of success. As is well known, this measure has already been successfully
carried out in the past in Austria, in Russia and in the Argentine. It is to be
remarked that, when the above conditions are fulfilled, the exchange with countries
on the gold standard remains steady or improves, and, on the other hand, when the
exchange with countries with the gold standard does not fall for a considerable
period, it may be taken as a sign that the above conditions are present. The
devaluation of the currency can then be carried out.
It is considered by some that, in the present slate of the money market, such
a measure could only be carried out by a very powerful State, such as England,
or, in the case of weaker States, by a group of them; otherwise the gold reserve might
easily pass to foreign countries. This eventuality, liowever, when the above condi-
tions are present, could only be brought about by surprise, and it would be easily
prevented by entrusting the duty of exi'hanging the currency for gold to certain
fixed organisations. It is, nevertheless, evident that the measure would be better
carried out simultaneously by several States.
The advantage of such a measure lies essentially in its power to render fully
effective, by the introduction of circulation on a gold basis, the stabilising forces
of the exchange; under a regime of fiduciary circulation there, forces operate, as
we have seen, far less perfectly. Should the exchange have a tendency to improve,
this measure would also have the advantage of eliminating a factor of price variation.
Therein lies the answer to an objection which has been raised: that if the condi-
tions outlined above are verified, the disequilibrium of the exchanges disappears
of itself, without any necessity of recourse to the devaluation of money. The dis-
equilibrium of the exchanges would doubtless disappear, but more slowly. The
establishment of a gold standard woidd render j)0ssible a more rapid recovery:
this is an imjiortant advantage; the establishment of such a st-andard would,
moreover, prevent any further disequilibrium occurring in the future, which is,
perhaps, a still greater advantage.
Such a measure has been recommended by many, and among the first, I think,
in Italy, by the present writer, with the reservation that its execution was still
premature. It has, however, been opposed by those who, rightly or wrongly, hope
that the currency of their country will return to the normal by means of a gradual
re-absorption. Their argument is that a devaluation would be equivalent to State
bankruptcy. The objection is completely unfounded, since the holders of capital
do not really lose anything by the devaluation of State currency, which merely
changes bad currency into sound currency at the actual exchange values. It is
a merely nominal " devaluation'"; in reahty it is only a "substitution". The
only thing of which the State deprives the holders of capital is the hope of a
recovery in the value of the currency; and it is therefore evident that the measure
would meet with far greater opposition in a State in which the exchange was
improving than in a State in which the exchange was steady. The only serious
objection to the measure is that those who in the past have acquired currency or
public securities from the State, from which a fixed income in that currency is
derived, counted upon the maintenance of its parity when the currency was still
sound, or on its recovery when it was already depreciated. It may be replied
that, judging by past experience, they should also have taken into account the
possibility of an eventual devaluation and substitution of the currency, and that
they have no right to com])lain if this is again carried out. And, on the other
hand, it must be remembered that, owing to the rapidity with which currency and
bonds circulate, such valuta and securities would seldom be found in the possession
of those who originally acquired them from the State. But a more potent
argument, in my opinion, is that, in this case, as in so many others, every measure
has its drawbacks, and it is necessary to select from the various measures proposed
that which presents the least serious difficulties.
Whether it is justifierl or not, this question of State prestige does not arise ir
the case of new States which have inherited a depreciated currency and whose
citizens cannot ask the Treasury to assume the burden of the revaluation of the
currency. This is precisely the case in the Baltic States, in Poland, and in the
Austrian Succession States. For the Polish marks, moreover, no fixed value in
fact was placed upon them at their issue; if was simply declared that the xalue
would f)e subs((|ueiit!y determined by Parliament. II is llierelore clear that the
idea of a devaluation of the currency is in these 'elates considered as a perfectly
reasonable m(^asur(^ which should be carried out as quickly as possible. In the cose
of Austrie such a moasiire is lecommended by I he r'inaiicial Commission entrusted
with the financial reorganisation of that country. In the case of Poland the new
currency which is to replace the Polish nu»rl<s is already prepared and will be called
— 71 —
"ziotis" (golden): it is merely e question of finding a propitious moment to carry
out the substitution. In Latvia, the gold fran?, which at present represents merely
an interna*ional monetary unit of account, is destined to Le subsequently put into
circulation under the designation "Lat." Contracts are being concluded for the
manufacture of this money, which will probably be issued in a month s time.
As has however already been remarked, it is above all necessary to re-establish
equilibrium in the balance of payments, to re-establish financial equilibrium in
the national budget, to inspire confidence abroad and at home in the political stability
and in the economic solvency of the country so as to stabilise the rate of exchange.
Once devaluation has occurred, fiduciary currency held abroad must be
previously withdrawn by the State or else the State must be prepared to convert
it to gold.
This in itself shows clearly enough that the disequilibrium of exchange is not an
isolated evil; it is but a secondary evil, and at the same time the symptom of a
deeper evil undermining the whole economic and financial organisation of the
country. It may be possible to hasten the disappearance of the disequilibrium,
but, above all, it is essential to restore the organisation to normal health.
Some nations, such as Czecho-Slovakia, are already almost in a position to realise
the above-mentioned conditions. Others, such as Poland, :Vustrif , the Baltic States,
and probably Hungary and the Balkan States, are still more or less far from doing so.
In my opinion there is no reason to suppose that the majority, if not all, of these
States, will not in time find a way of improving matters.
It is considered by many that loans accorded to private individuals from abroad
would be of assistance in stimulating the import of raw materials and therefore
production, insuring thereby the economic reconstruction of the country and
fostering its future exports. But as we have seen, although loans for industries
of exportation are not lacking, loans for industries working for home markets
are impeded by difficulties arising from the instability of the exchanges. We are
therefore moving in a vicious circle: on the one hand, the stability of the exchange
is necessary to stimulate loans from abroad; on the other, loans from abroad must
be stimulated in order to re-establish the stability of the exchange. Some other
means of financial reconstruction must be found to break this vicious circle.
The method of breaking this circle and of arriving at that nnancial reconstruction
which is indispensable for the improvement of the currency is to be found in the
introduction of new taxation or in a revision of the former system and, if necessary,
in national or foreign loans. Economic conditions are such as to permit that these
measures may be carried out almost immediately and in all States; agricultural
production, which forms the chief industry in the poorer countries, is to-day
almost completely re-established; industrial reconstruction has also been efi'ected in
most of these countries on a fairly large scale; for the industries, on account of the
disequilibrium of the exchange, do not experience any serious difficulties as a
result of the marketing crisis from which the richer States suffer.
The difficulties with which the States whose exchange is unfavourable are faced,
not excluding Austria, are of financial rather than of economic character. In all
the Baltic States, in fact, and in Poland, the reorganisation of the financial admini-
stration was necessarily carried out by inexperienced personnel which had no prac-
tical familiarity with the work of administration, since in Russia it was difficult for
subjects of those countries to obtain public appointments, these being reserved for
Russians who have now returned to their country of origin. It seems that similar
difficulties are present to a certain extent in Roumania, whilst German-Austria
suffers from the opposite difficulties arising from a surplus of officials. The latter,
dismissed by other States at the dismemberment of the Empire, now constitute a
heavy burden on the State and municipal budgets and increase the defects of the
public services. In addition to the defects of the administration, there is often the diffi-
culty of finding competent technical authorities capable of dealing with the situatioii,
in the political parties in power which are themselves new to public life. Political
contests present another difficulty, since the politicians who are desirous of carrying
out' a sweeping programme of financial reforms cannot always or everywhere bring
such a programme to completion, for their opponents take advantage of it to raise
— 72 —
public opinion against them and expel them from office. This is especially the case
in Portugal in which, since it is an old-established State, the preceding difficulties
do not arise. The remedy, or partial remedy, for this difficulty may be found in
the appointment, in States which are faced with financial difficulties and whose
exchange is particularly unfavourable, of technical advisers selected from persons
of special competence to advise the ministers of finance to proceed with caution,
shield them from the suspicion of a one-sided policy and carry out in the various
States a plan based on a common programme. The duties of such technical advi-
sers would naturally be dictated in relation to the conditions and wishes of the various
countries.
The need for such technical advisers is so great that certain efforts have already
been made in this direction in the past: thus, in Latvia, an adviser was desired for
questions of credit, and in Poland steps were taken to obtain the services of persons
who would have acted in the capacity of technical advisers upon all financial ques-
tions. In Iceland itself, the measure has actually been carried out in the case of the
railways, the administration of which has been greatly improved with the help of
an American adviser. In other cases, various difficulties have arisen, either owing to
financial reasons — such, for example, as that of the high salary in national currency
which it would be necessary to give to foreign advisers, — or owing to political
reasons, it being undesirable that persons with an official position should appear as
advisers af Governments which are still in political conflict with neighbouring States.
Earlier precedents are, of course, numerous: England, by means of technical
advisers, has been able to direct the economic policy of several Asiatic States with
advantageous results to their economy and to her prestige. It would, however, be
difficult to-day for one State to have recourse to such a system since it might disturb
the existing international equilibrium in giving rise to jealousy and suspicion on the
part of other Great Powers and thus alienate their sympathies from the State which
had made use of the services of national advisers.
Such difficulties would perhaps be avoided if the appointment of technical advi-
sers were made by the League of Nations. They would then be considered as em-
ployees of the League, which should also provide a part of their salary. For example,
the States which made use of the technical advisers could allow them a salary in local
currency corresponding to the highest salary of local officials, whilst the Leagne
of Nations could, for its part, provide a special allowance. This would be the only
method of assuring the co-operative action of a common programme of the various
advisers. It would, moreover, ensure that these advisers did not, by reason of their
sympathy towards the country in which they are living or of deference towards the
Government which pays them, place the particular interest of the country before
the general interest, with which in certain cases that particular interest might,
as has been explained, find itself in conflict. The technical advisers would act in a
sense as members of a commission for the reconstitution of the depreciated cur-
rencies distributed in the various countries. By their distribution in various States,
their work would not only be simplified but its results would be improved, since, as
has already been seen, the introduction of a currency on a gold basis would be more
easily effected simultaneously in several States. The solidarity which links all the
nations in these matters, as we have already shown, justifies the fact that a part of
the advisers' salaries would be drawn from the budget of the League of Nations, and
thus indirectly from all the States which are Members of the League. This would,
moreover, place a reasonable limit upon the number of financial advisers appointed
who might be claimed by many more States than those actually concerned, and for
more numerous services than could be required.
The advisers should be supplied by the League of Nations only to those
States the exchange conditions of which are particularly unfavourable, and in
which, for that reason, the task of rehabilitation is the more difficult and urgent.
The advisers should further be charged only with such duties as, for instance, the
regulation of the exchange, which are particularly important, not only for the country
in question, but also in general for all countries. The Secretariat of the League of
Nations might propose in each State a list of names of persons, belonging possibly
— 73 —
to different nationalities, suggested by the Secretary-General or by the Technical
Committees of the League of Nations, or, finally, by other organisations. From
amongst those persons the country in question might select the name or names
which inspired them with most confidence.
These technical advisers should be responsible either to the League which has
appointed them and might recall them, or to the Government which has accepted
them and which might withdraw its acceptance. In this they would difl'er from the
technical advisers formerly sent by England, who were responsible only to the
Government to which they had been accredited.
The idea which is here put forward has arisen from a consideration of the pre-
carious state of the finances of Portugal, a country which nevertheless possesses
considerable natural resources. Pre-war experience, indeed, shows how a soimd
and wise financial policy may, in a short space of time, bring about a complete
financial re-establishment in that country. But to-day, perhaps to a greater extent
than formerly, political reasons are opposed to such a course. Perhaps in thai
country, political reasons also are opposed, at any rate, to take the lead in accepting
the suggestion of technical advisers nominated by the League of Nations, on the
ground that the national susceptibilities would, according to authoritative infor-
mation I have received, regard such a course as a diminution of the Government's
freedom. No such difficulties, however, arise in the Baltic States and in Poland,
where the idea was, on the contrary, accepted by experts, diplomatists and poli-
ticians, with whom I have had occasion to converse, with general approbation — it
may even be said with enthusiasm. Well-informed persons are of the opinion that
even in Austria the technical advisers might exercise a useful purpose, even
should the programme of restoration proposed by the League of Nations come into
operation in that country; this programme would in itself involve a Commission
composed of nationals and foreigners, for the administration of the Central Bank
and of the Government securities offered as a guarantee for international cre-
dits.
Some persons raise as an objection the difficulty of finding such technical
advisers; but this difficulty does not appear to me insuperable; for I am sure there
are not lacking persons of competence whose amour-propre might be flattered by
their selection for a task of such great social importance and corresponding prestige.
The difficulties of execution which are feared should not in any way prevent an
attempt being made in a matter of such vital importance.
Nor should it be thought, in my opinion, that the usefulness of the technical
advisers would not be felt for some time. Whoever is acquainted, even in outline,
with the circumstances which, in certain States whose exchanges are depreciated,
contribute to produce a still greater depreciation, is aware that these circumstances
are partly of such a nature as to be incapable of removal save by a continuous
financial policy, but that they are also in part, it may be said, artificial, and that, as.
far as this part is concerned, they could be rapidly eliminated. Amongst such
circumstances might be mentioned the existence of various series of notes, which are
only current in the home country, or which have been imitated abroad on a large
scale, and which therefore cast suspicion on all the valuta which is offered abroad ;
the practice of paying for labour in kind, which greatly diminishes the need for
currency and thus contributes to the fact that the paper money issued becomes
excessive in relation to requirements; the similar custom of supplying Government
employees with coupons with which they can obtain foodstuffs at a reduced price
from co-operative stores; the restrictions on the export of goods which, as was ex-
plained, cause a scarcity of foreign currency in the home market and diminished the
utility of the national currency for foreigners ; also propaganda which casts doubt
upon the solvency and stability of the State, such as is sometimes carried on, and
maintained for that very purpose abroad by enemy States, with the object of
reducing the confidence of the Great Powers in countries with which political
disputes are still pending. The suggested Customs Unions, on the other hand, some
of which, as I have said, are being brought into force, might, for the reasons explain-
ed, involve certain risks, or at any rate might cause considerable inconvenience, if
— I'i —
they were not acconipanied by provisions governing the currency circulation. For
the matters, at any rate, the advice of technical experts would be of great value.
The considerations which have been developed will, I hope, serve to persuade
the Economic and Financial Committee that the appointing of such technical
advisers might be a step of the greatest value, and might serve to increase conside-
rably the prestige of the League of Nations.
— 75 —
IV.
PRINCIPAL CONCLUSIONS AND PROPOSALS,
Being a summary of the principal conclusions and proposals of a practical character ''.
I.
The market crisis through which worki trade is at present [mssing is due
fundamentally to the small purchasing capacity of the countries which were most
seriously affected by the war, and which the richer countries have been unable or
unwilling to aid sufficiently to enable them to re-establish normal economic life.
This is the natural outcome of the crisis of under-production, from which world
economy has lately suffered, and during which the enquiry on raw materials and
foodstuffs was undertaken. The gravity of the present crisis was undoubtedly
augmented, however, by the lack of international solidarity shown by the richer
countries during the past crisis.
n.
The difficulties in respect of the supply of raw materials and foodstuffs still
persist in many States during the present crisis, though they do not take the same
form as during the past crisis. It is, moreover, possible that, in the case of certain
raw materials, a crisis of under-production may shortly arise, resulting in an excess
of demand over supply, and in difficulties of a kind similar to those which charac-
terised the past crisis; whilst it is to be expected that, by reason of the natural
repetition of economic phenomena, crises of under-production will arise in a general
way in a more distant future. It is therefore still important to continue the study
of measures to overcome the present difficulties and to prepare for those which may
arise in the future with respect to the supplying of raw materials and foodstuffs.
III.
Difficulties in connection with the supply of raw materials and foodstuffs may
depend upon : —
(a) Scarcity of resources; {b) increase of requirements; (c) difficulty in dis-
tribution (commercial restrictions, difficulties of land or sea communications,
distance of centres of production of raw materials from centres of manufacture
or consuming countries); [d) difficulties of a financial character (lack of means of
purchase, instability and disequilibrium of the rates of exchange); (e) speculation
which results in a lack of goods on the market at certain definite periods.
IV.
Economic and social considerations clearly point to the inadvisability of a
policy which leaves the recovery of the nations to the work of natural forces alone.
Moreover, the worldwide interest which was shown in the discussion on the question
of raw materials at the last Assembly of the League of Nations and the expectant
hope with which the most necessitous countries followed the ensuing enquiry make
it dangerous for the League of Nations to adopt any programme but that of fully
' For arguments and conchisions of a more theoretic and scientific character the reader is
referred to the main body of the Report ; for the post-bellum economic crises and the crisis
of markets, see pp. 17-21 ; for Free Trade proposals and protectionist practices, see pp. 27-31 ; for
exchange and especially the question of the difYerence between the home and foreign pur-
chasing powers of currencies, examined in detail, see pp. 50-71. In regard to the latter subject
our analysis is — at any rate to a large extent — of an original character.
— 76 —
examining the question and energetically taking any measures which may serve
to alleviate the crisis.
The measures which may be taken in the matter by the League of Nations may
be distinguished according as they apply: (1) to the distribution of raw materials
and foodstuffs; (2) to the distribution of their consumers, i.e., emigration; (3) to
transport; (4) to the production of these raw materials and foodsluils; (5) to inter-
national credits, and finally (6) to the question of exchanges.
VI.
In so far as the distribution is concerned, three solutions have been put forward :
(1) tho nationalist solution, according to which every nation should have the right
to obtain from a territory under its control sufficient raw materials and foodstufTs for
its populations and its industries; (2) what may be called the "State" solution,
according to which all the raw materials and foodstuffs of the world would be acquired
by a central organisation and equitably distributed by it, in the common interest,
among the various States, according to the requirements of each' individual State;
(3) the "Free Trade" solution, which would consist in establishing complete freedom
in international trade and in economic relations within individual States.
VII.
The nationalist solution, apart from the political difficulties to which its adoption
would give rise, could not be completely carried out except to the advantage of
certain nations. From the international point of view it cannot claim to be called
a solution. It cannot, however, be denied that this solution would furnish one of
the guiding principles for the allotment of the zones which are still contested between
antagonistic States, above all when it is difficult to foresee a cordial economic colla-
boration between them in the future.
VIII.
The adoption of the "State" solution gives rise to difficulties of a practical
nature, which are admitted even by its most enthusiastic supporters. The latter
now limit themselves to demanding a statistical organisation which would follow
closely, and accurately record, the rise and fall of stocks and prices. Such an insti-
tution would undoubtedly be of value from a scientific point of view, even though
from a practical point of view it could probably in no way further the solution of
the supply problem.
IX.
The control of raw materials by the League of Nations might, on the other hand,
become essential, if it were necessary to have recourse to measures of blockade
against countries which had become its enemies. The question may therefore be
asked whether it would not be expedient to consider immediately what measures
would, in case of necessity, have to be adopted for the establishment and operation
of an organisation for the control and distribution of raw materials and foodstuffs.
X.
The complete adoption of the "Free Trade" solution, which to-day is supported
by many influential persons, would only be expedient if a super-State organisation
could guarantee the continuity of such a policy during a period of economic crisis,
and, further, exclude the possibility of wars which would necessarily result in the
destruction of the policy. The League of Nations cannot, of course, hope, at any
— // —
rate at present, to bring about the complete realisation of such a programme, but
it might profitably undertake measures tending towards free trade.
XI.
The first step should be in the direction of encouraging, supporting or assisting
the formation of Customs Unions between groups of States. Already some such
unions are spontaneously springing up. It would be useful from various points
of views for the League of Nations to take an interest in their organisation.
XII.
A second measure might aim at securing representation for the interests of
third parties in commercial treaties or conventions between two States.
It is desirable that the League of Nations, with a reputation for impartiality,
should undertake such representation.
XIII.
In so far as export duties and discrimination in prices are concerned, distinc-
tions must be drawn between different cases. Should it be considered that such
duties are not a necessity for the State, but merely a means of profiting more fully
from its particularly favourable conditions, the League of Nations might well,
on the request of the countries suffering thereby, intervene for the purpose of
eliciting an explanation of the circumstances from the States which would be
placed, as it were, at the bar, and of enforcing the reduction or suppression of the
duties, should such explanation be insufficient.
XIV.
Useful measures might be taken by the League of Nations in the case of special
duties on imports from countries with a depreciated currency. Though such measures
may momentarily alleviate the market crisis in the States which applied them, they
are likely, in their final results, to maintain or aggravate the crisis, thus causing
a general loss and a loss to these States.
XV.
In the matter of monopolies, the work of the League of Nations should not
aim at suppressing groups of producers and sellers of a monopolistic character, the
existence of which may be inevitable and the control of which is in any case a domes-
tic problem for the State concerned, but at preventing certain groups dealing in
new materials of international interest, from assuming a national character by
means of privileges that one State reserves to its own nationals, or through the
administration of such groups by the State itself.
XVI.
The difficulties placed in the way of immigration prevent the working of a
natural and useful mechanism of readjustment by which the population tends to
pass from impoverished countries to countries enriched, or impoverished to a lesser
degree, during the war. It would therefore be undoubtedly in the general interest
for the League of Nations to take action in this matter.
XVII.
In the mandated territories a special situation exists with regard to freedom
of commerce and of immigration.
Article 22 of the Covenant states that it is the sacred trust of all the Members
of the League of Nations to co-operate in the well-being and development of the
populations of these territories, whilst in the case of C Mandates this Article lays
— 78 —
upon the Mandatory the obligation to observe t lie preceding safeguards in the
interest of the native population. Among these safeguards is that of equality of
trade and commerce between the Members of the League of Nations. It is thus of the
greatest importance from this point of view to decide whether the freedom of trade,
commerce and of immigration in the territories under mandate should be considered
as a measure in the interests of and favourable to the well-being and development
of those populations. No economist could doubt that this is so, but it is in every
way to be desired that a categorical ruling in this matter should be given by the
Economic C-ommittee, which is certainly the most competent organ of the League
of Nations to give it.
XVI I L
The transport crisis contributes in no small degree either directly or indirectly
to the difficulties of the Balkan States, the Succession States of Russia and several
of the Succession States of Austria, in the supply of raw materials and foodstuffs.
In this field, the League of Nations could do useful work either by demanding strict
observance of the Treaty of Versailles by States which in virtue of that Treaty are
bound to grant free transit to foreign goods or above all by reviving the organisa-
tions for the international use of rolling-stock which were put an end to during
the war.
XIX.
There is an impression that the adoption of the eight-hour day has contributed
to the present crisis by reducing production, especially in the Southern countries,
which are generally the poorer. Individual experience and the evidence of biolo-
gical science seem to justify this hypothesis. It would therefore be desirable for
the League of Nations to take measures to ensure that the enquiries into the influence
of the length of the working day upon production should be resumed on a larger scale,
and should be extended to the Southern countries. These enquiries should be carried
out with all the care enjoined by science: the various industries, ages, seasons and
States, the different degrees of technical organisation, the different systems of
payment for labour and the various climates should be taken into consideration,
and the conclusions should be based only on the most carefully weighed facts.
Even if it is not possible, for political reasons, to apply the scientific results of
such investigations, it would in any case be interesting to know that sacrifices
have been imposed upon the economic systems of the diiTerent States by a standard-
isation of the working day.
XX.
The consideration of the economic conditions of the various countries, and
the examination of the international credit schemes tried or adopted by them,
show clearly that no single scheme for international credits can result in an equal
benefit to all countries in the supply of raw materials and foodstuffs. Each country
must be considered according to its needs, its techniral and social organisations,
the psychology of its population, the nature of its industries, the markets for its
luiiiluctions, its size, and many other circumstances. The organisation of inter-
national credits must, if it is to succed, conform to these data. In a general way
it is, however, clear tJiat, in granting credits, great consideration must be paid to
the personal conditions and to the capacity of production of the receiver. It there-
fore follows that the concession of credits for raw materials is left to private ini-
tiative rather than to State or inter-State organisations, which, to a greater or less
degree, are affected by the narrow outlook and slow methods of working common
to all bureauci'atic bodies.
XXI.
The intniilui'tiou of iMl(M'uational crtMlits — like the adoption of free trade
and the reorganisation of international transport — is greatly hindered by the
instability and disequilibrium of the exchange rates. These, moreover, since they
introduce enormous increases and considerable fluctuation in the cost of the pur-
— 79 —
chase of raw materials from abroad by countries with a depreciated currency,
under present conditions perhaps constitute, for these countries, the greatest difli-
culty in the way of supply. Without excluding the possible utility of certain mea-
sures (such as the accumulation of stocks of goods by exporting countries in
importing countries), it is clear that the evil must be attacked at its roots, and that
energetic measures must be taken for re-establishing the currency on a sound basis.
In the Succession States of Russia and Austria, in the Balkan States and in Portugal,
the most useful measure for this purpose would perhaps be the appointment of
technical advisers to the Governments, selected from persons of special competence
who could advise Ministers of Finance to proceed with the greatest caution, shield
them from the suspicion of a one-sided policy, and carry out in the various countries
a similar plan based upon a common programme. The duties of the technical advisers
would naturally be determined according to the conditions and wishes of the various
countries. They would be appointed, and their salaries furnished, in part, by the
League of Nations, and they would regard themselves as officials of the League.
More precise details of the organisation should be formulated after mature consid-
eration, account being taken of the conditions of the various countries. I am
in any case authorised to make myself the mouthpiece of the Governments of Latvia
and Poland, which are anxious for the appointment of such technical advisers, and
I hope that the Commission will share my belief that the appointment of such
advisers would constitute a highly useful measure, and one which would greatly
increase the prestige of the League of Nations.
Geneva, August 28th, 1921.
* ■^" ■'■■■-
I. STATEMENT OF THE POSITION CONCERNING
CEREALS
PREPARED BY PROFESSOR VINCI
CONTENTS
I.
Pag«
Position before the war 82
1. General Review with regard to wheat in the various countries of
the world 82
2. World production, trade and consumption of wheat 82
3. Importance of other cereals in human alimentation 83-84
4-8. World production, trade and consumption of rice, rye, maize,
barley, oats 84-87
9. Conclusions based on the above enquiries 87-88
10-14. Special conditions of the traffic in cereals in the United King-
dom, France, Germany, Italy and Belgium 88-90
15. Properties and uses of cereals 90
16. Customs restrictions 90
II.
Position during the War 90
17-22. Changes effected by the war in production, trade and consump
tion of wheat, rice, rye, maize, barley and oats 90-95
23. Conclusions based on the above enquiries 95
24. Factors giving rise to variations in harvest 95-96
25. Factors causing variations in traffic 96
26-28. Enormous influence gained by certain extra-European coun-
tries in the supply of Europe 96-97
29. Factors influencing cereal resources during the war 97-98
III.
Situation after the war 98
30. Special harvest conditions in 1918 (or 1918-1919), at the end of
the war 98
31. Reasons for the failure of the following harvest in Europe ... 99
32-33. 1920 harvest, first signs of awakening and difficulties in the
way of rapid recovery of European crops 99-100
34-35. Continued predominance of imports from extra-European
countries and difficulties in payment 100
IV.
Summary and Conclusions 101
(>
OOEFttD/VTl^S
I.
SITUATION BEFORE THE WAR.
1. On the eve of the world war, most European countries depended upon
foreign countries for their wheat supply. This dependence was felt not only in
countries which, like the United Kingdom, had restricted their own wheat culture
or which, like France, for example, had kept it almost stationary, but also in Ger-
many, Austria, Italy, etc., where wheat growing had shown a remarkable deve-
lopment both in extent and yield. It may be said that among European States
only Russia, Hungary, Roumania and Bulgaria could dispense with foreign supplies
and even export a part of their harvests. These exports are almost exclusively
directed towards other European countries where they were merged in the great
stream of exports fed by the United States, Canada, the Argentine, British India,
Australia and other less important extra-European countries.
On the other hand, the latter countries exported also to Japan, Egypt, Tunis,
South Africa, Brazil and other countries where the harvest was insufficient for their
needs.
2. To sum up, in the five years preceding the war, the harvest in Russia, Hun-
gary, Roumania and Bulgaria amounted to 303.3 million quintals of wheat, and
their net exports were 72.9 million quintals, while the five countries constituting
the chief extra-European producers exported, net, 103.4 million quintals out of
a total harvest of 400.9 quintals. Out of the 176.3 million quintals exported by
these countries, 148.1 millions at least were consumed by European countries.
It may, therefore, be said that the world's wheal trade was largely absorbed in the
supply of Europe, although the latter itself produced more than half of the wheat
of tlie entire world, estimated at a little over one million quintals'.
Here are the figures relating to harvests, to trade (grains and Hour listed as
grains) and to available slocks, for the five years immediately preceding the war
(annual average):
' The inajorily of llm data used in tlio text liave been .talcen from the publications of the
Inlernational AKi'ii'ultiiral Inslilulo: liitcrnalioiial Year-Book on Agricultural Statistics; Bulletin
c/ Agricultural ami Commercial Statistics ; Statistical A'olcs on Cereals, etc. We shall quote the special
sources from which we have taken other data and information.
83 —
Wheat
Countries
Crops
(1909 lol913)
Net Imports (+) Available Resources
Net Exports ( — ; without seed incl. seed
(1909-10 to 1913-14) (1909-10 to 1913-14)
Germany and Luxem-
burg
Belgium
Austria
Denmark
Spain
France
United Kingdom . . .
Italy
Norway
Netherlands
Sweden
Switzerland
Total ....
Japan
Russia in Europe and
Asia, except. Finland'
Hungary
Roumania
Bulgaria
Total ....
United States
Canada
British India
Argentine
Australia
Total ....
Thousands of
41,567
4,054
16,558
1,454
35,502
86,447
16,231
49,896
83
1,333
2,205
902
256,232
6,577
221,809
46,170
23,893
11,429
303,301
+
+
+
+
+
+
+
+
18,599
13,442
13,973
1,710
1,686
11,886
58,801
14,484
1,044
5,961
1,918
4,606
quintals
56,809
17,246
28,412
3,076
31,896
88,685
73,997
58,435
1,116
7,206
3,885
5,424
+ 148,110 376,187
+ 1,106
— 44,674
— 11,063
— 14,599
— 2,547
7,389
136,866
29,665
5,846
6,228
60,166
17,496
30,531
3,164
37,188
98,333
75,032
64,380
1,127
7,294
4,123
5.508
404,342
7,683
177,135
35,107
9,294
8,882
72,883
178,605 230,418
186,889
— 29,103
137,579
157,786
53,648
— 23,741
24,916
29,907
95,735
— 13,496 -
67,239
82,239
40,026"^
— 22,635^
12,324^
17,391^
24,630-
— 14,452'
8,150=*
10,178^
400,928 — 103,427
250,208 297,501
By adding the few countries omitted from the above table, the totals would
be only slightly increased and our conclusions would be unchanged.
3. It is impossible to draw up a table covering production, trade and world
consumption of wheat, without taking into account certain other cereals used by
certain countries, or consumed in periods of want as substitutes for wheat.
After wheat, rice is the chief cereal used for human food. It is the principal
food of the inhabitants of India, China, Siam, Japan, Corea, Formosa, Philippine
Islands, Ceylon, and the Malay Peninsula.
Further a great deal of rye bread is consumed in Northern and Central Europe.
Maize is used to a large extent as food by inhabitants of South America, Africa,
Asia and Southern and Eastern Europe. In Europe and North America, however,
it is chiefly used as food for cattle.
Barley is used as food for animals and the better qualities are used for distilling
purposes in Europe and in North America; but in Northern Africa and some parts
of Asia barley is used for human food.
Oats are almost entirely consumed by cattle; they are used as human food in
the form of flour, but only to a small extent.
' Production of Russia in Europe was 180,683, and that of Russia in Asia 41,120 thousands
of quintals.
- 1909-1910 to 1913-1914.
« 1910 to 1914.
— 84 —
Other cereals, such as millet, were entirely negligible, before the war, in
comparison with the cereals mentioned above *.
4. The pre-war world production of husked rice was estimated at nearly two
milliard quintals; almost all of this was produced in Asia (1.855 millions), chiefly
in China, (about 1.230 millions) in British India (488 millions), and in Japan, includ-
ing Corea and Formosa (110 millions).
The production in the Dutch Indies (54 millions), in the Philippine Islands (8.5),
in Madagascar (6) and in Egypt (4) was important. North American production
amounted to a little over 6 million quintals, 5 millions being furnished by the
United States; European production reached almost 7 millions, 4.7 furnished by
Italy and 2 by Spain, and was very insufficient for the needs of Europe.
Far the greater part of the exports naturally came from the great producing
countries of Asia and were divided among the other Eastern countries and the
various European countries.
Unfortunately trade statistics for rice do not make it possible to ascertain
with precision the movement of traffic and the consumption of rice. A large number
of countries make no distinction between raw rice and husked rice; moreover
there are differences in classification adopted by countries which provide detailed
information on this cereal. Finally, it is impossible to obtain "conversion co-effi-
cients for the different steps in rice production and trade.
5. About 450 million quintals of rye, representing the average world production
for the five years immediately preceding the war, were almost entirely furnished
by Europe (429 millions) more than half by Russia (in Europe 225.9 and 8.3 in
Asia), 113 millions by Germany, 28 by Austria and the remainder by Hungary,
France, Italy and other less-important countries.
Among the only extra-European countries deserving mention, the United
States produced nearly 9 million quintals.
Rye
Countries
Trnns ^^^ Imports ( + ) Available Resources
iiQAQi laiQi Net Exports ( — ) without seed incl. seed
'^^'^^'°'-^"*' (19Uii. 10 lu 191:^-1 '»! (1909-10 to 19i;<-14|
Austria
Belgium
Denmark..
France
Italy
Norway
Netherlands
Sweden
Switzerland
Canada
Total
Russia in Europe and Asia,
except Finland"
Germany and Luxemburg .
Hungary
Roimiania
Bulgaria
United States
Spain
Total
Thousands of quintals
27,996
5,803
4,515
12,453
1,354
247
4,109
6,122
453
532
63,584
234,176
113,258
13,100
1,188
2,093
8,869
7,020
379,704
+
+
+
+
+
+
+
+
3,160
1,242
2,081
812
157
2,619
2,898
967
185
25
14.146
7,068
6,712
3,479
961
409*
239
8
18,876
27,940
6,666
6,243
11,810
1,339
2,842
6,605
6,358
597
511
70,871
186,407
95,965
8,080
84
1,254
7,697
6,064
305,551
31,156
7,045
6,596
13,265
1,511
2,866
7,007
7,089
638
557
"77T73O
227,108
106,546
9,621
227
1,684
8,630
7,012
360,828
' The Future of Wheal Production, with Special Hejercnce to the Empire, in " liiiUctin of llie
Imperial Institute," London, 1919.
■ 111 Rus.sia ill lOuropc 225,876 thousand quintals; in Russia in Asia 8,300 tliousaiui iiuiiilals.
— 85 —
The above table chiefly shows the slight importance of the trade in rye in compa-
rison with the production. It should be pointed out, moreover, that the exports,
supplied almost exclusively by European coimtries, reached a total of nearly
19 million quintals, of which at least 14 were absorbed by the remaining European
countries.
6. The world production of maize reached about a milliard quintals, more than
half of which came from the United States.
Maize
Countries
Crops
(1909 lo 1913)
Net Imports { + )
Net Exports ( — ;
(1909-10 tol9]3-lM
Available Resources
without seed incl. seed
(1909-10 lo 191:M'ii
Germany and Luxemburg .
Austria
Belgium
Denmark
Spain
France
United Kingdom
Italy
Norway
Netherlands
Sweden
Switzerland
Canada
Japan
Tunis
Egypt
Chile
Uruguay
Austraha
Total
United States
Hungary
Argentine
Roumania
Russia in Europe and Asia
excluding Finland ' . . .
South African Union . . .
Bulgaria
Total
Thousands of
3,763
6,743
5,662
25,488
29
4,269
870
58
17,428
391'^
1,5552
2,560'-'
68,816
687,944
49,295
48,694^
27,303
21,849
7,545^
7,168
849,798
+
+
+
+
+
+
8,120
5,948
4,386
2,982
2,476
5,031
+ 20,474
+ 3,684
305
5,521
420
1,013
2,709
22
+
+
+
+
+
+
+
+
+
+
+
110
112
43
42*
108'
63,467
9,247
2,119
31,741=*
11,388
7,113
694 =>
2,346
64,648
quintals
8,120
9,530
4,386
2,982
8,944
10,596
20,474
28,372
305
5,521
420
1,041
6,966
869
164
16,958
385'
1,563'
2,644'
8,120
9,711 .
4,386
2,982
9,219
10,693
20,474
29,172
305
5,521
420
1,042
6,978
892
198
17,540
395'
1,597'
2,668'
130,240 132,283
674,012
45,895
15,748'
15,542
14,115
6,652'
4,658
678,697
47,176
16,953'
15,915
14,736
6,851'
4,822
776,622 785,150
It is noticeable that, as in the case of rye, the trade in maize was relatively
small, and that almost the total export of the chief producing countries was exported
to the remaining European countries, and in particular the United Kingdom and
Germany. A considerable quantity of maize was sent to Canada.
However, we have not been able to include Mexico (33.9 milHons of quintals),
China (26.4) and Brazil (38) among the chief producing countries.
In European Russia 17,837 thousand quintals; in Asiatic Russia 4,012 thousand quintals.
1909-1910 to 1913-1914.
1910 to 1914.
_ 8(1 —
7. Barley was grown extensively in Europe, where the total crop was estimated
at about 400 million quintals. Among the non-European countries, mention
should be made of the United States and China, each of which produced a crop
estimated at about 40 million quintals.
Barley
Countries
Crops NNet Imports ( + ) Available Resources
(J^ioy lo et Exports ( — ) without seed incl. seed
iyi:i) (i90i)-ioto lyi^-i'ii (lyo'j-io to I9i3-i'ii
Germany and Luxemburg .
Austria
Belgium
Denmark
France
United Kingdom
Italy
Norway
Netherlands
Switzerland
Japan
Egypt
Australia
Total
Hungary
Bulgaria
Spain
Roumania
Russia in Europe and Asia,
excej)ting Finland ' . . .
Sweden
Canada (4 years' average) .
United States
Tunis
Argentine (4 years' average)
Chile
New Zealand
Total
33,445
16,554
945
5,431
10,491
14,226
2,200
557
706
96
21,308
2,587
658'
109,304
15,595
2,964
16,262
5,441
109,861
3,273
9,306
39,599
1,704
957-
938-
272"^
206,172
Thousands of
+ 32,457
+ 916
+ 3,298
+ 28
+ 1,320
+ 10,374
+
+
178
990
+ 2,409
+
+
+
+
248
3
151
13=*
+ 52,385
quintals
63,492
15,842
4,193
5,123
10,961
23,633
2,131*
1,566
3,091*
335
20,456
2,522
624 »
153,969
65,902
17,470
4,243
5,459
11,811
24,600
2,378
1,647
3,115
344
21,311
2,738
671'
161,689
2,527
11,495
13,068
408
2,089
2,556
24
14,258
16,238
3,908
711
1,533
37,691
55,209
72,170
16
2,894
3.257
1,190
7,460
8,116
1,806
34,751
37,793
594
814
1.110
176^
729'
781'
238^
615'
700'
16 3
237'
256'
— 48,594
131,262 157,578
In the above table it has been found necessary to omit several countries pro-
ducing barley in large quantities, and chief among these Cliiua; it should also be
noted that the total crop considered above represents by itself three-quarters of
the worhl's Iiarvest.
As, moreover, the countries omitted in the table export to a certain extent,
it follows that the total of the im])orls in importing countries is larger than that
of the exports of the exporting countricis. However, in view of the slight impor-
tance of the exports omitted, it may be taken as certain that the greater part of
the barley export of the wliole world has been included in th3 second half of the
preceding table.
' In Russia in lOiirope 101,850 liiousand quiulals; ill Russia in Asia 8,011 lhousaii(i quintals.
- 1909-1910 (o 19i;t-1914.
' 1910 to 1914.
— 87 —
The. large Russian export should be noted as well as the considerable quantities
imported from Germany and the United Kingdom, where the crop was also fairly
considerable.
8. If we consider the yearly average world production of oats, which was 650
million quintals just before the war, we observe that the chief growing centres
were in Europe and North America; that even the Argentine, in spite of its small
production, exported a fairly large quantity, and finally that 23.2 million quintals
of oats exported by some of the producing countries were sent almost entirely to
the remaining European countries and chiefly to the United Kingdom and France.
Oats
Countries
Crops
1909 to 19i:j|
Net Imports (+)
Net Exports ( — )
(1909-lUtoiyi:j-l4i
Available Resources
without seed incl. seed
(1909-10 to 1913-|.'i|
Germany and Luxemburg
Austria
Belgium
Denmark
France
United Kingdom ....
Italy
Norway
Netherlands
Sweden
Switzerland
Australia
Total
Hungary
Bulgaria
Spain
Roumania ....'....
Russia in Europe and Asia,
excepting Finland ' . . .
Canada (4 years' average) .
United States
Japan
Tunis
Argentine Republic . . . .
Chile
New Zealand
Total.
86,420
23,873
6,183
7,764
51,569
29,986
5,362
1,733
2,821
12,490
694
2,515^
231.400
13,003
1,434
4,225
4,216
158,042
54,238
164,190
728
573
7,875-
508-
2,534^
411,566
+
Thousands
469
+ 1,910
+ 1 , 188
+ 662
+ 4,332
+ ,9,631
+ 1,184
+ 98
+ 1,175
+
127
+ 1,809
+
84 =
of quintals
79,947
22,883
6,956
7,791
52,626
37,165
5,946
1,704
3,852
10,946
2,447
2,261^
1,596
9
20
1,419
10,054
2,387
645
5
443
6,029^
383^
210'
23,200
10,045
1,161
3,734
2,278
115,535
47,900
150,315
705
97
1,357'
66=*
2,169'
335,362
86,889
25 , 773
7,371
8,426
55,901
39,617
6,546
1,831
3,996
12,617
2,503
2,599'
+ 22.669 234.524 254,079
11,407
1,425
4,205
2,797
147,988
51,851
163,545
723
130
1,846'
125'
2,324'
388,366
9. The facts given above prove:
(a) that the majority of European countries took the chief place in the cereal
trade of the whole world;
{b) that they, in general, depended greatly on Asia for their rice supplies;
(c) that in the case of wheat this dependence was extremely marked, and the
export from non-European countries (United States, Canada, the Argentine,
In Russia in Europe 142,411; in Russia in Asia 15,631 thousand quintals.
1909-10 to 1913-14.
1910 to 14.
— 88 —
Australia, Biilish India) was greater than that from certain other European coun-
tries (Russia, Hungary, Roumania, Bulgaria); the United Kingdom was the largest
importer, followed at some distance by Germany, and then by Italy, Austria, etc.;
(d) tiiat the situation was almost the same in the case of maize coming from the
Argentine and the United States as well as from Roumania, Russia and Hungary,
although the United States maize was mainly utilised in the country for fodder.
In spite of the considerable production of this cereal, Italy imported large quan-
tities from abroad, but the chief importers were the United Kingdom, Germany,
Austria, France, etc.
(e) Europe was less dependent for the supply of oats, and the exports of the
non-European countries (Argentine and Canada) were less considerable than those
joint of Russia, Hungary and Roumania.
The chief importers were the United Kingdom and France; while Germany
relied almost entirely on her own resources.
Nearly the whole production of the United States was kept in that country.
(/) In the case of rye and barley this dependence was principally between
European states. The exports of rye was supphed almost exchisively by Russia,
Germany and Hungary; the exports of barley by Russia, Roumania and Hungary.
10. Reviewing the special case of each of the states under consideration *,
it is to be noted that the United Kingdom in 1913 imported more wheat from the
United States than from Canada, and that she imported a smaller quantity from
the whole of her possessions than from other countries.
„ , ■ <• r^ ■ • Thousands of quintals
Countries of Origin imported in 1913
Russia 2,545.6
Germany 227.4
Netherlands 0.8
Roumania 19.6
Turkey in Europe 18.1
Turkey in Asia 2.7
Persia 5.1
United States 17,306.5
Chile 388.7
Argentine 7,496.1
Total (including the other foreign coun-
tries) 28,011.8
British India 9,533.2
Australia 5,144.3
New Zealand 28.5
Canada 11,068.3
Total (including the other British posses-
sions) 25,774.4
Grand Total 53,786.2
Tlic same thing may be said of wheat flour, of wjiicli the import amounted to
6 million quintals, coming chiefly from the United States (3.1), Canada (2.1), Germany
(0.25), Australia (0.15), France (0.15), and from oilier less imporlant countries.
As regards other cereals, the United Kingdom imported less rye and rice than
maize, barley and oats.
' See the Customs statistics of the various countries referred to .
- 89 —
In actual figures the United Kingdom imported rather less than 500,000 quintals
of rye, chiefly from Russia, the United States and Canada, and about 2.3 million
quintals of husked rice or paddy, chiefly from British India, Siam and various
European countries, directly and indirectly; while, on the other hand, it imported
in 1913, 25 million quintals of maize, mostly from the Argentine (19.7) and in
smaller quantities from the United States (3.5), Roumania (0.5) and from other
countries; 11.4 million quintals of barley, of which 1.8 came from British India,
3 from Russia 2.2 from the United States, 1.3 from Canada, etc.; and 9.2 million
quintals of oats from the Argentine, Germany, Russia, Canada and the United States.
The exports were altogether negligible, excepting small quantities of husked
rice sent to the United States, South America, to a few European countries and the
British possessions; and wheat flour sent to a few European countries, to Northern
Africa and to the British possessions.
11. French wheat imports, which in 1913 rose to 15.6 miOion quintals, came chiefly
from the Argentine (24 %), Russia (14 %), indirectly from Germany (16 %) and,
in smaller quantities, from Australia (10 %), United States (8 %), British India
(7 %) and Roumania (7 %).
Algeria also furnished a fairly large quantity (6.5 %).
The import of wheat flour was relatively unimportant, amounting to 100,531
quintals, coming principally from Germany, Italy, United States, Algeria and Tunis.
Among the other cereals those imported in largest quantities were: — Maize
(5.9 million quintals), chiefly from the Argentine (3.5), from Indo-China (1), from
Russia (0.6), from Roumania (0.5); oats (5.8 million quintals), chiefly from Germany
indirectly, Russia, the Argentine, Algeria and Tunis; husked rice and rice flour
(1.6) chiefly from Indo-China; barley (1.2) chiefly from Russia, Roumania,
Algeria and Tunis ; rye (0.5) principally from Germany.
In addition to this, the import of rye flour from Germany and the Netherlands
amounted to about three times the quantity of wheat flour imported.
With the exception of 204,983 quintals of wheat flour, and about 200,000
quintals of husked rice and rice flour, the export of cereals from France was negli-
gible.
12. Germany carried on a fairly important re-export trade; having imported
in 1913 slightly less than 30 million quintals of wheat, she exported 5,4 millions,
chiefly to France and other neighbouring countries.
Imports came chiefly from the United States (40 %), Russia (20 %), the Argen-
tine (18 %), Canada (12 %), Roumania (4 %), British India (2.4 %).
The import of wheat flour amounted only to 178,680 quintals.
As regards the other cereals, those imported in largest quantities were: — maize
(9.2 million quintals, chiefly from the Argentine and the United States); barley
(30.9 milhon quintals, chiefly from Russia); husked rice (3.1) and paddy (1.6), chiefly
from British India; oats (5.1) chiefly from Russia and the Argentine; rye (3.5)
chiefly from Russia.
The export of oats and rye was also important (for oats 6.6 and for rye 9.3
million quintals in 1913); the export of rye flour (2.3), of wheat flour (1.9) and of
prepared rice (1.8) was also important.
13. Italy imported, in 1913, 18 million quintals of wheat, chiefly from Russia
(49 %), Roumania (18 %), the Argentine (16 %), the United States (8.5 %), Australia
(5 %) and India (2.5 %).
In addition maize was imported in large quantities (3.5 million quintals) of
which 0.8 came from Roumania and 2.5 from the Argentine. On the other hand,
imports of the other cereals reached a smaller figure.
Among exports we must notice nearly a million of quintals of wheat flour,
710 of food pastes, chiefly for the United States, and 261 of raw and prepared rice.
— 90 —
14. We must also notice specially Belgium's re-export trade, set out in the
following table (figures from the year 1912): —
Imports Exports
Thousands of quintals
Wheat 19,368.82 . 4,511.41
Rye 1,340.39 289.07
Barley 4,752.98 1,031.28
Maize .' 8,131.43 2,577.26
Paddy 599.74 108.12
Husked Rice 528.49 413.55
Belgium was a heavy exporter of flour: 650,650 quintals of wheat flour, 89,650
of maize flour and other flours of inferior quality, barley, oats, malt, and so forth.
15. The source of supply of the various kinds of cereals depends, for each
country, partly upon its geographical situation, the price of transport, etc., and
partly on the quality of the cereals produced on the markets of origin.
Wheat, of course, is put to various purposes (for making bread, for the manu-
facture of food pastes, etc.) according as it is hard or soft. Hard wheat is generally
grown on a large scale in Southern Europe — chiefly in Southern Russia — in Nor-
thern Africa and also in North America.
The same may be said of the various qualities of rice produced in Europe and
in the East, etc.
16. These economic reasons have, however, been modified to a certain extent
by the Customs regulations in force in several of the countries with which we have
dealt, and principally by the protective tarifi's imposed to encourage production.
As these tariffs increase the price of imported cereals, they enable protected countries
to defeat, on the home markets, the competition of cereals coming from abroad,
especially from extra-European countries where the cost of production is much
lower; thus these countries have been able to encourage the cultivation and pro-
duction of cereals at home, making themselves to a certain extent independent
of foreign supply.
The working of the protectionist system in France, in Germany and in Italy
was of special interest.
In France there was, on the eve of war, a duty of 7 fr. per quintal on imported
corn and of 3 fr. on rye, barley, and maize.
In Italy this was somewhat higher; 7.50 lire per quintal on corn and white
maize, 4.50 on rye and 4 on oats and barley.
In Germany the duty was fixed at 7.50 marks and 5 50 marks on corn (according
to the general tariff and the treaty respectively) at 7, and 5 marks on rye, at
7 marks for barley and at 5 and 3 marks for maize.
11.
roSlTKJN DURING THE WAR
17. The blockade of the Central Empires, the difficulties of mai'itimc trade, the
wholesale conscription of the agricultural population in all the belligerenl. countries,
the invasion of enormous and lertile territories and the recjuirements of the world
war, have in fact revolutionised the production of, the trade in, and the consumption |
of cereals. 1
It is not easy, in view of the forces set in motion by th(> war, to make an estimate
of the world's supply of cereals sufficiently accurate to bear exact comparison with
the estimates in the preceding paragraphs. Nevertheless a decrease in the produc-
tion of cereals in the belligerent countries may be noted, as well as a increase
in this production in the chief neutral countries of Europe, and finally a notable
increase in the exporting countries outside Europe, taken as a whole.
Among the belligerent States we do not include the former enemy countries,
nor Russia, for which sufficiently detailed data are not available.
We must add that the data available for the period of the war relate, as regards
the Northern Hemisphere, to the harvests of 1914 to 1917, that is to say, to one
harvest produced in times of peace; this harvest should be taken into consideration,
although it was not affected by the war, if it is desired seriously to study the resour-
ces in cereals available during the war.
These are the figures for wheat: —
Wheat
Countries
Crops
lUMi lo 17i (1909 lo V.i]
Net Imports ( + )
Net Exports (— )
(I91i-15 to (1909-10 to
1917-lS) 1913-14)
Available Resources
includins; seed
|19r.-l5io (19119-10 lo
1917-lS) 19l3-r»,
Thousands of
quintals
France (for 1915-
16-17, not in-
cluding the in-
vaded territory)
57,489
86,447
+ 21,234
+ 11,886
78,723
98,333
United Kingdom
17,720
16,231
+ 52,284
4- 58,801
70,004
75,032
Italy (for 1917,
not including
the invaded ter-
ritory) . .
44,516
49,375
+ 18,889
+ 14,484
63,405
212,132
64,380
Total . . .
119,725
152,053
+ 92,407
+ 85,171
237,745
Spain ....
37,448
35,502
+ 2,169
+ 1,686
39,617
37,188
Denmark .
1,640
1,454
+ 814
+ 1,710
2,454
3,164
Netherlands
1,427
1,333
+ 5,209
+ 5,961
6,636
7,294
Sweden . .
2,341
2,205
+ 1,669
+ 1,918
4,010
4,123
Switzerland
1,062
902
+ 3,880
+ 4,606
4,942
5,508
Norway
88
83
+ 1,561
+ 1,044
1,649
1,127
Japan . .
7,342
6,577
— 398
+ 1,106
6,944
7,683
Total . . .
51,348
217,033
48,056
-i- 14,904
+ 18,031
66,252
66,087
United States .
186,889
— 59,793
— 29.103
157,240
157,786
Canada ....
73,793
53,648
— 47,098
— 23,741
26,695
29,907
British India
94,485
95,735
— 9,594
— 13,496
84,891
82,239
Argentine . . .
43,677'
40,026^
— 23,358^
— 22,635^
20,319^
17,391 '*
Australia . . .
32,064'
24,6,30''
— 10,265^
— 14,452'*
21,799=*
10,178''
Total . . .
461,052
400,928
—150,108
—103,427
310,944
297,501
It should here be noted: —
(a) That not only production but also the export of the United States, Canada
and the Argentine increased to a marked degree during the war, thus balancing the
deficit which occurred at the same time in the other exporting countries, and causing
an increase in the imports of France and Italy.
' 1914-15 to 1917-18.
' 1909-10 to 1913-14.
' 1915 to 18.
* 1910 to 14.
— 92 —
(b) That the increase in imports did not prevent a reduction in the resources
of these two countries, notably in Francs, as a result of the decrease in the harvests,
which was due, above all, to the invasion.
(c) That in the United Kingdom, on tlie contrary, the average yield of the
harvest slightly increased, whereas the imports have not; the resources have thus
appreciably diminished.
(d) That in spite of the increase of exports, the resources outside Europe appear
to have increased to a considerable extent. This increase has been greatly influenced
by Australian production.
18. Since the main rice-producing centres are situated in Asia, the war has not
entailed any decrease in production; on the contrary, it has led to a considerable
increase in the harvest.
The 448 millions of quintals produced in British India during the 5 years preced-
ing the war increased in 1914-1917 to rather more than 500 millions; in .Japan the
harvest increased from 95 millions to 102; in the Philippines from 8.1 to 9.6; in the
United States from 4.9 to 6.5.
The rice production of Spain also increased from 2 millions • of quintals to
2.4. Even in Italy a marked increase from 4.7 to 5.4 can be noted, and this in spite
of a slight reduction in the area under cultivation.
As we have stated in connection with the pre-war period, the export figures of
the producing countries cannot be made use of to any great extent. It would seem,
however, that exports to France have changed but little; they have, on the other
hand, largely increased in the United Kingdom, in Canada and the United States.
But while exports have decreased and imports increased in Italy, an opposite result
occurred in the case of Spain.
19. Since the main growing districts are situated, as we have already said,
chiefly in Russia, Germany and Austria, the product of rye greatly decreased
during the war.
The figures at our disposal enable us to draw up the following table for the
Allied and neutral countries:
Rye
Countries
Crops
(1914 (1909
10 I') to 13)
Net Imports i + )
Net Exports (— )
(1914-16 to 1 1909-10 to
1917-181 1913-14:
Available Resources
including seed
(1914-15 10 (1909-10 to
1917-18) 1913-14i
France (for 1915-16-17,
not including the inva-
ded territory) ....
Italy (for 1917, not in-
cluding the invaded
territory)
Denmark
Norway
Netherlands
Sweden
Switzerland
Total
Spain
Canada
United States ....
Total
Thousands of quintals
8,575 12,453 + 147 + 812 8,722 13,265
1,225
2,801
252
3.352
5,552
478
708
1,354
4,515
247
4,109
6,122
453
+
+
+
+
285
473
1,544
291
230
43
-f 157
-f 2,081
+ 2,619
+ 2,898
+ 967
+ 185
1,510
3,274
1,796
3,643
5,782
521
6,543 7,020
332
13,248 8,869 — 3,81
1,511
6,596
2,866
7,007
7,089
638
22,235 29,253 + 3,013 + 9,719 25,248 38,972
5 — 8 6,538 7,012
193 -f 25 515 557
- 239 9,437 8,630
20,499 16,421 — 4,009 — 222 16,490 16,199
— 93 —
The blockade of the Central Empires, the difficulties of trade with Russia
early in the war, followed by the Russian Revolution, have entailed a great reduction
in the supply of rye for the Alhed and neutral countries; the United States, which
formerly exported a negligible quantity, have almost wholly fed the depleted
imports of these countries.
20. The production of maize has increased in the p^ncipal producing countries
outside Europe, except in the Argentine; but it has no? proved sufficient for the
export trade, which is lower than before the war. If we add to this the fact that
European production has also decreased, we shall understand the great reduction
which has taken place in the resources of the Allied and neutral countries. Finally,
we must note the increase of the resources available in the exporting countries of
which we have made mention:
Maize
Countries
Net Imports ( + ) Available Resources
Crops Net Exports ( — ) including seed
(Ifll4 lu 17) |1909i() i;!) {l9l't-\r,io (1909-10 lo (19ri-15lo (190910io
1917-lHl I913-l'i) 1917-18) 19i:i-14|
France (for 1915-
16-17, not inclu-
ding invaded
territory) . . .
Italy (for 1917, not
including inva-
ded territory) .
United Kingdom.
Spain
Denmark ....
Norway
Netherlands . . .
Switzerland. . . .
Canada
Japan
Tunis
Total . .
United States
Egypt. . . .
Argentine . .
South African
Union. . .
Total .
Thousands of quintals
4,520 5,662 + 3,669 + 5,031 8,189 10,693
24,372 25,488
7,457 6,743
41
2,689
992
53
29
4,269
870
58
+ 1,677
+ 17,133
+ 1,183
+ 3,901
392
5,418
932
2,251
5
74
+
+
+
+
+
+ 3,684
-f 20, 474
-J- 2,476
2,982
305
5,521
1,013
2,709
22
110
+
+
+
+
+
+
+
26,049
17,1.33
8,640
3,901
392
5,418
973
4,940
997
127
29,172
20,474
9,219
2,982
305
5,521
1,042
6,978
892
168
40,124 43,119 +36,635 +44,327 76,759 87,446
717,563 687,944 —12,163 — 9,247 705,400 678,697
19,433 17,428 — 459 + 118 18,974 17,540
45,456* 48,694^—21,800^—31,741^ 23,656^ 16,953*
9,106* 7,545- — 2,215^ — 694* 6,891^ 6,851*
791,558 761,611 —36,637 —41,570 754,921 720,041
■ 1914-15 to 1917-18.
^ 1909-10 to 1913-14.
3 1915 to 18.
•• 1910 to 14.
— 94 —
21. It will be noticed that the production of barley in the Allied countries
has decreased and that the supplies available for consumption have been
reduced in spite of the increased production and export trade of tlie United States,
Spain and Canada. The available resources of the exporting countries have
increased considerably.
Barley
Countries
Crops
ll'.tl'j lo 171 (l'.)09 tol3)
Net Imports ( + )
Net Exports ( — )
(1914-15 to (1909-10 lo
1917-18) 1913-l'i)
Available Resources
including seed
(191'i-lolo (1909-10 lo
1917-181 1913-11)
France (for 1915-
16-17, not inclu-
ding invaded
territory) . . .
United Kingdom.
Italy (for 1917 not
including inva-
ded territory). .
Denmark ....
Norway
Netherlands . . .
Switzerland . . .
Japan
Egypt
Total . .
Spain
Canada ....
United States .
Tunis
Total .
8,281
12,578
1,930
5,088
709
605
135
20,282
2,961
Thousands of quintals
10,491
1-4,226
2,200
5,431
657
706
■ 96
21,308
2,587
+ 1,584
-f 7,048
+
+
+
+
+
+
389
244
442
792
185
1
33
+ 1,320
+ 10,374
+ 178
+ 28
+ 990
-f 2,409
+ 248
+ 3
+ 151
9,865
19,626
2,319
5,332
1 , 151
1,397
320
20,283
2,994
11,811
24,600
2,378
5,459
1,647
3,115
344
21,311
2,738
52,569 57,702 +10,728 +15,701 63,297 73,403
17,410 16,262
10,599 9,306
44,516 39,599
1,442 1,704
246
— 24
17,164
16,238
1,450
— 1,190
9,149
8,116
5,330
— 1,806
39,186
37,793
- 294
— 594
1,148
1,110
73,967 66,871 — 7,320
3.614 66,647 63,257
22. Finally, we note, as regards oats, an increase in the harvest in the United
Kingdom, followed, nevertluiless, by a reduction in her resources due to a marked
decrease in imports. In France, on the contrary, a reduction of resources has taken
place as a result of recent harvests, while imports have increased. It will also be seen
that harvests, ex|)orts and available resources have all incr(>aso(l in llio chief
producing countries outside Furope, mainly in the United States and in Canada.
^ 95 —
Oats
Countries
(191
Crops
:tol7| (1909 lo 13)
Net Imports ( + )
Net Exports (—)
(1914-15 to (1909-10 to
1917-18) 1913-14)
Available Resources
including seed
(1914-15 to (1909-10 lo
1917-18) 1913-14:
Thousands of quintals
France (for 1915-
16-17, not inclu-
ding invaded
territory) . . .
38,039
51,569
+ 6,679
+ 4,332
44,718
55,901
United Kingdom.
31,976
29,986
+ 6,883
+ 9,631
38,859
39,617
Italy (for 1917, not
including inva-
•
ded territory) .
4,269
5,362
+ 2,627
+ 1,184
6,896
6,546
Denmark ....
6,854
7,764
+ 17
+ 662
6,871
8,426
Norway
1,963
1,733
+ 25
+ 98
1,988
1,831
Netherlands . . .
3,165
2,821
+ 435
+ 1,175
3,600
3,996
Sweden
10,960
12,490
+ 115
+ 127
11,075
12,617
Switzerland . . .
803
694
+ 772
+ 1,809
1,575
2,503
Australia ....
1,979'
2,515^
+ 113^
+ 84*
2,092'
2,599*
New Zealand . .
1,301'
2,534"^
+ 8=*
— 210*
1,309'
2,324*
Total . .
101.309
4,841
117,468
+ 17,674
— 147
+18,892
— 20
118,983
136,360
Spain
4,225
4,694
4,205
Canada
63,615
54,2.38
— 6,. 360
— 2,. 387
57,255
51,851
United States . .
200,838
164,190
—15,633
— 645
185,205
163,545
Japan
889
728
— 52
— 5
837
723
Tunis
432
573
— 347
— 443
85
130
Argentine ....
8,183'
7,875-
— 5,478'
— 6,029''
2,705'
1,846*
Total . .
278,798
231,829
—28,017
— 9,529
250,781
222,300
23. To sum up, the following conclusions may be drawn from the information
at our disposal: —
(a) during the war the Allied countries in general suffered a reduction in their
supplies of cereals, except as regards rice. This reduction was largely due to the
smaller harvests or the decrease in imports, or to both these causes combined;
(b) decreases in imports became evident in spite of the increase in production
and the partial increase in exports from certain extra-European countries; further,
these latter countries were able to increase their available resources;
(c) the countries in question assumed a greater importance in the provision
of supplies to Europe.
24. The considerable decreases, in general, in the cereal harvests of the Allied
countries were a natural result of the upheaval caused by the war to their economic
organisation. The call for men for the army, the great reduction in imports and in
the production of manures, the decrease in the number of cattle, and the invasion of
certain territory tended to produce a reduction either in the area under cultiva-
tion or in its yield.
It is true that in many countries exemptions were granted on agricultural
grounds; recourse was had to a very large extent to woman and child labour; the
1914-15 to 1917-18.
1909-10 to 1913-14.
^ 1915 to 18.
" 1910 to 14.
— 96 —
use of agricultural machinery was encouraged; further, the Governments requisi-
tioned the harvests at official prices fixed in advance on rates which were generally
remunerative and were higher than re-selling prices; the Governments also granted
bonuses to farmers, etc. But the figures reproduced above show that in general
these measures were only proper to lessen the harmful effects of the factors
to which reference has been made. In spite of this, it was found |)ossible in the
United Kingdom to increase the harvest of certain cereals, and in Italy the rice
harvest.
25. In view of the obstacles caused by the war, it is easy to understand the
small effect produced on imports from extra-European countries by the abolition
of import duties on cereals, which was already in force in certain European countries.
Indeed, the provision of supplies was rendered considerably easier by a system
of rationing, which reached its greatest development after the entry of the United
States into the war, and which, together with the opening of large credits to those
of the Allies who needed them, prevented the latter from feeling the effects of
the considerable rise in export market prices, and in freightage and exchange.
Although these measures could not prevent a large decrease in imports, they in-
creased, as we know, the predominant share of imports from extra-European
countries.
26. If we examine the Customs statistics of the European Allied countries,
the following table, which refers only to the importation of wheat into the United
Kingdom, clearly indicates the almost complete substitution during the war of
extra-European sources of supply, although, in the case of the United Kingdom,
consignments of wheat from European countries were very small.
Importation of Wheat
Thousands of quintals
Countries of Origin 1913
United States ... 17,306
Argentine 7,496
British India .... 9,533
Australia 5,144
Canada 11,068
Other countries . . 3,239
1914
1915
191G
i9i:
1918 ,
17,383
21,157
32,788
27,537
12,576
3,300
6,175
2,283
3,403
7,309
5,440
7,089
2,850
1,394
315
6,153
91
1,879
4,695
1,023
15,980
10,020
10,947
9,351
8,112
2,504
509
84
66
100
Total .... 53,786 50,760 45,041 50,831 46,446 29,435
The decrease in imports and the increase in the consignment of goods from
extra-European countries were no less notable in the case of maize.
Importation of Maize
Thousands of quintals.
Countries of Origin
I9i;i
191'.
I'.llo
1 9 1 (i
I'.ii:
1918
United States . . .
3,494
118
861
3,551
5,420
4,023
Argentine
19,737
14,550
22,429
10,588
4,865
1,820
British .South Africa.
17
664
1,103
1,265
1,360
1,240
Canada
107
—
75
1,104
831
65
Other counti'ios . .
1,613
4,498
209
842
226
210
Total .... 24,968 19,830 24,677 17,350 12,702 7,358
A similar process took place in the case of barley, the importation of which,
almost exclusively from North America, finally fell to onc-lifLh of its previous
level; the same holds good as regards oats, the importation of which from North
America ;ind the .Argentine I'dl to about one-half.
— 'J7 —
These considerable diminutions were compensated in part by the following
means : —
(a) the importation of rice increased to about double its former extent; this
was due solely to the increased export from India to the mother-country;
(b) increase in the importation of wheat flour, chiefly from North America;
(c) a large decrease in the re-export of cereals and in the export of prepared
cereals.
27. The chief sources for the import into France of wheat were the United
States and the Argentine, and for the import of maize and rye the United
States.
Importation of Wheat
Thousands of quintals
1918
4,658.6
5,108.9
402.7
330.8
1,577.4
Countries of Origin
1913
United States . .
1,336.8
Argentine ....
3,677.9
Australia ....
1,650.0
British India . . .
1,101.1
Other countries
7,790.7
Total
15,556.5
12,078.4
28. Regarding Italy, as her imports from Russia had diminished to a negligible
quantity, those of hard wheat fell considerably and her needs were supplied almost
exclusively by the United States, the Argentine and British India.
Importation of Wheat
Countries of Origin
United States .
Argentine . . .
Australia . . .
British India . .
Other countries
Total . .
Thousands of quintals.
1913
1,538.5
2,973.2
825.4
444.9
13,325.3
18,107.3
1918
5,768.9
5,642.3
275.7
3,364.3
367.9
15,419.1
Her imports of maize diminished very considerably; they came almost exclu-
sively from the United States, the Argentine and British India. On the other hand, her
total imports of rye, barley and oats increased; the rye was imported from the
United States, the barley from the United States and British India and the oats
from the United States and the Argentine.
The great decrease in Italian exports of flour, food pastes and prepared rice
should also be noted.
29. It may be stated in general, however, that the cereal resources of all coun-
tries were in reahty greater than those shown in the above statistical tables, by
reason of the almost complete consumption of the stocks existing on the eve of the
war, and also of the greater yield of flour obtained as a result of the compulsory
introduction, imposed by the States, of a greater degree of flour dressing'.
It may be added, moreover, that the resources allocated for human consumption
probably increased, as a result of the reduction in the quantities set aside to feed
certain kinds of animals.
' See Interallied Scientific Food Commission. General Report. Fond Requirements and
Resources of Allied Countries. Paris, 1918.
— 1)8 —
The prohibitions on distillation, the use of flour for pastry, etc., also had the
effect of bringing about a better use of these resources. Moreover, account must be
taken of destruction, damage and waste of various kinds, resulting from the war.
Unfortunately, owing to the insurmountable difficulties which prevent an even
approximate estimate of these various factors, it is not possible to arrive at an
exact estimate of the resources of the various countries during the war.
III.
SITUATION AFTER THE WAR.
30. In comparison with the averages obtained during the war, the harvest of
1918 (or 1918-1919) had been particularly plentiful throughout the world as regards
wheat, rye, barley and oats, thanks to the cultivation of larger areas during the
last year of the war. As regards maize and rice it had, however, been deficient.
In the case of wheat this applies not only to the neutral countries and to the
principal non-European producing countries, but even to the Allied countries:
the wheat harvest in that agricultural year showed a considerable increase in Italy,
France and the United Kingdom. The cultivated area increased in the last-named
country in comparison with the average during the war, as well as before the war;
and it must be noted that in Italy and in France this increase was only in
comparison with the year 1917 and not with the average of the preceding years,
mainly on account of the occupation of certain territories.
This does not apply to the poor rye harvest in France and in Italy. As regards
barley and oats, however, both the areas cultivated and the harvests showed an
increase, particularly in Italy and in the United Kingdom.
31. It would seem that with the cessation of hostilities, and the elimination of
the factors, previously referred to, which tend to lower the output, the production
of cereals should have shown a rapid increase, if not in the United Kingdom, where
the war had brought about an increased agricultural activity, then in other countries
wliere this activity had been considerably lowered. The effects of the war, the
blockade, which was still in force, the delays in demobilisation, the many difficulties
attending upon the reconstruction of the devastated areas, the fixed prices maintained
in certain countries even after they had ceased to be remunerative, all these factors
stood, however, in the way of a rapid recovery.
Of the Allies, France had in 1919 increased her wheat area in consequence
of her territorial expansion, while Italy and Roumania, in spite of their territorial
gains, had considerably reduced theirs.
The same decrease occurred in Japan, in several neutral countries, and in
British India, the Argentine and Australia (only Canada and the United States
have increased their cultivated areas and their harvest), and the general wheat-
supply suffered in consequence. As regards rye, the increase in the general supply
in 1919 is due entirely to the increase in the cultivation of this crop in Northern
America, especially in the United States.
On the other hand, the decrease in the cultivation uf Jjarley in the United
States and in Canada and the unsatisfactory oats harvest in those two countries
reacted unfavourably on the cultivation of these cereals in Europe.
The liberation of the invaded territories resulted in an increase in the area of
inaiz(! under cultivation in Italy during 1919, but it is still below the pre-war ave-
rage; whilst in Roumania it is still very far from attaining the area cultivated
hefor(> Mi(^ war. Wticii one (•oiisid(M's, nmroover, that in the United States the
— 99 —
area under cultivation fell below the pre-war level, the reasons for the shortage
in the maize harvest during that year will be readily understood.
The area of rice under cultivation remained low in Italy, increased slightly
in Spain, Japan and British India, and decreased slightly in the United States,
but on the whole the harvest showed an increase, thanks especially to the heavy
production in British India.
32. With regard to the 1920 harvest, we have fortunately the basis of a compa-
rison with the figures of the preceding year, the area under cultivation having
remained unaltered in several countries.
An examination of the pro^'^sional figures, quoted below, relating to wheat reveals
an increase of the cultivated area in France, Italy, Germany, the Serb-Croat-Slovene
State and certain neutral countries in Europe. Great Britain has further reduced
the area cultivated. Russia no longer has a place amongst what were formerly
the exporting countries ; the deplorable conditions in which that country is struggling
are, moreover, well known. Bulgaria has succeeded in slightly increasing the
area under cultivation, whereas within the boundaries of the ancient Kingdom of
Roumania it is considerably reduced. Similar reductions may be noted in the case
of Canada and the United States (where, however, the area under cultivation is
greater than before the war) and in the Argentine; they are only partially balanced
by the increase shown in British India and Australia.
Wheat
Countries
Germany
Belgium
Denmark
Spain
Serb-Croat-Slov. State .
Finland
Norway
Netherlands
Sweden
Switzerland
France
Great Britain
Italy
Roumania (Old King-
dom)
Bessarabia. ......
Bulgaria
Canada
United States
British India
Argentine
Australia
Area
Thousand hectares
Crops
Thousand quintals
1920
1919
1920
1919
1,387
114
66.6
4,067
1,599.2
7.8
16.6
63.1
145.7
48
4,854.3
780.6
4,570
838.5
547.5
871.7
7,378.1
21,712.4
12,130.7
5,995'
3,844'
1,279.4
133
50.4
4,199.9
1,367.8
7.8
16.6
68
140.9
52.7
I
4,603.7
931 . 1
4,286.6
1,199.8
515.1
841.7
7,739.9
29,640.8
9,630.6
6,053-'
3,000^
21,480
21,691.4
2,163.3
2,692.9
1,890
1,612
36,593.1
35,176.5
17,611.8
13,868
74
83.2
281.6
291.5
1,817.3
1,568.5
3,030
2,587.9
976
959
62,706.3
49,653.7
15,103.5
18,199.6
38,466
46,204
6,531.9
13,197.4
4,848.5
4,623.5
11,210
9,261.1
79,841.1
52,597.7
204,296.4
256,099.1
102,539.5
76,284.8
50,142'
58,280^
39,728'
11,975-
As to rye, the area cultivated has diminished slightly in Germany, in the United
States and in Canada, but has increased in Italy, France, and the Serb-Croat-Slo-
vene State. Maize, on the contrary, shows an increase of area in the United States,
Canada and France. The area has remained unchanged in Italy, and has decreased
in Roumania.
1920-1921.
1919-1920.
— inn —
The area of barley under cultivation has increased in Germany, France, the
United Kingdom, Italy and Roumania, and has remained more or less stationary
in North America. The same may be said of the area under oats, except in the
United Kingdom, where the area has decreased. Finally, as to rice, the cultivated
area has slightly increased in Spain, has decreased in Italy to an area even less than
qefore the war, but has not shown any appreciable variation in British India.
33. To sum up, one cannot deny the existence of certain indications of a revival
in tlie cultivation of cereals in Europe.
It is quite obvious that the increase in the areas under cultivation has not
always had a corresponding effect on the harvests, which, apart from the influence
of climate and other circumstances, have suffered, particularly in certain European
countries, from the scarcity of manure, agricultural machinery, etc.
This has resulted in a persistent shortage of cereals, and it has therefore been
necessary to import them from non-European countries in amounts far greater than
might have been indispensable.
34. It is only natural, therefore, that several countries in Europe, so far from
forbidding it, have actually sought to facilitate the import of cereals from non-
European countries.
It appears from the data relating to the international trade of certain of the
principal countries of Europe that the imports of non-European origin still far
exceed those of European origin, even in the case of those cereals which, in the years
before the war, were exported chiefly by the Austro-German and Balkan countries.
For reasons well known to those who are familiar with commercial statistics,
a detailed examination of the figures of international commerce based upon the
last two harvests which we have been considering woidd still be premature, but
the facts already in our possession show that this considerable excess of imports
from non-European countries is beyond all doubt. It is modified, and that in a
very small degree, by a small export of wheat from Roumania.
35. In these circumstances, certain exporting countries have not hesitated to
place heavy burdens upon the sale of cereals, such as enforcing cash payments or
credits on very onerous terms, while other countries have introduced an export
tax in addition.
In view of the importance of these exj)orts, we should note particularly the
case of the Argentine, which since January 1918, and up to the end of 1920,
placed a compensatory tariff upon wheat K This tariff, varying from month to month,
and in accordance with the price, amounts to a veritable tribute imposed on those
countries which were in need of wheat, and has certainly lessened their capacity
for acquiring this, most essential article.
One of the causes which have led to the low price of wheat since 1920 is in general
attributed to the difficulty which certain importing countries of Europe have expe-
rienced in their attempts to acquire non-European wheat, in spile of the large
storks of the non-European exporting countries.
It appears that for the current season certain increases on the area allotled
f-o the culture of cereals and on the crops have been achieved in several countries
of Europe"^; it does not appear, however, that the dependent position (if (hese
countries, as indicated above, has thereby been strongly improved.
' International Ciiamiikr op Commf.rcf, 1st Conp;re.ss, London, 1021. rnniplili't No. ',
H(Hv Materiah.
- The larf,'o roilurl.ioii of llic an'a in HoiiiiiaMia has brcn followrd in I ',12 1 l)y a coMsidorahlc
increase.
— 101 —
IV.
SUMMARY AND CONCLUSIONS
In Europe before the war only Russia, Hungary and Bulgaria exported wheat.
The supplies of the other countries in Europe depended, to a large extent, on these
states, but even more on the exports from the United States, Canada, the Argentine,
British India and Australia. The world's wheat-trade was, above all, determined
by Europe's need of supply. The United Kingdom imported more wheat from the
United States, Canada and other countries than from its possessions.
II.
After wheat, rice was the staple food of the world's population. It was chiefly
produced and consumed in Asia and was very largely exported to Europe and the
two Americas. The production of the United States, Spain and Italy was consi-
derable.
III.
Rye was also consumed in large quantities in Northern and Central Europe.
The chief producing centres were situated in Russia, Germany, Austria and to a
less extent in the United States. Trade in rye was mainly conducted between the
various European countries and was of no great importance.
IV.
Maize was employed as cattle food, but in South America considerable quan-
tities were used for human consumption. This was also the case in Africa and in
Southern Europe. The United States was responsible for a good half of the pro-
duction. Hungary, Italy, Roumania and Russia also produced rye. The European
countries and in particular the United Kingdom and Germany were the chief im-
porters of maize. Italy, although producing maize, imported a considerable
quantity.
V.
The better qualities of barley were used for distilling purposes. It was used
for human consumption in North Africa and in some parts of Asia; and was also
used as food for animals. The cultivation of barley was widespread in Europe;
the production of the United States and China was also considerable. Russia was
the chief exporting country. Germany and the United Kingdom, while producing
a large quantity of barley, also imported a great deal.
VI.
Oats, which were used almost entirely for animal food, were cultivated mainly
ill Europe and in North America. The Argentine, however, exported large quantities.
In Europe the chief importing countries were the United Kingdom and France.
VH.
The re-export trade and the milling industries of Belgium and Germany must
be particularly noticed.
VIII.
The production of cereals in most European countries was subject to a protec-
tive tariff; the import tariffs were particularly interesting in France, Italy and'
Germany.
— 102
IX.
On the outbreak of the world war the Allied countries, in general, were faced
with a reduction of their resources in cereals, except in rice, owing to the decrease
in the crops harvested or the diminution of imports, or to both causes simul-
taneously. The reduction of imports took place in spite of the increase of
production and of the partial increase of exports in some non-European countries
which, for their part, were able to increase their own resources.
X.
The non-European countries played a great part in supplying Europe.
XI.
The production and consumption of cereals in the belligerent countries and in
some neutral countries have, during the war, been subject to special regulations.
In certain countries, even among belligerents like the United Kingdom, these
regulations led to a considerable increase in the cultivation of certain crops. Supply
was largely assisted by a system of rationing among the Allies. The abolition of
import duties had little effect. As a result of the difficulty of obtaining figures
with regard to the stocks and of estimating the effects of the increase of the yield
of cereals in the shape of flour, the variations in the quantities of cereals used
for feeding animals, the prohibition of distilhng and of waste, etc., it is impossible
to estimate the exact cereal resources of the various countries during the war.
XII.
The harvests of 1918 (or 1918-19) at the end of the war were better than the
preceding, except in the case of maize and rice; this was especially due to the in-
crease in the area cultivated.
XIII.
The effects of the war, the difficulties of the work of reconstruction, etc., have
prevented the rapid revival of production in the year following the war, if not in
the United Kingdom, where agricultural production has increased, at least in other
countries, where this activity has decreased to a marked extent.
XIV.
The harvests of 1920 (or 1920-21) have shown a revival in the cultivation of
cereals in several European countries, but it does not seem that the increase in
the area cultivated has had any great effect on the harvests; several European
countries have suffered from bad climatic conditions and others from a lack
of manure and agricultural machinery. This has caused a persistent diminution
in European resources. The supplies of Europe still depend, to a very large extent,
on imports from non-European countries, although this dependence is relieved
by the exports from certain countries, such as Roumania, and by the increase
on the area and crops of 1921 in several European countries.
XV.
On the other hand, some exporting countries have iiol. hesitated to impose
diffiodt selling conditions. The Argentine added a duty on the export of wheat,
which has only recently been raised.
II. STATEMENT OF THE POSITION CONCERNING
W^OOL
PHEPARKD BY PROFESSOR VINCI
CONTENTS
I.
Page
Position before the War 104
1. General condition of the various countries of Europe before the
war as regards the supply of raw wool 104
2. Estimate of the amounts of wool generally available before the war 104-107
3. Position of the British Empire 107-108
4. Countries importing raw wool 109-110
5. Movement of exports in yarns and fabrics 110-112
6. Manufacturing industry of the various countries of the world . 112-114
II.
Position during the War 114
7. Effects of the war upon the flocks 114
8. Variations in the supply of wool and the directions of exports. . 114-119
9. Regulations as to export ofwool from Australia and New Zealand
and prices 120-121
10. Changes which have occurred in the wool industry of the various
countries 121-122
III.
Position after the War 122
11. Development in 1919 and intensification of industrial activity . 122-124
12 Subsequent depression, stocks and decline of prices 125
13. Anglo- Australian agreement 126
14. Present conditions and future prospects 126
IV.
Summary and Conclusions 127
X\^OOL
POSITION BEFORE THE WAR
1. The situation of the wool industry in the various countries of the world
on the eve of the war was the result of the profound changes in the sources of the
supply in the course of the last century.
European herds were continually decreasing in number; this was particularly
noticeable in France, Germany, Austria, Hungary, Spain, Switzerland, Belgium,
Denmark and Sweden and was less noticeable in the United Kingdom, European
Russia, Netherlands and Norway. It was also slightly compensated for by an increase
in Italy and certain other countries. This decrease rendered the wool industry in
Europe ever more dependent on the production of raw materials in other continents.
As a result there was a great increase in the number of herds in Australia, New
Zealand, Argentine and Uruguay and certain South African countries.
It was only in the last few years before the war that in the case of some of
the countries mentioned above this increase ceased and even became a decrease,
due to the favourable conditions offered for other kinds of cattle, to the extension of
agriculture and also to climatic conditions.
Moreover, the more extensive requirements resulting from the general increase
in the world population and the improvement in conditions of life compelled certain
non-European countries to have recourse to the same markets. This was notably
the case with the United States, although the number of sheep there had consi-
derably increased.
2. It is not easy to estimate the total available amount of wool in the world.
In many coimtries there only exist private statistics, the information of which
is contradictory. In other countries only export figures are available, and in others
only conjectures are possible. The National Association of Wool Manufacturers, U.S. A.,
publishes periodically a statistical table which in many respects cannot be con-
sidered as reliable'.
But it suffices, in fact, to compare the data bearing on the number of sheep
(and such data were available for many countries) with those of the wool production
for each country as shown in the same table; this will show the exaggerations and,
still more often, the omissions in these estimates. An attempt has been made in
l\n'. following table to establish a more certain estimate of the world production
of raw sheep's wool about 1912, based upon the number of sheep and certain other
available information, such as the amount of wool used in commerce, manufactured
wool, etc.
See The Wool Year-Book, l'J21, printed and iniblishod by The Textile Afercuri/, Manchester.
105 —
Countries
Europe : —
Russia in Europe . .
. United Kingdom . . .
France
Spain
Austria- Hungary . . .
Italy
Germany
Portugal
Norway
Sweden
Netherlands
Denmark
Belgium
Switzerland
Balkan States . . . .
Other countries . . .
Total , .
Asia: —
China and Thibet . .
India and Afghanistan
Turkey in Asia . . .
Persia
Russia, Asiatic . . .
Other countries . . .
Total . .
Number of sheep Raw sheep wool
about 1912 dip about 1912
Thousands of metric tons
Africa : —
British South Africa
British East Africa
Uganda . . . .
German East Africa
German West Africa
Algeria
Tunisia
Morocco
Other countries
Total
A merica : —
North :—
U. S. A
Canada
Other countries
South : —
Argentine ....
Uruguay
Chile
Brazil
Peru
Falkland Isles . .
Other countries
Total
and
42,736'
28,887
16,468
15,830
12,946
11,163
5,803
3,073
1,398
946
889
727
185
161
22,267
?
?
?
?
?
?
?
30,657
7,500
6,000
500
8,529
767
?
?
77.5^
68.0
37.3
28.7
23.5
20.3
13.2
5.6
3.2
2.1
2.0
1.6
0.4
0.4
40.4
2.3
326.5
90.7
68.0
40.8
27.2
90.7
0.5
317.9
73.5
20.4
13.6
l.i
15.5
1.4
6.8
6.8
139.1
52,362
137.9
2,174
4.9
;)
5.4
83,545
153.2
26,286
59.6
4,169
9.4
10,550
15.9
2,000
'3.6
711
2.1
?
1.8
393.8
Includinff a negligible number of goats.
Including a negligible quantity of goat-skins.
— 106 —
Number of sheep Raw sheep wuul
Countries about 191-2 clip about I 'J 1 2
Thousands of metric tons
Oceania : —
Australia . .
New Zealand
Other countries
83,264
332.9
23,750
93.4
?
0.1
Total ... ? 426.4
Summary : —
Europe ? 326.5
Asia ? 317.9
Africa ? 139.1
America ? 393.8
Oceania ? 426.4
Grand total ? 1,603.7
This table does not take into account wool-bearing animals other than sheep,
and consequently does not include wool from goats, etc. It is certain, however,
that the amount of wool thus omitted forms only a small fraction of the total,
and it may be stated that the latter did not reach the figure of 1,800,000 tons.
This figure considerably exceeds that of 1,597,000 tons which was calculated by
the Bulletin of the Imperial Institute for all kinds of wool produced in 1912'.
This difference is largely due to the higher valuation which we placed on the sheep's
wool produced in various countries, taking as our basis the more exact statistics
regarding their flocks as supplied by the International Agricultural Institute'^, or
derived from more recent official estimates.
Moreover, it should not be forgotten that the figures given refer to raw
sheep's wool. The reduction in the weight of washed wool amounts to 50 % for
Australian wool, and a little less for the wool of other countries. It should be
remembered that in general the weight of washed wool is that of raw wool in a
ratio of 3 to 5; the production of washed sheep wool about 1912 may therefore be
estimated at 960,000 tons.
No comparison can be drawn here between the figures given in the table and
those of population, as in the case of many countries the estimates of the
population in the considered period are not available, or do not exist at all in
other countries.
Moreover, this information would not give any idea of the requirements of
the various countries as regards raw materials, dependent as tiiese requirements
are on their industrial development, the state of their civilisation, etc.
It should, however, be noted that, amongst the various countries of Europe,
the United Kingdom accounted for 4.2 % of the total wool clip, but, in the other
countries of the Empire, disposed of 37.1 %; Russia only accounted for 10.5 %,
France 3.3 %, Germany 1.7 %, Italy 1.2 % and, amongst tlic eountries of America,
the U. S. A. possessed only 6.8 % and the countries of South America (except tiie
Falkland Isles) 15.1 %; finally, the countries of Asia, China, including Thibet,
produced only '5.6 % and Turkey in Asia, with Persia, only 4.2 %. The renuurnh'r,
8.5 %, was distributed amongst the small countries of Europe and the rest of the
world.
' See "The Empire's Trade in Wool in its relations to the Wool Trade of Ihe World", in
Bulletin of the Imperial Institute, October-December iyi8, London.
"' Sec International Year-liook oj Agricullural Statistics, Vols, for 1912-1918, published by
International Agricultural Inslilulc, lionie.
100
60
35
5
100
18
82
—
100
57
43
—
100
20
80
—
100
20
—
80
100
75
25
—
100
20
80
— ■
100
19
81
—
100
50
50
—
100
—
—
100
— 107 —
Finally, during the period under review, the distribution of wool in the form
of merino, cross-bred and inferior wool (the latter exclusively employed in the manu-
facture of carpets, blankets, etc.) must be approximately the following, calculated
on the basis of the figures for 1915 '.
Countries Total Production Merino Cross-bred Inferior
United Kingdom 100 — 100 —
Australia 100 85 15 —
New Zealand 100 4 96 —
British South Africa 100 100 . — —
Falkland Islands 100 — 100 —
Canada 100 50 50 —
British India 100 — • — 100
Total for the British Empire . . .
Total for South America
Total for North America
France
Russia
Italy
Germany
Austria-Hungary
Spain and Portugal
Other countries
Total of universal production .... 100 38 36 26
It must be observed that, although the universal production of merino wool
was about equal to the production of cross-bred wool, the greater portion of the
production of the British Empire (60 %) consisted of merino wool, and the
greater portion of the South American wool output (82 %) was cross-bred wool.
The British Empire, however, disposed of 63 % of the universal production
of merino wool and 40 % of the universal production of cross-bred wool.
Countries
British Empire ....
France, Russia and Italy
North America
South America ....
Other countries ....
Total 100 100 100
3. Almost the whole of the wool produced in the possessions of the British
Empire (37.1 %) and in South America (15.1 %) was intended for other countries,
principally for European countries and the United States; thus these countries
obtained their full supply of wool.
Spain occupied a special position; indeed, although the Spanish suppHes of wool
were reduced, Spain could still dispense with imported wool and was even in a
position to export part of her clip.
Merino
Cross-bred
Inferior
63
40
9
10
7
40 (Russia
16
12
—
7
32
—
4
9
51
See Report of the Departmental Committee of the Textile Trades, Cd. 9070, London, 1918.
— 108 —
Exports into Europe were largely to intermediary countries (United Kingdom,
Germany, Russia, France, Belgium, Italy and other.less important countries), which
then re-ex])orted the wool to a greater or less extent to other European countries
in the form of washed, cleaned, carded, threaded, woven or prepared wool. Side
by side with this imported raw wool from extra-European countries there also
existed a considerable trade in native raw wool between the various European
countries, according to their economic requirements '.
The following are the figures for exports from the chief extra-European wool-
producing countries.
Total Exports of Raw Wool (or Washed Wool reduced and reckoned as
Raw Wool) in 1U12
Thousands of metric tons
Austraha 305.9
New Zealand 85.5
British South Africa 80.3
Argentine 169.7
Uruguay 80.8
Chile ." 12.1
Peru 3.8
Brazil 1.9
Falkland Isles 2.1
Total .... 742.1
To these figures must l)e added 24.2 thousand tons of exports coming from
British India by sea (up to March 31st, 1913), 22.7 from Turkey in Asia, 9.1 from
Algeria, 2.04 from Egypt (largely in transit), and other imimportant exports
from other non-European countries.
The export of raw sheep wool from these countries in 1912 may be estimated,
as a whole, at about 800,000 tons, and the export of all other kinds of wool can be
estimated at a slightly higher figure.
Australia- exported merino wool in the proportion of 85 %, South Africa and
Uruguay in the proportion of 100 % and 80 %. The Falkland Islands, New Zealand
and the Argentine, on the other hand, exported exclusively, or almost exclusively
(100 %, 97 %, and 90 %) cross-bred wool. The same may be said of the other South
American countries, while Asia exported inferior wools.
Sheep-wool exported in the British Empire represented about 60 % of these
exports; wiien we take into consideration the relatively limited amount of merino
wool furnished by Uruguay, we may conclude that the merino wool exported from
the various parts of the British Empire formed a still greaier proportion (nearly
90 %) of the total export of this kind of wool.
Sheepskins are iuchidrd in llic cxiiorlalidu (if sliri'|i wmil. but not oilier kinds
of wools and skins.
It should be noh'd llic mcdiair, wliiili is cliiflly c\|iiu'led from Turkey and
South America.
' Son the oflicial alalisUcs of Ibc inVcvnalional cominerco of llio various counlries; The Wool
Year-Book; The Bullclin o/ ihc Imperial Instiliile, I'.IIH ,■ I'he Report of the Departmental Committee
on the Textile Trades, and the slalislical Ycai'-tlooks ot Iho various countries.
- See Ojjicial Year-Book of the Commonwealth oj Australia, Melbourne, 1913.
95.9
12.8
68.8
6.8
48.8
4.8
24.8
2.6
3.9
0.02
4.2
1.3
2.2
0.2
3.5
0.04
0.8
0.2
— 109 —
4. Australian wool was cliiffly sent to the United Kingdom, France, Germany,
Belgium, the United State.s, Japan, Italy and Austria-Hungary: —
Raw Wool Waslied Wool
Exported from Australia in 1912.
Thousands of metric tons
United Kingdom
France
Germany
Belgium
United States
Japan
Italy
Austria- Hungary
Other countries
Total . . . 252.9 28.76
On the other hand, wools exported from New Zealand', British India (by sea),
and the Falkland Isles were nearly all exported to the United Kingdom, and also
some 70 % of South African wool.
Germany and France were the chief importers of Argentine wool, and took
respectively 37 % and 24 %; but the United Kingdom, Belgium and the United
States were also importers to an appreciable extent.
On the other hand, Uruguayan wool was chiefly exported to France, Belgium
and Germany; wool from Chile was exported chiefly to the United Kindgom.
Beyond a small quantity of skins and raw wool, imports into the United King-
dom in 1912 reached about 335.55 thousand tons of sheep wool, nearly all raw,
and these were allocated as follows: —
Ttiousands of metric tons
The Cape and Natal ... 54.7
British India 25.1
Australia 129.3
New Zealand 83.5
Canada 0.22
Falkland Isles 2.0
Other British Possessions . 0.13
Total . . 294.95
Peru 1.4
Chile 9.4
Uruguay 4.3
Argentine 25.5
General Total 335.55
The United Kingdom therefore imported about 42 % of the raw wool exported
from non-European countries. Rather more than half of this enormous stock
remained in the United Kingdom, which re-exported the remainder (153,000 tons),
to which must be added 21.4 thousand tons of wool produced at home.
Although the Customs statistics do not distinguish between raw wool and washed
wool, it may be assumed that a large part of the exported British home-produced
wool and colonial wool consisted of raw wool^.
' See New Zealand Year-Book, 1914. The data regarding the other countries were taken from
the Customs statistics, and for the South American countries from the Wool Year-Book.
- See Annual Statement of the trade of the United Kingdom with foreign countries and
British possessions, 1914. The consideralile proportion of raw wool in the Britisli wool exports
has been confirmed by the reply from the Board of Trade to the first statistical questionnaire
sent by the League of Nations regarding raw materials. As to the re-export of colonial wool, the
information which we have received from tlio Board of Trade, througli our London correspondent,
Miss Hook, has confirmed our opinion.
— 110 —
These exports were sent to nearly all European countries as well as to the
U. S. A. and Canada, as the following table for 1912 will show: —
Re-export of Export of home-
Colonial sheep wool produced sheep wool
Thousands of metric tons
Russia 0.045 2.3
Sweden 0.13 0.4
Germany 45.9 3.2
Netherlands 3.9 0.8
Belgium 29.6 0.02
France . 34.9 0.6
Switzerland 0.013 —
Italy 0.09 0.8
Austria- Hungary ... 0.02 —
U. S. A 37.0 11.5
Mexico 0.045 —
Other countries. . . . 0.045 0.5
Total .... 151.688 20.12
Canada 1.2 1.2
Other British Possessions 0.03 0.09
General total . . 152.918 21.41
5. The United Kingdom, which formerly enjoyed a world monopoly of woollen
goods, witnessed the rise, during the last fifty years of peace, of the woollen manu-
facturing industry in the U. S. A. and in the principal countries of Europe, an industry
which covers all stages from washing to the final finishing processes.
Some countries also easily succeeded in exporting washed wool. In fact, in
1912, Germany exported 6.5 thousand tons of washed merino and 5.2 thousand
tons of washed cross-bred wool, while France exported 39.78 thousand tons of raw
wool, of which the greater part consisted of washed wool. The same may also be
said of the 113.4 thousand tons of cross-bred wool exported by Belgium'.
As regards yarns and fabrics (piece goods) this is only the case with regard to
certain qualities (for the greater part inferior), a state of affairs which is said to
be due to the protectionist policy pursued by certain States.
As regards France, special mention must be made of the fancy materials
for women, manufactured at Lille and at Roubaix, a trade which profited by the
privileged position of France with regard to feminine fashions".
This has brought about a new orientation in the international wool trade
of the United Kingdom and has led in particular to the importation into the United
Kingdom of a very considerable quantity of certain woollen products of European
manufacture, as well as a marked increase in the exportation from the United
Kingdom of semi-manufactured products.
Indeed, in 1912 the United Kingdom imported about 1.36 thousand tons
of waste (dechets de laine), of which 0.63 came from France, 0.23 from Belgium,
0.14 from Germany, 0.13 from the U. S. A. and 0.13 from Italy; and almost as
many tons of woollen rags (not used for manures), of which 0.4 was derived
from Germany, 0.4 from France, 0.04 from the U.S.A. and the rest from Russia,
Turkey, Denmark, Norway, Sweden, Portugal, Netherlands, etc.; 13.88 thousands
of tons of woollen and worsted yarns (fils de laine), of which 7.30 were imported
from Belgium, 4.39 from France, and 1.50 from Germany; about 70 million yards ^
of cloths, stuffs, ect., (tissiis de laine) from Germany, France, Switzerland, the
Netherlands, Belgium, Austria, Hungary and other countries of lesser importance;
1.9 million square yards of carpets and rugs from Belgium, Turkey, Germany,
France and Persia.
Further, we may obtain some idea of the importance of the exportation of
semi-manufactured products from the United Kingdom when we realise that that
' See The Wool Year-Book ; The Bulletin of the Imperial Institute, 1918, and The Report
of the Departmental Committee on the Textile Trades.
- See MiNisTfiRii dii Commekce, Rapport j,'enei'al sui' rindustrie I'ran^aise, t^aris 1919.
•i 1 yard = 0.914 metres.
— HI
country exports 8.9 thousand tons of noils and carded or carbonised wool; 20.3
thousand tons of tops and 6.1 thousand tons of woollen rags, exported chiefly to
Germany, Japan, Russia, etc., and also 40 thousand tons of yarns.
As regards the fabrics, the following table will show their distribution: —
Fabrics
'Woollen"
Millions of
Russia 0.7
Sweden 0.2
Norway 0.2
Denmark (incl. Faroe Isles) . . 0.8
Germany 6.7
Netherlands 4.2
France 5.5
Belgium 3.8
Switzerland 0.8
Portugal 0.1
Spain 0.3
Italy 1.3
Austria- Hungary 1.8
Greece 1.0
Bulgaria 0.1
Roumania 1.0
Turkey: in Europe 2.0
in Asia 1.1
Egypt 0.5
China (except Hong-Kong) . . 5.4
Japan 5.0
U.S. A 2.1
Cuba 0.4
Mexico 0.4
Colombia 0.3
Venezue'a 0.2
Ecuador 0.2
Peru 1.1
Chile 2.8
Brazil 2.0
Uruguay 1.0
Argentine 6.0
Other countries 2.2
Total 61.2
Malta and Gozo 0.1
Cape of Good Hope 1.0
Natal 0.3
Transvaal 0.6
British India 7.4
Straits Settlements and Depend. 0.3
Ceylon and Dependencies ... 0.1
Hong-Kong 2.8
Australia 11.0
New Zealand 2.5
Canada 11.9
Newfoundland and Labrador . . 0.1
British Antilles 0.5
Other possessions 0.7
Total ' 39.3
General total .... 100.5
"Worsted"
yards
0.1
0.3
0.2
0.3
1.4
0.7
1.4
1.1
0.6
0.1
0.2
1.8
?
0.2
?
0.3
1.8
1.0
0.7
3.6
3.2
10.0
0.4
0.4
0.1
?
?
0.3
1.8
1.0
0.7
3.6
1.7
39.0
0.1
1.2
0.2
0.4
3.8
0.3
?
2.8
5.7
1.2
15.9
?
0.4
1.2
33.2
72.2
— 112 —
Besides woollen fabrics (of which a small part is mixed withothertextile fabrics),
we may note 0.1 million yards of damask, etc., exported mainly to Australia, Canada,
Japan, Germany and the U.S.A.; 0.4 million yards of mohair and woollen plush to
Canada, France, the U.S.A. and Italy; 7.6 million yards of flannels and delaines,
exported chiefly to the possessions, as well as to the U.S.A., Japan, Argentine, Ger-
many, China and France; 8.8 million square yards of carpets to the possessions and
the chief European countries, China, Japan, the U.S.A. and the South American
countries, and also other products of minor importance.
The principal imports of the United Kingdom in 1912 were therefore a small quan-
tity of waste and woollen rag (2.7 thousarid tons), 13.^ thousand tons of yarns and
70 million yards of fabrics; the U.K. exported 20.3 thousand tons of tops, 6.1
thousand tons of rags, 8.9 of noils and carded or carbonised wool; 40 thousand tons
of yarns and nearly 200 million yards of fabrics.
With regard to yarns, in particular, we note that only two countries show
an excess of exports over imports, namely: France and Belgium, while Germany,
Austria-Hungary, Italy and Switzerland show a marked excess in imports.
The remaining countries exported only to a limited extent, although the imports
of Russia, Japan, the Netherlands, Canada, Sweden, Norway, the Balkan States
and Turkey were of fairly large dimensions.
As regards fabrics it may be said, in a general way, that value of exports
were in excess of value of imports in the United Kingdom, Germany, France, Austria-
Hungary, the Netherlands and Persia; and were less than imports in Italy, Switzer-
land, Belgium, Denmark, Spain, Bulgaria, Turkey, United States and British India;
and, finally, that the remaining British possessions. South America, Russia, Sweden,
Norway, Portugal, Roumania, Serbia, Greece, Japan and China hardly exported
at all '.
It is very interesting to observe that Germany succeeded in importing a quantity
of fabrics from the United Kingdom with a view to dyeing them; this was due to
the fact that the dyeing could be carried lout in Germany more cheaply and by
more effective processes^.
Speaking generally, it may therefore be said that:
(1) The United Kingdom had maintained its position as the chief source of
the world's supply of yarns and fabrics, its exports amounting to 40,000 tons
of yarn and to 26.1 millions sterling w'orth of fabrics.
(2) Next in order came: Germany, France, Austria- Hungary, Belgium,
Switzerland, Italy.
(3) The remaining countries of the world did not export yarns and fabrics
at all, or only in insignificant quantities. Moreover, they were in a more or less
degree dependent on imports from the countries mentioned in the preceding para-
graphs. This was particularly noticeable, as regards yarns, in the case of Russia
and Japan; the United States, on the other hand, were almost independent in respect
of yarns; though, as regards fabrics, their dependence on imports was very
marked.
6. The figures, together with the comments set forth above, which refer to
international commerce, afford a preliminary idea of the extent to which the various
countries of the world were contributing, before the war, to the production of
manufactured woollen goods.
A still better idea may be obtained if we examine the statistics of production
in these countries ^
' See the Bulletin oj the Imperial Institute, 1918.
- See Report of the Departmental Committee on the Textile Trades ; ami llu' HuUelin roferroil to
above.
' See: The Wool Year-Book, and the Statistical Year-Books of the various countries under
review. It must be noted that the figures for production are always more reliable than the figures
for the spindles and looms on account of the varying returns of the latter in the countries under
review.
— 113 —
The most recent statistics for United Kingdom, i.e. for the period before the
war, showed a production of tops amounting to about 108.9 thousand tons, and of
noils, amounting to 13.6 thousand tons, and are evidence of the existence of rather
more than 6 million spindles and of 100,000 mechanical looms, producing 118,000
tons of woollen yarns, 170 milhon yards of woollen fabrics and 180 million yards
of worsted fabrics and in addition some miUion yards of less valuable fabrics.
These data are, in part, obtained from estimates, and cannot be very closely
compared with the exports statistics given in the tables above; nevertheless, they
serve to bring out, in a general way, the large consumption of woollen articles in
the United Kingdom and the large exports of yarns and fabrics from that country.
On the other hand, some statistics which will be given are evidence of the
effectiveness of Germany's competition with the United Kingdom during the last
few years before the war.
Germany was, in fact, manufacturing some 60,000 tons of tops, she possessed
some 5 million spindles and more than 100,000 looms, and she was producing more
than 90.7 thousand tons of woollen yarns, and about 250 million yards of fabrics
(woollen and worsted).
Although Germany continued to be a large importer of tops and yarns from the
United Kingdom, she had nevertheless succeeded in appreciably reducing her
dependence upon that country and even in competing effectively with British
manufactures in foreign markets — chiefly as regards ordinary products.
It should also be observed that in British India the percentage of imports
(57.7) of woollen products from the United Kingdom was less, just before the war,
than it had been 30 years previously (91.9). This change had taken place to a
great extent in favour of Germany, who had contrived to increase her exports to
this British possession from 3.6 % to 27.8 %.
Other British possessions, South America and many European countries, were
importing German woollen articles; among these countries were Russia, Scandi-
navia, Boumania, Austria, the Netherlands, Switzerland, Italy and even the
United Kingdom itself.
The 3,000,000 spindles and the 60,000 looms which France possessed immedi-
ately before the war, were producing rather more than 36.3 thousand tons of woollen
yarns and 49.8 thousand tons of worsted yarns, and nearly 60 thousand tons of fabrics.
Belgium and Germany were the chief importers of French combed and carded
wool, while the United Kingdom was the chief importer of French yarns. As regards
Belgium, it is well known that Antwerp was one of the principal wool markets of
Europe, particularly for South American and Australian wool.
It is also generally known that a great quantity of wool was retained in Belgium,
where it was washed, combed and carded and subsequently re-exported, but in this
country also we note that there was a production of yarns and fabrics representing
more than 500,000 spindles and 4,000 looms.
Austria was to a great extent dependent on Germany for combed and carded
wool, and on Great Britain for yarns; she exported her products chiefly to the Balkan
countries and Turkey.
Switzerland imported a considerable quantity of washed wool, worsted yarns
and fabrics obtained, for the most part, from Germany, France and the United
Kingdom. She exported yarns, fabrics, and various woollen articles, chiefly to
European and South American countries.
Italy possessed about 800,000 spindles and over 16,000 mechanical looms,
besides more than 20,000 hand looms; she imported washed wool and tops chiefly
from France, Belgium and the United Kingdom, and also a considerable quantity
of yarns.
Her annual production of textiles amounted to 30,000 tons, to which should
be added a certain quantity of imported products, of superior quality, obtained
from abroad.
She exported a small quantity of fabrics to Argentine, Turkey, British India
and British South Africa, and a few other countries.
In spite of the small extent of their commerce with foreign countries, the
United States possessed immediately before the war a highly developed woollen
industry which was almost entirely devoted to supplying their own internal
requirements: this industry was represented hy 4.7 million spindles and 75 thousand
looms, producing about 272.2 thousand tons of yarns and 400 million yards of fabrics,
besides a considerable quantity of second-grade products (carpets, blankets, etc.).
Russia in a similar way possessed a highly developed woollen industry, which
was nevertheless inadequate to maintain regular exports and to satisfy completely
the requirements of the home market.
II.
POSITION DURING THE WAR
7. We do not propose to give a detailed account of the industrial position with
regard to wool during the world war. We will confine ourselves to such matters as
will enable us to arrive at the conclusions with which we are concerned.
The considerable reduction in the European flocks of sheep during the war
should be noted at the outset'.
This reduction was of negligible dimensions in Germany, slight in the United
Kingdom, but very extensive in France as a result of the invasion by the enemy
(the number of sheep has decreased from 16.5 million head to 9.1), in Russia, and in
certain Balkan countries.
In view of the fact that there was a general difficulty in obtaining food in the
neutral countries, there was a marked decrease in the number of sheep in Denmark
(from 0.51 to 0.45 million head), in Norway (from 1.33 to 1.18), in the Netherlands
(from 0.8 to 0.*".), etc.
Although certain countries were able to avoid this decrease, and even to increase
somewhat the numbers of their flocks, there can be no doubt that the war has very
considerably reduced the total number of sheep in Europe, a total which was already
insufficient.
In North America, a slight reduction of 1 % million head is noted in the U.S.A.,
and is only slightly compensated for by an increase in Canada; but there had been
a marked decrease in South America already on the eve of war, particularly in
Argentine, Brazil and Uruguay, mainly owing to unfavourable climatic conditions.
It does not appear, from the scanty information available, that there has been
any marked changes in the total stock of sheep in India and the South African
Union during the war; the same applies to the total of sheep in Australia and New
Zealand, if we disregard the slight and transient decrease which occurred during
the first years of the war.
8. But the European wool industry was even more severely hit:
(1) By the economic isolation of the Central Powers, which included the
Belgian factories and the occupied I'rench Departments; the latter, as is
known, were the chief centres of the French wool industry (81 % of the
spinning mills) ^
' See International Agricultural Year-Boak, 1917-18, ami the other statistical publications of
the I nternational Agricultural Institute.
^ See Economic Survey of certain Countries specialh/ ajjcctcd In/ the Wdr til the clusr oj llic Year
1919, London 1920. I'liliiishiMl hy His Majesty's Stationery Ollice.
— 115 —
The Central Powers were almost entirely cut ofT from their wool supplies
and had to content themselves with exhausting their existing stocks and
resorting to substitutes;
(2) By the difficulties of maritime transport, which impeded the import
of overseas wool.
Under these conditions the export of South American wool was more and
more directed towards the U.S.A.; the export of South African wool decreased to a
marked extent : it practically ceased to be directed chiefly to the United Kingdom and
was largely diverted to the United States and Japan, while the export from Australia
and New Zealand, now much reduced, went more and more to the factories of
the United Kingdom '.
The changes in the totals and destinations of the wool exported from the
Rio de la Plata from October 1st, 1913, to September 30th, 1918, are shown by the
following table: —
Exports to 1913-14 1915-16 1916-17 1917-18
Thousands of nielrir tons
France 46.5 14.2 16.4 12.4
Belgium 22.7 — — —
United Kingdom 19.3 13.8 15 2.6
United States of America. . . 19 67.8 113.9 95.1
Italy 3.8 26.5 17.4 17.4
Spain 0.013 2.9 1.5 3.8
Netherlands 1.1 4.8 3.1 0.06
Germany and Austria .... 53.7 — — —
Other countries 4.3 13.1 5.1 15.5
Totals 170.413 143.1 172.4 146.86
Attention is drawn to the depression from October 1915 to September 1916.
due to the European War, and to the depression of 1917-1918, which coincided
with the period of the submarine war. The U. S. A., which imported 11 %of this
wool, succeeded in concentrating 64 % of it in their hands.
On the other hand, the total exports from the South African Unions during
the war, show a continuous and considerable reduction, with the exception of the
year 1915: —
Raw wool including scoured wool not reduced in terms of raw wool.
1914 1915 1916 1917 1918
Thousands of metric tons . 60.8 77 61.9 53.4 52.4
On the other hand, whereas the United Kingdom imported about 70 % of this
wool before the war, it hardly imported 20 % during 1917 and 1918; the benefit
of this reduction was reaped by the United States and Japan.
United Kingdom
Canada
France
Italy
Japan
U.S. A
Argentine
Totals 5.40 6.89 47.94 45.54
Scoured wool
Raw wool
Thousands of metric tons
1917
1918
1917
1918
0.42
0.22
9.33
15.61
0.07
0.62
0.08
0.10
—
0.03
0.12
0.045
—
0.56
0.47
0.35
16.48
13.00
4.44
5.66
22.00
16.00
—
—
—
0.15
' See the Wool Year-Book and the Customs statistics of the various countries.
— 116 —
The reduction of Australian export was even more marked; but the United
Kingdom was able to increase the real quantity of her own purchases, with the
exception of the raw wool imported in 1917-18, always considerable.
Raw Wool
Thousands o( metric tons
United Kingdom
France ....
Germany . . .
Belgium ....
U.S. A
Japan ....
Italy
Austria- Hungary
Other countries
19 1. 'i
1914-15
1915-16
1916-17
1917-18
84.1
145.0
91.8
128.5
63.1
72.5
5.8
6.2
5.6
2.6
42.7
1.4
—
—
—
23.5
1.4
—
—
—
6.7
28.0
52.2
0.01
26.0
3.3
10.3
15.7
7.64
1.3
2.6
8.3
19.6
11.6
8.0
5.3
0.4
—
—
—
(
Canada
0.43
0.2
0.33
2.14
\
1 Egypt
—
—
—
7.04
0A{
India
0.2
0.09
0.14
0.35
i
1 New Zealand
0.25
0.004
" • —
—
1
Other countr
. 0.8
0.66
0.01
—
Total
241.1
202.28 186.454 153.83 110.53
United Kingdom
France ....
Germany . . .
Belgium ....
U. S. A
Japan ....
Italy .....
Austria- Hungary
Other countries
Total .
Scoured and Washed Wool
Thousands of metric tons
1913
1914-15
1915-16
1916-17
1917-18
11.9
21.9
17.1
21.3
26.9
8.5
0.9
0.5
0.5
0.03
4.6
0.08
—
0.7
—
2.4
0.42
—
—
—
0.05
2.07
12.7
—
0.66
1.62
2.8
3.4
2.3
2.1
0.08
0.3
2.2
1.2
0.22
0.03
0.7
—
—
—
1
' Egypt
—
—
—
0.46
0.05 '
1 India
0.06
0.11
0.1
0.002
i
1 New Zealand
0.001
0.04
—
—
{
Other countr.
0.14
0.19
0.26
0.14
29.23
30.091 36.24 26.36
30.512
These are the figures for New Zealand:-
Export of wool (raw and scoured)
not reduced to terms of raw 1913
wool 84.6
Exports to United Kingdom 76.3
Thousands of metric tons
1914 1915 1916 1917 1918
100.0 89.2 84.1 80.9 49.3
88.7 83.0 73.7 76.2 40.5
There is no detailed information available with regard to the resources in wool
of the exporting countries mentioned above: but if we take into account, on the
one hand, that the quantity of sheep in Australia, New Zealand and in the Cape
has not as a whole undergone any reduction during the war*, and if we recall, on
the other hand, the considerable reduction sulTered during the same period by the
export trade of those countries, we may assume that a large stock of wool must
have accumulated in those countries during the war.
' The change in llie composition of the floclcs of sheep as regards quality, due to tlie develop-
ment of the frozen moat trade, must, however, be noted. Tiiis trade liud begun to develop before
the war, but lias lieen considerably p.xtended since 1915.
— 117 —
A study of the statistics of the chief importing countries enables u« to arrive
at further conclusions \s-ith regard to the international traffic in wool during the war
and to arrive at a better estimate of the resources of these countries, in view of
the fact that the divergencies between the customs statistics of the exporting and
of the importing countries — which are considerable even in normal times — in-
creased in consequence of transport difficulties, submarine warfare, etc.
It must be observed, first of all, that the total supply of wool in the United
Kingdom suffered a considerable decrease: —
1913 191i 1915 1916 1917 1918
Total imports of Wool Thousands of metric tons
in the United Kingdom . . 363.1 318.7 420.2 280.7 282.7 187.6
From:
Russia 3.2 1.8 — 0.09 — —
Germany 2.1 1.04 — — — —
Belgium 1.4 1.2 — — — —
France 11.1 8.6 0.09 1.7 0.09 —
Turkey in Asia 3.4 1.7 0.41 1.2 1.4 2.8
Egypt 1.9' 1.9 2.9 2.5 1.3 1.0
Persia 0.9 0.5 0.59 0.7 0.0004 —
China (excluding Hong-Kong) 1.0 0.6 0.54 0.18 0.1 0.1
U. S. A 1.2 2.1 1.09 0.13 0.1 0.004
Peru 2.4 1.3 1.4 1.2 0.54 0.8
Chile 1.0 8.2 6.9 3.7 2.5 0.6
Uruguay 4.4 0.8 0.5 0.4 0.86 0.2
Argentine 25.2 20.8 27.7 14.4 14.5 2.8
Cape of Good Hope. . . . 42.1 37.1 43.0 28.5 13.7 12.9
Natal 18.3 18.05 19.0 12.4 5.5 1.2
British India 24.9 21.3 29.7 29.4 21.9 28.1
AustraUa 120.2 108.5 193.3 109.6 153.4 92.9
New Zealand 82.2 83.7 90.7 71.6 64.5 40.5
Falkland Islands 2.8 2.0 1.4 1.2 0.8 2.6
This general decrease resulted not only in the complete stoppage, or the reduc-
tion to negligible quantities, of the imports from other European countries (imports
which consisted, for the most part, of washed wool) but also in the diminution
in the imports of raw wool for South America, without this diminution being com-
pensated for by imports from the British possessions. On the other hand, the imports
of yarns and fabrics in the United Kingdom — which were already small — were
reduced to an absolutely negligible figure.
It might seem a paradox that the United Kingdom was able during the same
period, to retain at home a quantity of wool considerably larger than it had done
before the war and to accumulate large stocks; but the following points must be
kept in mind: —
(1) The great decrease in the export of British wool, which fell gradually from
21.4 thousands of tons in 1912 to 1.04 in 1918.
(2) The decrease also in the export of waste, which fell from 5.8 thousands
of tons to 1.45; noils from 8.9 to 2.3 thousands of tons; tops from
20 . 3 to 6.8; woollen rags from 6 . 1 to 0 . 04 ; yarns from 39 . 9 to 7 . 4 ; and
finally, woollen fabrics from 100.5 to 67.4 millions of yards and worsted
fabrics from 72.2 to 32.1; to these must be added the decreases noted
in all other woollen articles, with the exception of woollen blankets
(which increased from 1.1 milHon pairs in 1912 to 3.1 in 1918, mainly
exported to France and Italy) and also with the exception of flannels
and delaines.
' Including the Anglo-Egyptian Sudan. See Annual Statement of the trade of- the United-
Kingdom, 1919, and, for the following figures, the Customs statistics of the various countries.
— lis —
(3) Finally, the enormous reduction in the re-export of wool, which fell from
153 thousands of tons in 1912 to 9 . 072 thousands of tons in 1918 (almost
entirely exported to France and Italy).
It should also be noted, moreover, that the imports of alpaca, vicuna wool,
and lama into the United Kingdom suffered no marked decrease; this was not the
case in respect of camel skins, which fell from 3.81 thousands of tons in 1912 to
1.14 in 1918, and of mohair, which fell from 17.10 to 2.54. The re-export of these
articles ceased almost entirely; in the case of alpaca, vicuna, and lama wool the
re-exports were negligible (about 0.14 thousands of tons), but were considerable
in the case of camel skins and mohair'.
France, which formerly imported rather more than 250 thousands of tons of
wool and waste (principally from Australia — average for 1911-1913: 91.3; from
Argentine 80.2; from the United Kingdom 35.6; from Uruguay 19.8) reduced its
consumption to a point where, in 1918, it disposed of only 44,753 tons, distributed
as follows: —
From: Metric tons
United Kingdom 7,644.5
Australia 4,423.3
Uruguay 3,774.7
Argentine 15,968.3
Algeria 3,936.8
Other countries 9,005.4
Total . . . 44,753.0
She was able, however, to import from the United Kingdom a quantity of
tops, yarns and fabrics far superior to the pre-war quantities.
The facts were not the same in regard to Italy, but this country was able to
increase its imports of raw wool from 10,000 tons to 34,000 tons in 1918, and was
thus able to meet a marked reduction in the import of yarns and fabrics coming from
the United Kingdom and other countries : —
Metric tons
United Kingdom 5,757.6
Spain 1,374.4
British Indies and Ceylon . 1,715.6
Australia 7,481.2
Egypt 1,741.9
Argentine 11,474.9
United States of America . . 435.7
Uruguay 3,902.5
Other countries 475.3
Total . . . 34,359.1
The few thousands of tons of washed wool, which also constituted one of Italy's
imports, were not appreciably affected.
The following table shows the increase of imports to the United States from
1914 to 1918 (year ending on June 30th) and the fluctuations which look place in
the imports from the various countries*: —
' In spite of the large stocks of wool in the United Kingdom, the difTiculties arising in its
manufacture by reason of the lack of German dyes must not be forgotten. This was not the case
as regards the machinery, which was almost entirely supplied by home factories. See lieport
of the Departmental Committee on the Textile Trailes.
^ See Foreign Commerce and Navigation of the United Stales, Washington, 1918. This puliii-
cation gives these statistics for the fmancial year.
— 119 —
Sheep Wool, Camel Skins, etc.
1914 1915 1916 1917 1918
Thousands of metric tons.
Total imports 53.5 100.7 182.0 126.8 137.8
From:
France
Spain
United Kingdom ....
Canada
Mexico
Argentine
Chile
Ecuador
Peru
Uruguay
China
Austraha
New Zealand
British South Africa . .
To these figures should be added some thousands of tons of combed wool
(an amount which has not varied much during four years: Canada was able to in-
crease the export of its own combed wool, while exports from the Argentina replaced,
in part, the British exports which had practically ceased); in addition there were
some tens of thousands of tons of carpet, which was considerably reduced owing to
the interruption of imports coming from other European countries. These imports
were only partly compensated for by the increased exports from Central America,
South America and South Africa.
Japan herself was able greatly to increase her imports of wool during the war.
Her sources of supply in 1918 were as follows: —
Millions de kin'
China 2.4
Kwantung 0.09
Great Britain 0.8
South America 4.3
African countries 20.5
Australia 10.5
Other countries 0.3
2.4
0.45
0.03
0.04
0.0004
0.013
0.03
0.23
0.4
17.7
17.64
13.6
0.68
0.9
0.13
1.04
0.73
0.45
0.72
0.36
0.54
0.59
0.54
0.14
13.9
29.66
49.9
84.9
73.5
0.04
1.09
4.3
5.5
5.5
— •
—
—
0.18
0.45
—
0.36
1.09
0.1
2.09
3.6
6.62
4.0
15.1
8.07
0.04
0.27
1.09
6.2
6.0
10.7
22.94
71.4
0.45
13.6
1.2
0.18
7.6
0.14
1.9
0.23
10.75
28.1
10.7
25.3
Total . . . 38.8
These imports enabled the imports of yarns to be reduced from 8.3 millions,
yen in 1912 to 0.2 in 1918, and were the foundation of an export trade in manu-
factured goods to the countries of the East.
The reduction in the export of raw wool and finished wool for European coun-
tries was also due to the prohibition of export issued by the various Governments;
it would be useless to give these prohibitions in detail, as they are all alike.
We have referred above to an increase in the export of combed wool from the
Argentine to the U. S. A. The development of the wool industry, which took place
during the war, in South America (Argentine, South Brazil, Montevideo, Chile), is
indeed very striking. A similar development may be noticed in Australia. Even
before the war this British possession was exporting a considerable amount of
scoured, washed and combed wool, and was also working up wool for local consum-
ption. The export of tops was encouraged by special bounties provided by the
Bounties Act of 1907, the amount of which varied from year to year.
During the war the export of tops increased from a total of 1 .86 thousands
of tons in 1914-1915, to 2.09 thousand in 1914-1918, while the home consumption
of wool, in spite of fluctuations, rose from 4.76 to 7.17 thousands of tons^.
' 1 kin = 600 grammes. See Japanese Financial and Economic Year-Book, 1918-19, and
Monthly Return of the Foreign Trade of the Empire of Japan.
^ See Official Year-Book of the Commonwealth of Australia. 1920.
— 120 —
9. The considerable export of wool from Australia and New Zealand to the United
Kingdom during the war was favoured by an agreement with regard to the pur-
chase of wool between the United Kingdom and the Dominions in this part
of the world; this agreement had the effect of creating, alongside the free market,
a wool market monopolised by the United Kingdom.
Encouraged, on the one hand, by the success of the requisitioning at a price
higher by 35 % than that of July 1914 of the whole British wool production
in 1916, and influenced, on the other hand, by the ever-increasing requirements
of the war, the British Government concluded a contract with the Governments
of Australia and New Zealand for the purchase of the whole of the wool produced
in these Dominions. In October 1916, it began to buy, in these Dominions, the
wool production for that year which had not yet been sold to private purchasers.
The minimum price was fixed at a price exceeding by 55 % the average market
price in 1913-1914, i.e., for Australia at 15i4d. per lb. of raw wool, delivered at
the wharf; the Governments of Australia and New Zealand were left free to pay the
producers different prices according to the various qualities of wool. This mini-
mum price only held good for wool used by the State; on the other hand, it was
understood that the British Government, if it should make a profit in re-selling
this wool, should share it equally with the Governments of Australia and New
Zealand, which in their turn would distribute a bonus to the producers over and
above the minimum price.
The control over the execution of this agreement was entrusted to the Central
Wool Committee, assisted in each State by a Committee composed of producers,
sellers and persons engaged in industry, etc., the President being appointed by the
Government.
This system was renewed, from time to time, throughout the war and for a
year after hostilities had ceased.
Thus, all wool imported from Australia from 1916-17 to 1919 in the various
countries was bought through the agency of the United Kingdom.
At the same time, another system of sale ' was established for wool from India;
but for South African wool it was only partially established during 1917-1918.
In the official report quoted in the footnote onthe profits derived from the wool
trade and industry in United Kingdom during the war, we note that, in spite of
the considerable profits derived by the British Government from this trade in
wool, the prices obtained at sales of Colonial wool were lower than those of South
American wool, sold in the free market.
Average prices in London of Merinos and Crossbreds in pence
per lb., calculated on a basis of clean-scoured wool
Quality
July 1914
d.
70's
30 1/2
64's
28 1/2
60's
28
58's
26
56's
24
50's
201/2
48's
16
46's
151/2
44's
15
40's
14 1/2
Government Sale Price
(April 1 — Nov. 30, 1919i
d.
63
62
- 67 1/2
— 66
59
— 65
521/2
46
- 55 1/2
— 49
411/2
371/2
33
- 44 1/2
- 39 1/2
- 35
311/2
28 1/2
- 33 1/2
- 30 1/2
Profiteering Act, 1919. Findings by the Committee appointed to investigate the Cost of Pro-
duction and Distribution of Wool, Tops and Yarns at all stages and the Profits arising therefrom
(Cm. 353, London 1020). The Indian wool \va.s sent to tho United Kingdom and distrilinted
under the control of the Briti.sh Government at a |)ricc fixed by agreement between the Indian
Government and the War Office.
d.
d.
24
99
221/2
84
21
79
191/2
72
18
63
16 V4
38
15^4
34
141/2
32
14
30
121
Average Prices of South American Wool, c.i.f. Liverpool, in Pence per lb,
calculated on a basis of clean-scoured wool
Quality Commercial year 191 '« Commercial year 1919
64's
60's
58's
56's
50's
48's
46's
44's
40's
This report does not deal with the comparison of the average price of merino
and cross-bred wool in London with the average price of South American wool : but it
must, at any rate, be considered that the export duty of 4 % of the value of raw
and washed wool — a duty estabhshed by Uruguay on November 9th, 1917 — exer-
cised some influence on the considerable rise in the price of American wool; the
same is true of the export duty of 12.6 cents gold per iiilogram of washed wool
(and also a variable and larger sum per kilogram of unwashed wool) which was
established by Argentine in March 1918 *.
10. The profound changes in the international wool traffic, which we have
already noticed (without taking into account the various changes which took place
in other neutral countries which, on account of the small importance of their wool
production, are not of great interest) gave rise to: —
(1) An enormous development in the manufactures of the United States
and the United Kingdom, as a result of which these countries were enabled to
meet their enormous war needs, and, in the case of the United States, were also
able up to 1916 to support a large export trade in manufactured articles.
(2) A considerable development in Italian manufactures, which were thus
able to supply a large part of their country's war requirements; also of Japanese
products, which both supplied the needs of home consumption and also partly
replaced Germany in supplying Oriental countries^.
France endeavoured to make up in part for the loss of her best wool centres
by developing production in other centres in the South; but the results obtained,
although considerable, were naturally inferior to those in the countries which have
just been mentioned. The figures for the United Kingdom — 6 million spindles
and 100,000 looms — increased in 1918 to rather more than 8 million spindles and
120,000 looms; while those of the L^nited States increased from 4.7 million spindles
and 75,000 looms to 6 million spindles and 80,000 looms. Moreover, up to the
end of June 1916, the latter country supported an export trade in manufactured
articles which increased more quickly than the rise in prices, and which was chiefly
exported to Europe and consigned to the Entente countries.
' See the Wool Year-Book. It is held that the countries which purchased wool from Auf tralia
and New Zealand through the intermediary of the United Kingdom paid a lower price than they
would have paid if the United Kingdom had not monopolised this wool. But it must be considered
that the high price of the South American wool was undoubtedly influenced by the British mono-
poly of the Colonial wool and that, on the other hand, the science of economics is not yet sufficiently
advanced to allow us to determine the extent of variation of an economic factor by means of the
hypothetical variations of one of its conditions.
- For the data relating to this paragraph, see the sources already quoted.
122
Exports of wearing apparel
Millions of dollars
Europe . . .
North America
South America
Asia ....
Oceania . . .
Africa . . .
1914
1915
1916
1917
0.151
7.116
14.002
0.679
1.771
1.541
2.509
3.296
OAOb
0.053
0.129
0.188
0.060
0.281
2.628
0.059
0.050
0.107
0.076
0.189
0.011
0.011
0.024
0.041
1918
191'.
1915
1916
191"
1918
0.868
10.944
20.328
2.371
0.320
0.647
5.651
6.138
6.267
2.340
0.046
0.078
1.653
2.292
0.354
0.040
0.118
5.023
.1.148
0.877
0.064
0.029
0.169
0.253
0.077
0.003
0.009
0.021
0.011
0.014
Total . . . 2.148 9.109 19.368 4.452
Exports of other Products (except Wool Rags)
Millions of dollars
191'. 1915
Europe
North America
South America ....
Asia
Oceania
Africa
Total . . . 1.668 16.829 33.332 12.342 3.982
As regards Italy, the production of tops was increased threefold; the number
of spindles exceeded 1 million, and mechanical looms numbered 20,000.
During the years 1912-1918 the importation into Japan of wool yarns decreased
from 8.3 to 0.3 million yen. The value of the production of manufactured woollen
products (flannels, blankets, clothes, etc.) increased from 18.3 to 85.9 million yen,
and in 1918 the exportation of tissues amounted to 11.7 million yen, divided as
follows. —
Millions of yen
China 2.1
Kwantung 1.1
British India 0.8
Asiatic Russia 2.1
Great Britain 1.0
France 2.8
African countries .... 0.7
Other countries 1.1
Total .... 11.7
III.
POSITION AFTER THE WAR
11. The two years which followed the conclusion of the armistice with Germany
were marked by two very different phases in the condition of the world's wool
industry.
In fact, after a short period of hesitation at the outset, the year 1919 was notable
for a resumption of commercial activity in the various countries, due to'the disap-
pearance of the dangers which beset maritime transports, the sudden opening of
huge commercial markets and the removal of export prohibitions (except to Bolshe-
vik Russia). The United Kingdom imported a quantily '^f sheeps' wool very
much in excess of that imported in 1918, a double amount of camel skins and a
— i2;{ —
quadruple amount of mohair; moreover, 1.36 thousands of tons of yarns were
imported as against the 7 tons in 1918, three times the amount of manufactured
wool, etc.
On the other hand, the United Kingdom exported 8.39 thousands of tons
of home-produced wool as against 1.04 in 1918, double the amount of waste and
almost three times the amount of noils and carded or carbonised wool, but about
the same amount of tops as in 1918 (6.80 thousands of tons); finally, the U. K. was
able to export 14.6 thousands of tons of yarns as against 7.44 in 1918, 131.1 millions
of yards of woollen fabrics as against 67.4; 33.2 millions of yards of worsted fabrics
as against 31.1 in 1918, and a greater quantity of woollen articles, with the
exception of blankets; the export in these was reduced by a third.
In the same way the re-export of wool from the U. K. increased considerably,
in particular as regards sheeps' wool, which increased in a proportion of 1 to 8.
This, however, did not prevent the U. K. retaining in the country an amount
almost double that which it kept in 1912 and in 1913'. This was the time
when the factories were overwhelmed with orders, especially for the better qua-
lities, which they were not wholly in a position to meet; meanwhile, prices rose to
fantastic heights, especially in connection with these better-quality wools (merinos).
It is to be noted that, while the price of 70-grade wool increased from 30V^d.
to 163d. in the period July 1914 to March 1920 per lb. of washed wool (409%)
the 44-grade wool increased, during the same period, from 15d. to 32d. i.e. nearly
100%. The same applied to tops and yarns'^.
In the U.S.A. the import of combed wool chiefly derived from Argentine
was nearly doubled during 1919 (from 1.95 thousands of tons in 1918 to 3.49 in
1919) and carpet, wool increased from 31.4 to 43.9; the import of tops remained more
or less stable.
On the other hand, the export of all kinds of wool has increased to a very large
extent; that of manufactured articles in particular has doubled.
In France, the import of wool and woollen waste has risen from 44.7 to 160
thousands of tons, coming chiefly from the United Kingdom, Argentine and
Uruguay; similarly, the imports of the various qualities of yarns and fabrics have
greatly increased.
The export of wool in bulk has increased from 4.14 to 5.93, especially to Switzer-
land and Belgium; and the same applies — and in a very great proportion — to the
various kinds of yarns and fabrics exported. The values of 1918 were quadrupled
for fabrics exported to Belgium, Switzerland, the United Kingdom and other non-
European countries' .
The impetus given to the wool industry in Belgium is worth nothing; Belgium,
in fact imported 46 thousands tons of wool, chiefly from U. K., Argentine and
Uruguay, and exported 13.5, mostly washed wool; she imported, moreover, consi-
derable quantities of worsted yarns and fabrics, chiefly from the United Kingdom,
France and the Netherlands, and exported woollen yarns to an amount nearly
twenty times in excess of the amount imported, principally to the same countries
and, to a small extent, to Germany.
Japan also increased her wool imports from 38.8 to 41.8 millions of kin. This
was also the case in nearly all other countries, with the exception of the conquered
countries and Russia, which were still struggling in the meshes of the blockade,
which had not yet been raised.
In consequence, the exports of wool from the wuol-producing countries increased,
and with a return to former conditions a readaptation of these countries to the
improved conditions of transport became apparent.
' See The Annual Trade Returns of the United Kingdom, 1919, and the Wool Year-Book.
For the other countries under review, see the sources already quoted.
' See The Wool Year-Book.
' It must be noted that, although the inclusion of Alsace has increased France's spindles
by alnrost 600,000, and her looms by 10,000, the latter has not been able to use the far greater
number of spindles and looms which were destroyed.
— 124 —
The figures of wool exported from Argentine for the following years up to the
end of September are given herewith':
l'jn-H)18 1918-1919
Thousands of metric tons.
France 12.4 35.6
Belgium — 5.7
United Kingdom 2.6 10.9
U.S.A 95.1 81.7
Italy 17.4 9.1
Spain 3.8 —
Netherlands 0.06 —
Germany and Austria .... — —
Other countries 15.5 23.3
Total 146.86 166.3
The exports of wool from the Union uf South Africa increased from 52.43
thousands of tons in 1918 to 83.9 in 19191
Australia nearly doubled her exports, almost exclusively to the United Kingdom
(in accordance with the system under the above-mentioned agreement which
was still in force), and to the U.S.A.
Thousands of metric tons
Raw Wool Cleaned and Washed Wool
1917-18 1918-19 1917-18 1918-19
United Kingdom 63.10 159.80 26.85 46.85
U.S.A 26.00 32.56 0.63 0.68
Italy 8.00 4.53 0.22 —
Japan 1.30 2.40 2.17 1.54
France 2.60 1.67 0.02 0.01
Egypt 7.04 4.98 0.49 0.01
Canada ■. . . 2.14 1.45 — —
Germany — — — —
Belgium — — — —
India 0.35 0.36 0.02 0.09
Austria-Hungary — — — —
New Zealand — — — —
Other countries — — 0.13 0.31
Totals 110.53 207.75 30.53 49.49
The export of wool from New Zealand was almost three times as much, increas-
ing from 49.3 thousands of tons in 1918 to 124.4 in 1919, divided as follows:
Thousands of metric tons
Raw Scoured Sliped Washed Total
United Kingdom. . .
. 82.14
17.19
17.69
0.18
117.21
India
0.45
0.13
—
—
0.46
France
0.68
—
—
—
0.68
U.S.A
6.03
—
—
—
6.03
Canada
—
0.02
—
—
0.02
Totals. . . . 89.30 17.34 17.69 0.18 124.40
' See the Wool Year-Book.
- See Annual Trade and Shipping Returns oj the Union of South Africa, 1919, and the Trade
of the Union of South Africa (Monthly).
— 125 —
12. But already by the end of 1919 and especially in the U.S.A. there were
signs of an unfavourable change ahead.
On December 31st, 1919, it was estimated that about 4 million bales of 500 lbs
each of wool were in the possession of the British Government, and the excess
stocks of Australia and New Zealand amounted to 2 million bales. We have already
seen how the South African and South American stocks increased to an abnormal
extent'. Furthermore, while the restrictions on transport were largely removed
by the opening of frontiers and the increase in tonnage, the difficulties caused by
Europe's economic situation made the absorption of the wool available still more
difficult: either in raw wool (due to the disorganisation of the factories in Central
Europe) or, as regards finished wool (on account of reduction of Inter- Allied credits,
the rise in the exchanges, and the necessity for economy).
This situation produced some very remarkable results: —
(1.) Despite an undoubted decrease in the annual production of raw wool
in Europe, owing to a reduction in the number of flocks, the world's stock of
wool had accumulated nevertheless to an excessive extent.
(2.) In spite of the existence of these very considerable stocks and the
increasing amount of tonnage available, the enormous needs of Europe's civil
population were met to an ever-decreasing extent, owing to the scarcity of
money which was strangling Europe, — who had not yet put off her "shining
armour. "
This phenomenon was merely one aspect of the grave economic crisis which,
in the spring of 1920, involved the whole world, due partly to general circumstances
and partly to circumstances peculiar to the industry under consideration. Factories
had an enormous number of cancelled orders, prices fell and industrial activity was
decreasing. The lack of coal, owing to the decrease in production caused by strikes,
undoubtedly reacted on the wool industry, but does not appear to have been a
decisive factor.
The commercial and industrial statistics of our principal countries, which we
will not quote (they are partly incomplete and partly merely provisional) show —
apart from exceptions — evident signs of depression. One knows of the reduction
of working hours to eight, which took effect in the early months of 1919, and there
has since been a further decrease, owing to the lack of orders.
The following are the average monthly prices, calculated on a basis of the
wholesale price in the U.S.A., as quoted on the markets of wool-producing countries":
Non-Manufactured Wool.
Clothing
1919 December 0.553
1920 January 0.446
February 0.611
March 0.663
April 0.502
May 0.604
June 0.659
July 0.605
August 0.496
September 0.437
October 0.398
November 0.274
December 0.241
Dollars
per pound
Combing
Angora-Alpaca
Carpet
0.735
0.648
0.308
0.738
0.492
0.357
0.594
0.613
0.317
0.518
0.593
0.377
0.616
0.499
0.442
0.700
0.526
0.340
0.777
0.615
0.321
0.570
0.497
0.285
0.669
0.540
0.237
0.669
0.414
0.336
0.433
0.639
0.188
0.668
0.501
0.237
0.229
0.681
0.232
' See the Wool Year-Book.
■^ See the Monthly Summary of Foreign Commerce of the United States for December 1920.
— 126 —
13. Although the world's stocks were becoming exhausted, the British Govern-
ment decided to come to an agreement with the Australian wool growers with a
view to avoiding the detrimental effect on the wool market which was being caused
by the existence of large Australian and British stocks.
After a few unsuccessful attempts, the British- Australian Wool Realisation
Association was created. This organisation was entrusted with the duty of dis-
posing of the British and Australian stocks, the work of realisation being based
upon a financial scheme which, though showing every consideration for the inter-
ests of both parties, would diminish the evil effects of the fall in prices and the
excessive quantities of raw wool '.
14. In the meanwliile, however, the economic crisis had become aggravated.
The price of wool had fallen to such a point that in some of the exporting countries
sheep were sometimes slaughtered without being shorn, because the price of the wool
would not have paid for the expenses of shearing.
Factories were working only a few hours a day (three or four hours); the trade
was falling into decay and the amount of business done was negligible.
Nevertheless, it appears to be beyond dispute that the gradual absorption of
the world stocks of wool was everywhere causing a falling off in production, which
cannot as yet be estimated as a whole.
When we consider not only the existing situation and that of the immediate
future, but the developments which were to take place at a more distant date, one
is inevitably confronted by the following jjroblem: what conditions will, in all pro-
bability, be produced, as regards the wool industry of the whole world, by the
development of certain tendencies of a less transitory character which have recently
become apparent ?
Seen from this point of view, the future prospects of this industry appear
much less favourable in the case of certain countries than they appear for the world
as a whole. In fact, when the period of very acute depression through which we
are now passing has been successfully surmounted, and if the increase in the
demand for raw wool is more rapid than the increase of live-stock, it is not
unlikely that we may witness:
(1) A deficiency of raw wool which may, however, be counteracted by
the existence of a part of the present world stock, which is valued at a very
high figure;
(2) The development of acute rivalry in connection with the supplying of
wool from countries outside Europe, even as regards the Central European
countries and Russia, whose flocks of sheep have been so terribly reduced*;
(.3) The predominance as competitors of those countries which before the
war disposed of a considerable part of the world's exports of raw wool, and
which have already conformed to a regime of agreements in regard to the
export of wool.
' According to a letter of July 19th, 1921, sent by Mr. West, Secretary of tliis Association,
to Miss Hook, our London correspondent, "this Association was formed for the purpose of carrying
out the realisation of that portion of the Imperial purchase of Australian wool half of which
lielonged to the Australian growers and half to the British Government. The Australian half
of the wool was capitalised and the necessary scrij) will he issued accordingly. The British Govern-
ment has agreed to consign its half of the Australian wool to the Association for disposal on
a commission basis. In addition, the British Government has consigned to the Association for
disposal the whole of the carry-over New Zealand wool amounting to 770,000 bales at the 31st of
December. The method of disposal is in accordance with trade custom and in accordance with
the method adopted by th(> Ministry of Munitions: namely, sale by auction through the London
Wool Brokers."
- As regards France, the Report submitted by the French Delegates to the first Congress
of the International Chamber of Commerce (London, June to July 1921), puts forward the opinion
tliat, in spite of the future reconslitution of tlie French flocks, "a reduction in French wools, both
in ((uality and quantity, may be expected by reason of the division of property, the reduction
of free. j)ast\ire-laiKls and the I'caring of sheep for slaughter."
— 127
IV.
SUMMARY AND CONCLUSIONS
Before the World War, Europe was dependent for its supplies of raw wool on
Australia, New Zealand and certain parts of South Africa and South America.
The United States, for their part, were also obliged to draw a large portion of their
supplies from these countries.
II.
The British Empire disposed of 41.3 % of the total production of all qualities
of wool and of about 60 % of the total exports of non-European countries. On
the other hand, it disposed of 63 % of the total production of merino wool and of
almost 90 % of the non-European exports of this quality of wool.
III.
The United Kingdom imported the greater part of the wool produced by Australia
and South Africa, and nearly all the wool produced by New Zealand, British India
and the Falkland Islands. A considerable part of the Chilian wool was also shipped
to the United Kingdom. Germany and France were the chief importers of wool
from Argentine and Uruguay. The United States accounted for a considerable
share of the exports of wool from Argentina.
IV.
Speaking generally, about 42 % of the raw wool exported from all countries
outside Europe was despatched to the United Kingdom, who re-exported at least
half of her imports, largely in the form of raw wool, together with a considerable
quantity of home-grown wool.
During the last fifty years of peace the European wool industry had become
capable of competing elTectively with the United Kingdom for the supremacy in the
manufacture of woollen articles, particularly as regards certain qualities which are,
for the most part, inferior. Germany was an active competitor with the United
Kingdom, as regards these products, but the latter had been able to increase her
exports of half-manufactured goods to European countries and continued to be
the chief purveyor of the world, as regards yarns and fabrics.
After the United Kingdom, the chief European manufacturing countries were:
Germany, France, Russia, Austria- Hungary, Belgium, Switzerland and Italy.
The remaining countries of the world were, with the exception of Russia, more
or less dependent on the above-mentioned countries. This applies especially to
Japan as regards yarns, and to the United States as regards fabrics, though boUi
these countries possessed well-developed wool industries.
VI.
Immediately before the war, a very appreciable reduction had taken place,
in the flocks of sheep of certain exporting countries; this was followed, during the
years of the war, by a considerable reduction in the numbers of European sheep.
Seethe Wool Year-Book.
— 128 —
The United States and many of the neutral countries sufTered corresponding losses,
but it does not appear on the whole that the numbers of sheep in the chief wool-
growing countries underwent any variations of any extensive and continued
character.
VII.
The effect of the war lias been to disorganise the wool industry of Europe, as
a result of the economic isolation of the Central Powers and of Russia, and owing
to the losses sufTered by the French and Belgian wool districts, and to the diffi-
culties of maritime transport.
South America has, generally speaking, reduced her exports, though she still
despatches them to the United States. The latter have contrived by a rapid expan-
sion of their manufactured output to become exporters of finished products. The
export of South African wool has meanwhile decreased; it has to a large extent
ceased to flow to the Unit ed Kingdom, and has been diverted towards the United
States and Japan; the exports of Australasia have also been considerably reduced,
and are directed in increasing quantities towards the United Kingdom; the latter
country has been able to increase its stocks of wool and to develop its manufactures
to a colossal extent, while at the same time suspending almost completely its
exports of manufactured articles and of home-grown wool, and also its re-exports.
Italy has also been able, generally speaking, to increase her imports of raw wool
and to develop her national wool industry to such a degree that she was able to
cope, to a large extent, with her war requirements.
Japan had been able to commence exporting manufactured articles to the
countries of the East; she had also been able to increase her production of woollen
articles and to provide for her home requirements.
A system of export-prohibition, mitigated by the issue of export licences either
for raw wool or for manufactured wool, has been introduced in European countries.
VIII.
The development of the wool industry in the chief wool-growing countries during
the war, and the introduction in Argentine and Uruguay of export duties on raw
wool and on washed wool are a phenomenon of exceptionalimportance. It is true
that the Argentina has quite recently suspended this export duty; but this appears
a measure taken for a definite period which does not change the legal position.
IX.
The increase in the exports of Australian wool to Great Britain during the war
was facilitated by an agreement between the British and Australian Governments;
by the terms of this agreement, Australia was to sell to the British Government,
at a minimum price, the whole of her jjroduction dating from October, 1916, on
condition that the British Government should divide with the Australian Govern-
ment the profits on the wool which it sold again; the latter undertook for its part
to divide among the wool-growers the amount by which the price obtained exceeded
the minimum standard.
• A similar system was also introduced for New Zealand; another system of sale
was established for wool from India; but in the case of South African wool the agree-
ment was only a partial success.
As a result, two wool markets existed : one free market and one market mono-
polised by the United Kingdom.
The British Government made considerable profits from the sale of the wool
to the Allies and to neutrals during the war; but it is held that the actual prices
were lower than the prices which would have been paid if the United Kingdom
had not monopolised this wool !
— 129 —
The two years which followed the conclusion of the Armistice represent two
widely diflering stages in the condition of the world's wool industry.
The year 1919 was marked by the resumption of economic activity in the diffe-
rent countries, owing to the disappearance of the dangers of maritime transport
and to the sudden opening of immense commercial outlets, and also to the aboli-
tion of export prohibitions (except to Russia) ; imports of raw wool and the export
of woollen articles to the principal wool-producing countries increased, particularly
in the case of the United Kingdom and the United States ; factories received orders
on a scale which they were unable to cope with, especially for articles of the finer
qualities, which rose in price more rapidly than the others.
XI.
But towards the end of 1919 unfavourable symptoms had again become apparent.
The British Government had been left at the end of the war with a large stock of wool;
the chief wool-growing countries, on the other hand, had accumulated immense
stocks. Again, though the difficulties of transportation had diminished owing
to the opening of the frontiers and to the increase of tonnage, the difficulties of
Europe had increased at the same time, and its demands for wool had fallen, ^his
was owing to the restriction of Anglo-American credit, to the high rate of exchange
and the impoverishment of the national exchequers and economic systems. The
results were the cancelling of orders, the lowering of prices, the reduction of hours
of work in factories and all the other symptoms of economic depression.
XII.
Owing to these circumstances, the British Government concluded an agreement
with the Australian wool-growers to prevent a fresh fall in prices being caused
by the Australian and British stocks of wool ; an Association was formed to dispose
of the available stocks at advantageous prices.
XIII.
At the present moment prices are very low, and the demand is so insignificant
that the production of wool has had to be considerably restricted ; it cannot, how-
ever, be clear that the available stocks are being slowly absorbed.
XIV.
When the period of depression through which we are now passing has been
successfuUy surmounted, it is not impossible that, if the increase in the demand
for raw wool is more rapid than the increase in live-stock, we may witness the fol-
lowing results: —
(a) A deficit in raw wool which, nevertheless, may be compensated for by a
part of the present world stock;
(b) Acute rivalries with regard to the wool supply;
(c) The predominance in these rivalries of countries which, before the war,
disposed of the greater part of the total exports of raw wool, and which have already
conformed to the system of agreements for the export of wool.
¥
III. STATEMENT OF THE POSITION CONCERNING
COTTON
PREPARED BY PROFESSOR VINCI
CONTENTS
I.
Page
Position before the War 132
1. The world production of raw cotton before the war and the
principal producing countries 132-133
2. The exportation from the producing countries 133-134
3. The commercial movements of raw cotton in the principal coun-
tries of the world 134-136
4. The cotton industryof the various countries considered according
to the qualities of cotton employed 136
5. The extent of the cotton industry in the various countries . . . 136-137
6. The exportation of the products of the manufacturing countries. 137-140
II.
Position during the War 140
7. Disturbances produced by the war 140
8. Reductions in the exports of the producing countries 141
9. The supply to the manufacturing countries and the Egyptian
Commission of Control 141-142
10. The reduction of the cultivation of cotton and the available world
supplies 142-143
11. The development of manufacture in certain countries 143-144
III.
Position after the War 144
12. Progress in 1919 and its special features as regards the cotton
industry 144-145
13. Causes of this progress and the extension of cultivation .... 145-146
14. The depression in 1920 146-147
15. Temporary changes and general tendencies: anticipations for the
future 147-148
IV.
Summary and Conclusions 148
OOTTOIV
I.
POSITION BEFORE THE WAR
1. A continual increase in the production of cotton, especially in the United
States, in India and in Egypt, had led to an extraordinary development in the
world's cotton industry in the half-century preceding the war.
At the outbreak of war the world's cotton crop had, in fact, reached a point
never before attained: namely, 5.6 millions of metric tons (ginned cotton produced
on an average in 1912-14) coming almost exclusively from the United States (3.18
million tons), China (about 0.95), British India (0.90) and Egypt (0.32).
The United States crop provided, in addition to the ordinary American Upland,
tiic best Sea Islands cotton that the world produced. It formed, however, only
a small part of the world's supply.
The Egyptian crop — apart from the Afifi and the Ashmoiini, which competed
with the best qualities of American Upland — consisted of the Sake!, the Janno-
vitch and the Abbassi, which hold the second place after tlie Sea Islands.
Indian and Chinese cotton were, as a rule, of inferior quality.
Among the other countries — which, taken together, produced a little more
than 0.2 millions of tons — the most important were Peru (0.02), Brazil (0.09)
which produced a superior quality of cotton, Mexico (0.04), Asiatic Russia (0.03),
Turkey (0.003), Persia (0.02), Uganda (0.004), together with Japan and certain
other countries of South America and Central Africa'.
The following table gives a very clear idea of the proportioi] of the various
quantities of cotton produced in the world.
It was prepared from the figures published by Mr. Tood ^ and it corresponds
closely to the figures worked out by the Board of Trade in 1918: —
Qualities Percentage of Production
I. Best Sea Islands: —
Carolina Islands 0.04
West Indian 0.02
II. Florida and Georgia: —
Sea Islands 0.27
Egyption Sakel, Jannovitch, Abbassi, etc. 1 .64
II. Egyptian Afifi, etc 3.80
Long staple American Upland .... 0.76
Peruvian 0.47
IV. East African 0.15
Brazilian 1.14
American Upland 57.03
Russian 3.80
West African 0.08
Asia Minor 0.38
V. Indian 15.21
Chinese 15.21
Total . . . 100.00
' HoQlhe Inteniatiotial Year-Book of Agricultural Siatisiics , \n\h\\f,\\M hy tlie Inlenialional
Agricultural Institute, Rome.
' J. A. Toou, The World's Cotton Crops, London, 1915.
— 133 —
The principal cotton-producing countries of the world were therefore the
United States and the British Empire (including Egypt), which controlled respec-
tively about 58 % and 21 % of the world's production.
2. Of the 3.18 million tons which they produce, the United States exported
about 68 %, almost entirely to European countries. A considerable quantity,
however, was sent to Japan.
The following are the figures for 1913-1914': —
Export of Upland and other qualities in 1913-14
Metric tons
Austria- Hungary 24,150
Belgium 51,600
Denmark 20
France 257,700
Germany 654,100
Greece 400
Italy 121,900
Netherlands 7,950
Norway 850
Portugal 1,470
European Russia 22,390
Spain . 67,440
Sweden 11,720
England 795,890
Scotland 470
Ireland 13,630
Canada . 34,040
Guatemala 260
Mexico 7,860
Newfoundland and Labrador 1.8
French West Indies ... 2.3
Venezuela 14.5
China 2,040
Hong-Kong 70
Japan 80,160
Oceania-Philippines .... 110
British South Africa ... 0
Total .... 2,156,244.6
To these figures must he added a few thousand* tons of Sea Islands cotton
exported chiefly to England (2280 tons), to France (750 tons), to Canada (200 tons),
to European Russia (70 tons), to Germany (50 tons), and to Japan (3 tons).
The best customers of the United States were therefore England and Germany,
and after these, France, Italy, Japan, Spain and Belgium. Canada, Austria-
Hungary and Russia constituted a third class.
The following facts must be taken into consideration, however, that part of
the cotton which was sent to Germany went to Austria- Hungary, Russia, etc.;
that great quantities of cotton passed through Belgium; that Switzerland imported
through the neighbouring counti'ies, etc.
' See Foreign Commerce and Navigation of the United .S'fates, Washington, 1918. This publication
gives the statistics for the financial year. The other data in the following paragraph have been
taken from the Customs statistics of the countries under review and from E. Goulding, Cotton
and other Vegetable Fibres, their Production and Utilisation, London, 1919 (Imperial Institute
Handbooks).
— 134 —
Moreover, of the exports from India, which form about half of the total crop
produced, about 50 % were sent to Japan and about 16 % to Germany, 3.6 %
to the United Kingdom, etc., as will appear from the following table: —
Raw Cotton Exports from India in 1913-14 (March 31st-ApRiL 30th)
Thousands of metric tons
Japan 244.8
Germany 85.8
Belgium 57.6
Italy 43.1
Austria- Hungary 37.9
France 26.6
United Kingdom 19.5
Spain 8.5
Hong-Kong 5.6
China (except Hong-Kong and
Macao) 4.3
Other countries 6.2
Total .... 539.9
Although China produced a considerable crop of cotton, the amount of her
export was very small, particularly to the countries of Europe, as her crop was
almost completely allotted to home requirements.
Egyptian cotton, on the other hand, was almost all exported. In 1913, 313.3
thousands of tons were exported from Egypt, chiefly to the United Kingdom
(43 %), to Germany (9.5 %), the United States (10 %), Austria-Hungary (6 %),
France (9.4 %), Italy (3.8 %), Russia (8.6 %), and Switzerland (4 %).
The total quantity of raw cotton exported from producing countries may be
estimated at about 3,000,000 tons. The proportion exported from the United
States and from the British Empire (including Egypt) were 72 % and 28 %, res-
pectively.
3. The preceding information will furnish an adequate idea of the pre-war
sources on which the countries which principally produced cotton articles could
draw for their supplies.
It may be added that, whereas British India manufactured almost exclusively
cotton produced in the country, the United States, in spite of the enormous flow
of exports which she supported, had to import raw cotton of various qualities
different from those which she herself produced.
In fact, during 1913-1914 the United States imported 56,000 tons of cotton,
chiefly from Egypt, Mexico, China, Peru, British India and, indirectly, from England.
Imports of Raw Cotton into the United States during 1913-1914
Thousands of inelric tons
Egypt 28.9
Mexico 16.9
China 4.2
Peru 2.9
British India 1.4
England 1.1
Other countries 0.5
55.9
It is also interesting to note the fact lliat, of the 986,000 tons imported in all
into the United Kingdum in 1013, as inucli as 73 % originated from the United
— 135 —
States, and scarcely 20 % from Egypt and India, which — as we have seen — sent
57 % and 96,4 % respectively of the exported cotton to diHerent markets from
those of the United Kingdom.
Imports into the United Kingdom of Raw Cotton in 1913
Thousands of metric tons
United States 718.9
Egypt, including Anglo-Egyp-
tian Sudan 182.7
British India 23.3
Brazil 28.0
Peru 17.4
British East Africa 5.1
British West Africa 2.8
British West India Islands . 1.4
Other countries ...... 6.7
Total .... 986.3
Among imports from other countries, a considerable proportion were imports
which came through certain other European States ^
Re-exports from the United Kingdom were comparatively unimportant,
consisting in the main of:
(1) 116,000 tons of raw cotton, of which a little less than lialfwas sent to
Russia, a good third to the United States, and the rest to Belgium, Germany
and other European countries, Japan, and British India;
(2) 50,000 tons of waste, sent to the extent of about a third to Germany,
of an eighth to France, a tenth to the United States and Belgium respectively,
and to other countries of Europe and certain States of South America and the
British possessions.
Among the other countries, one of the most important was undoubtedly Russia,
which not only had a considerable cotton crop, but also imported a still larger
quantity (probably more than 200 tliousand tons), from the United States, Egypt
and Persia (it acquired almost the whole crop of this country) and from other
countries. But the scantiness of the statistics at our disposal as regards this country
does not enable us to undertake any detailed enquiry.
Just before the war, Germany imported nearly 500 thousands of tons of raw
cotton, of which 75% were derived from the United States, 12% from British
India and 90% from Egypt, and only re-exported about 50 thousands of tons,
chiefly to Austria-Hungary (50%), Russia (20%), the Netherlands, Italy and Switzer-
land.
France came next with an import of about 350 thousands of tons of cotton
and waste, derived as follows: about 70 % from the United States, 12 % from
Egypt, 9 % from British India; against this she re-exported 58 thousands of tons,
chiefly to Germany (50 %) and Belgium (19 %).
Japan imported 386 thousands of tons of ginned cotton and 16 of unginned
cotton, almost entirely derived from British India (60 %), from the United States
(30 %) and China (7 %). She re-exported only some hundreds of tons.
Austria- Hungary imported 207 thousands of tons, chiefly re-exported by Ger-
many and other European countries; she re-exported some thousands of tons.
Italy imported 202 thousands of tons, 73 % from the United States, 17 %
from British India and Ceylon, and 5 % from Egypt.
Of these she exported only a very small quantity, but she exported, on the
other hand, 8,000 tons of waste.
' The well-known divergences between the various Customs statistics obviously render
impossible a comparison between the export figures registered by the exporting countries and
the import figures registered by importing countries.
these divergences became even more marked during the war, on account of transport difli-
culties, submarine warfare, etc.
— 136 —
Spain imported about 88 thousands of tons, chiefly from the United States,
and she exported a hundred tons.
Belgium's role as an entrepot was particularly important because, while impor-
ting 141 thousands of tons (43 % from the United States, 20 % from British India,
the rest being re-exports from other European countries), she, in her turn, re-exported
52.4 thousands of tons.
4. The proportion of the various qualities of cotton used in the several countries
mentioned gives us an idea of the different kinds of manufacture in which they are
engaged.
The large proportion of home-grown cotton which the United States retained
for her own purposes (nearly a million tons), the small amount of Indian cotton
(1,4 million tons) imported by this country as against the large imports of Egyptian
cotton (28,9 million tons), and of the better-quality cotton from Peru and Mexico,
indicate that in the United States the most important manufacture was that of
high-class and expensive articles.
In the United Kingdom the manufacture of high-class cotton goods was even
more extensive, owing largely to the much higher percentage of Egyptian cotton
which that country — as compared with the United States — imported and retained
for her own use ^
Germany and particularly France also chiefly imported high-quality American
and Egyptian cotton.
Although Italy imported a very large quantity for cotton from the United
States, nevertheless Indian cotton formed a considerable part of her imports.
On the other hand, China and India mainly employ home-grown cotton for
their manufactures, and together with Japan, specialize in the manufacture of
the inferior qualities of Irif'ian cotton, produced mainly for cheaper articles of
general use.
f the numbers of spindles and looms in use in the various
countries gives us somi Jea of their importance in the cotton industry: —
5. A general surve^
Spindles Looms
(in millions) ■ ^in thousands)
working about the year 19 H
United Kingdom .
United States . .
Germany
Russia
France
India
Austria-Hiaigary .
Italy
Japan
Spain
Belgium
Switzerland. . . .
Canada
Sweden
Netherlands . . .
Portugal
Denmark
Norway
Other countries. .
Total.
56.3
800
32.1
650
11.6
230
9.2
213
7.4
108
6.5 ■
104
5.0
170
4.6
140
2.7
25
2.2
55
1.5
24
1.4
22
1.0
32
0.6
12
0.5
40
0.48
12
0.1
4
0.06
2.6
3.3
176.0
146.54
2.819.6
' The Report of the Drpiirl.nienlal Conimittcc appoi/ilnl. by the Boafd oj Trade to consider the
position oj the Textile Trade after the War (Cd. 9070, London 1918), shows that nearly ^^''o of the
s[>indle.s in the United Kingdom are cxclnsively adapted for I he spinning of Egyptian collon
while the United States possess hardly 6 % of spindles suitable for the sjiinning of Egyptian
cotton.
— 137 —
It was therefore estimated that about 146 million spindles and about
2,800,000 looms were working at the outbreak of war'. Of these 38.4 % and
28,3 % respectively were situated in the I'nited Kingdom, 22 % and 23 % in the
United States.
Unfortunately we have no sufficiently reliable information with regard to China.
The importance of an industry cannot, of course, be determined exactly by
merely estimating the number of spindles and looms working in each country,
the varying yield of the factories depending on the various qualities of the cotton
manufactured, the various degrees of efficiency in the organisation and in the exploit-
ation of the workshops, etc., all of which constitute modifying factors of consider-
able importance.
In fact, in calculating the net figures of the consumption in some of the chief
countries, by taking the corresponding average for certain periods during which
we may consider the influence of the stocks as of the same equivalent, it appears
that the United States, although they had at their disposal a very much smaller
number of spindles and looms than the United Kingdom, manufactured articles
from a larger amount of raw cotton; the same phenomenon may be observed as
between India and Russia, and Japan and France, etc.
Average Production plus Imports and minus Exports for 1909-1913 .
Thousand of metric tons
United States 968.1
United Kingdom 857.6
Germany 390.5
India 389.2
Russia 314.4
Japan 283.8
France 231.4
Italy 184.4
Austria- Hungary 184.1
But if we are satisfied with a general estimate, these figures of consumption
give us a first group of countries producing cotton articles. It includes the United
States and the United Kingdom, which, between them, use nearly 32 % of the total
world cotton output for their manufacture ; to these China may, perhaps, be added,
but we have no reliable information with regard to this country. Germany, India
and Russia, using between them 20 % of the world's cotton produce, form a second
category. Finally, a third category includes the other countries, headed by Japan
and France.
6. Another classification is based on the export traffic of semi-manufactured
products and finished products by these countries.
From this point of view, the United Kingdom is far ahead of any of the other
manufacturing countries.
' See Report of the Departmental Committee already quoted; and the Cotton Year-Book, 1921,
printed and published by the Textile Mercury, Manchester.
-' According to ofTicial statistics. In the case of the countries which do not produce cotton,
the figures given represent the difference between imports and exports.
The difference between the United States and the United Kingdom may, in part, be explained
by the comiiaratively more extensive use of better qualities in the U. K., to which we have
already referred.
— 138 —
In 1913 it exported 95.2 thousands of tons of cotton yarns to various countries,
distributed as follows ' :
• Ttiousands of metric tons
Russia 1.09
Sweden 0.725
Norway 1.13
Denmark 0.41
Germany 23.54
Netherlands 17.83
Belgium 2.13
France 2.27
Switzerland 4.31
Austria- Hungary 1.22
Greece 0.63
Bulgaria 1.22
Serbia 0.045
Roumania 3.22
Turkey in Europe 0.95
Turkey in Asia 3.49 '
Egypt 0.95
United States 2.45
Philippine Islands and Guam ... 0.36
Colombia 1.22
Brazil 0.59
Argentina 0.86
Other countries 3.08
Total 73 . 72
British West Africa 0.50
British Indies 16.92
Straits Settlements 0.68
Hong-Kong 0.68
Australia 0.63
Canada 1.63
Newfoundland 0.09
Other British possessions 0.32
Total 95.17
The United Kingdom, moreover, exported to the whole world 7 milliards 75
million yards '^ of cotton fabrics (piece goods), and a hundred million yards of
various goods.
This immense and widespread current of export was absorbed more by the
British possessions (3 milliards 993 million yards, of which more than 2 ^4 niiiiiards
were absorbed by India, and ' '4 milliard by Egypt) than by other countries (3 mil-
liards 82 millions.)
Among the latter, the non-European countries occupy tlu^ first phiees, Ciiina
coming first with rather more than V^ a milliard yards, Tui'key iiexl with 350 mil-
lions, Argentina with 200 millions, etc.
On the other hand, the European countries absorbed a couiparati\ely small
quantity of English fabrics.
Among these, leading coiui tries were the Netherlands (81 million yards), Switzer-
land (80), Germany (76, '1), Greece (32), Belgium (.".I), I'orlngal (28,6), Uoiiiiiania
(21,5), France (13).
' See Annual Slalcmenl of tlw I'rddi: 0/ l)ie Ihiiled Kinf;dom, 1914.
" 1 yard = 0.<Jl'i inetrL'.
— 1,19 —
Among the producing countries which have not yet been mentioned are
Japan (50.2 million yards), the United States (44.4), Italy (10.2), Russia (3.9).
It is thus easy to see why the United Kingdom imported such small quantities
of yarns (5.2 thousands of tons, chiefly from Belgium and Germany) and cotton
fabrics (not more than 200 million yards, chiefly from the United States, Belgium
Germany, Switzerland, France and Italy).
In spite of the great difficulties which this calculation involved, the percentage
of the exports in relation to the production of yarns and fabrics has been ascertained '.
According to the last Census of production and the corresponding export figures,
about 12 % of the quantity and 15 % of the value of the yarns produced were
exported, while the export of fabrics amounted to more than 85 % of the quantity
and nearly 80 % of the value of the total production.
The difference between the percentage of the quantity and that of the value
shows that the United Kingdom, on an average, exported the higher-grade yarns,
but retained the more highly priced fabrics.
Against this enormous English export trade may be set a comparatively small
volume of export on the part of the United States, and this was limited to fabrics ^.
This was due to the fact that the latter country manufactured mainly in order
to meet the requirements of her huge home market.
The fabrics exported by the United States were estimated at 414.9 million yards»
of which 199.9 were unbleached, 42.1 bleached, and 172.9 dyed.
To this must be added other products of less importance and about 30.5 thou-
sand tons of waste.
Exports to Eastern markets, and as far as concerns European countries, to
Turkey, consist chiefly of unbleached fabrics, whereas bleached and dyed fabrics
were mainly exported to Oceania (almost exclusively to the Philippine Islands)
and the countries of Northern America.
The following are the figures for the various continents: —
Exports of Fabrics in 1913-1914
Europe
North America
South America ....
Asia
Oceania
Africa
Total .... 199.9 42.1 172.9 414.9
a of which 6.8 went to the Philippine Islands.
b „ 22.1 „
c ,, 57. o ,, ,, ,,
d „ 86.2 „ „ „
A similar classification for the exports of the United Kingdom provides inter-
esting results.
The following table shows, in fact, that exports from the United States, although
they cannot be directly compared with those of the United Kingdom, were, rela-
tively speaking, larger than the latter only in the North and South American and
Philippine markets, but were very much lower on the other markets of Oceania
and on the markets of Europe, Asia and Africa.
Millions of
yards
nbleached
Bleached
Dyed
Total
4.8
0.4
1.9
7.1
34.9
13.7
88.7
137.3
23.2
2.0
16.3
41.5
118.1
2.8
4.2
125.1
10.6"
22.9*
Gi.6''
95.1 '^
8.3
0.3
0.2
8.8
' See Report of the Departmental Committee, etc.
■ See Foreign Commerce and Navigation of the United States, 1918.
— 140 —
Export of F.vbrics
From the United Kingdom
in 19i:; .
Million yds Percentage
Europe 518.5 7.3
North America 291.7" 4.1
South America 580.8 8.2
Asia 4,700.8 60.4
Oceania 229.3'' 3.3
Africa 719.2 10.2
Other countries 35.0 0.5
From tlio United States
l'.)i:!-191'i
Million yds
Percentage
7.1'-
1.7
137.3
33.1
41.5
10.0
125.1
30.2
95.1''
22.9
8.8
2.1
Total .... 7,075.3 100.0 414.9 100.0
a of wliicli 44.4 went to the United States.
b ,, 16.9 ,, ,, Philippine Islands,
c „ 2.4 „ „ United Kingdom.
d ,, 86.2 „ „ Philippine Islands.
Unfortunately these figures do not lend themselves to comparison witli those
of other countries, owing to the difficulties arising from the use of different kinds
of measures (weiglit, length, etc.).
According to the Customs statistics, we can say, however, speaking generally,
that the exports of manufactured goods from Germany were more than double
the exports of such goods from the United States; France's exports were about
double, those of Switzerland slightly larger, and Italy's rather more than three-
quarters. These countries exported chiefly to the Balkans and Asiatic countries.
It should also be noted particularly that, whereas among European countries,
France, Italy and Belgium and others show a very much greater export than import
of yarns and fabrics, Germany imported, chiefly from the United Kingdom, about
three times as much yarn as she exported.
As regards the other producing countries, the enormous export of yarn from
India (89.81 thousand tons) should be noted: it was nearly all exported to China
(80.74). India herself remained dependent on European fabrics.
On the other hand, Japan exported both yarns (chiefly to China) and fabrics
(chiefly to India, China and other Eastern markets) to an extent considerably
superior to the manufactured products which she imported, chiefly from the
United Kingdom.
II.
POSITION DURING THE WAR
7. As will be well understood, great disturbances were caused in I lie cotton
industry of the world by tiic outbreak of the great war.
There was first the blockade against the Central Powers, including Belgium
and the invaded portions of France, which wvw. dt^prived of extra- l']uropean pro-
visions, and there were also grave difficulties in securing further supplies of raw
cotton from the United States, Egypt, India and the minor producing countries.
The main coiiscipicnces of these conditions were: —
(1) a decrease iu the trade id' raw col ton;
('2) a difl'erent orieiilation of I lie trade;
(3) a reduction in cultivation.
— 141 —
8. According to the sources referred to above, the exports of raw cotton from
the United States were reduced to one-eighth for the best Sea Islands, and in total
to one-half:
Export of Raw Cotton from the United States
Thousands of metric tons
1913-14 lyi'i-lS 1915-16 191fi-i: 1917-18
Sea Islands 3.36 1.10 0.78 0.43 0.40
Upland and other qualities 2,156.24 1,945.17 1,341.21 1,292.83 1,009.97
Linters — 51.19 55.58 107.50 42.21
Total . . . 2,159.60 1,997.46 1,97.57 1,400.76 1,052.58
The exports from India were still more considerably reduced, diminishing
from 541 thousand tons in 1913-14 (March 31st-April 30th) to 186.88 thousand
tons in 1918-19.
The exports from Egypt fell from 313.3 thousand tons in 1913 to 183.02 in
1917 and 225.52 in 1918 after various fluctuations.
9. But to this marked reduction in supplies there did not correspond an equally
large reduction in the stocks at the disposal of the Allied countries (including Russia
up to 1916), because the blockade of the Central European markets permitted the
Allied countries to take advantage of the considerable quantities of raw cotton
which was directed before the war to Central Europe.
As a matter of fact, the exports from the United States of Upland and other
cottons continued, in general, to decrease, by reason of the stoppage of exports
to Germany and Austria, and this in spite of the increases in exports towards the
Asiatic countries (especially Japan), South America (especially Brazil up to 1916)
and the Philippine Islands.
On the other hand, the exports of this cotton to the Allied countries were as
follows :
Thousands of metric tons
1913-14 19J1-15 191.6-16 1916-17 1917-18
England 759.89 876.54 622.29 646.61 533.43
Scotland 0.50 0.27 0.10 0.27 7.48
Ireland 13.61 4.85 3.22 0.82 —
France 257.64 142.34 153.50 150.19 123.11
Italy 121.88 246.98 188.61 153.41 79.701
Russia in Europe ... 22.41 18.64 37.38 10.30 3.63
Exports from the United States to certain neutral countries — such as Spain
and Portugal — also on the whole increased.
As regards Egyptian cotton, it is worth noting that, in spite of the large reduction
in total exports, the exports to the United Kingdom increased by a good sixth;
to the United States, after an increase up till 1915, they fell in 1918 to a level little
below the pre-war level; exports to Italy maintained on the whole a higher level,
whereas to France they fell to about one-third.
It should be added that in June 1918 an Official Commission of Cotton Control
was formed for the acquisition of the Egyptian crop for 1918-19 for its distribution
to the purchasing countries and for the stabilisation of prices.
This Commission secured large profits for the Egyptian Government', but its
monopoly of purchase was abolished on July 3ist, 1919.
Finally, in spite of the great decrease in exports from India, the supplies for
the United Kingdom were only reduced to 70 %; the supplies to Italy to 50 % and
' See the Reports on the Finance, Administration and Conditions of Egypt and the Soudan,
1914-1919, Cd. 957. Mr. Ashley, of the Board of Trade, informs us that the sale prices were fixed
by the Commission according to a system which allowed only a quota for risks and contingen-
cies. Since the transaction brought in an unexpected profit, the Government reaped the benefit.
— 142 —
to China to a little loss than 50 %, whereas the exports for France suffered a greater
reduction.
It should be observed, however, that as the Allies, especially the United King-
dom and France, before the war, did not import great quantities of Egyptian and
Indian cotton, the variations of the exports of Egyptian and Indian cotton to these
countries only had a slight repercussion on the total of their resources.
The following are the figures for the United Kingdom and France: —
Imports of Raw Cotton into the United Kingdom
Thousands of metric tons
1913. 1914. 1915. 1916 1917. 1918.
United States 718.86 519.10 917.36 744.033 538.06 442.71
Egypt 182.66 152.45 203.44 161.80 126.05 176.22
India 23.27 47.31 42.64 36.33 34.47 26.99
Thousands of
metric tons
1913
191'.
1915
1916
1917
1918
250.4
133.6
198.0
204.6
240.1
116.2
40.2
16.0
10.9
14.2
9.6
13.6
31.3
37.6
11.4
10.3
8.1
7.1
Total (incl. other countries). 986.26 845.55 1200.95 984.76 736.28 675.45
Imports of Raw Cotton and Cotton Waste into Fr-ance.
United States
Egypt
India
Total (incl. other countries). 352.1 205.7 228.2 255.5 273.3 142.3
It should be noted further that a very small proportion of these supplies were
furnished by the African possessions, on which the United Kingdom, France and
certain other countries still base great hopes.
As regards Italy, her imports of raw cotton were reduced from 202 thousand
tons in 1913 (of which 73 % came from the United States; 5 % from Egypt and
17 % from India) to 130 in 1918 (of which 76 %, 9 % and 15 % came respectively
from the three sources mentioned).
A noteworthy feature was the increase of the general imports of Japan ; between
1913 and 1918 this country increased its supplies of cotton, the figures for ginned
cotton rising from 386 in 1913 to 404 thousand tons in 1918; Japan imported in
particular larger quantities of cotton from the United States.
10. In addition to the above-mentioned general reduction in trade, there was
a corresponding reduction in the areas under cultivation and in the cotton harvests
in the principal producing countries; this reductioxi was also caused by the dimi-
nution in labour, particularly in the United States, and the extension of areas
devoted to food production, and to other circumstances — meteorological, plant
diseases, and so on.
The diminution of areas under cultivation is shown by a comparison between
the average of 1912-14 with the war average 1915-18'.
Thousands of Hectares
1912-191'i 1915-1918
United States . 14,596 13,784
India 9,669 8,672
Egypt 728 613
Total . . 24,993 23,069
Sec tlio Year-Book of the Internnlionnl Afiriiultttrdl Instilule.
— 143 —
A similar comparison for the harvests shows an even greater reduction:-
Thousands of metric tons
1912-191'i 191.5-1918
United
India
States .
3,179.5
901.6
2,492.0
735.0
Egypt
323.7
236.2
Total . . 4,404.8 3,463.2
Nevertheless, the reduction in trade being, as we have observed, much more
marked than the reduction in cultivation, the reserve stocks of raw cotton increased
in the principal producing countries in question.
This is particularly noticeable in respect of the United States, which, in 1912-14,
disposed of about 1,270 thousand tons, whereas in 1915-18 she had at her disposal
an average of 1,656 thousand tons, which enabled her, particularly up to the time of
her entrance into the war, to intensify greatly her export of manufactured products,
especially in the case of certain classes of goods '.
The great general increase in the resources of the United Kingdom was, more-
over, remarkable in spite of the considerable reduction in the exports of raw cotton^.
These resources increased by reason of the great reduction in the enormous exports
of yarns, fabrics and waste from the United Kingdom compared with the exports
before the war and also by reason of the almost complete cessation of the re-expor-
tation of raw cotton.
According to Customs statistics, while the imports of raw cotton decreased from
986.26 thousand tons in 1913 to 675.45 in 1918, the export of English yarns decreased
at the same time from 95.20 thousand tons to 46.13; the exports of fabrics from
7,075 million yards to 3,699.3; the exports of waste from 50.21 thousand tons to
8.6; the re-exports of raw cotton from 116.85 thousand tons to 0.181.
Examining, however, the figures of exports of yarns and fabrics, it will be seen
that the great reduction in these categories was due to the closing of the markets in
Central Europe, Turkey, Bulgaria, etc., and to traffic difficulties in trade with Canada,
South America and Asia; on the other hand, it will be observed that exports to France
increased 13-fold for yarn and 14-fold for fabrics and France was thus enabled to meet
her war needs more completely than would have been the case had she been forced
to rely only on the reduced capacity of her own cotton industry (29 % of the French
spindles were in the regions occupied by the Germans ^).
In Italy and in other countries, the export of yarns and fabrics was largely
reduced for the benefit of internal consumption.
Such restrictions in trade were bound up with a system of prohibitions of exports
of raw materials and manufactured products from the European countries and of
concessions of special export permits.
It must also be remembered that the civilian populations had to make sacrifices
everwhere for the needs of the army.
A Cotton Control Board was established in the United Kingdom and such boards
were also established, in different forms and of lesser importance, in other countries,
and these boards succeeded in regulating the output and activity of the national
manufactures *.
11. This increase in the supply was followed by a considerable increase in the
number of spindles and looms in the United States, United Kingdom, Japan, Italy
and other countries, and in the productive efficiency of these countries ^.
' See Statistical Abstract of the United States, 1920, and the Cotton Year-Book, 1921.
" When noting the increase in raw material retained in the country, the great difficulties
must be borne in mind which the cotton industry and the textile industries in general had to
surmount, in order to make up tor the lack of German dyes.
' Department of Overseas Trade, Economic Survey of certain countries specially affected
by the War, London, 1920.
* G. BiGwooD, Cotton, London, 1918, and the official sources quoted therein.
^ See the Cotton Y ear-Book, 1921. As regards France, tlie wonderful increase in the cotton
production in the non-invaded regions should be noted.
— 144 —
Especially noteworthy were the increases in the United States, where there
were more than 4 million new spindles; in the United Kingdom, where there were
more than 2 millions; and in Japan, where there were more than 1 million.
The following official figures relating to Japan are very significant: — '
Number of
cotton
factories
Amount of
capital
invested
(millions
of yens;
Average
number of
spindles
in work
(millions)
Quantity of
raw cotton
worked
(millions
of kwan)'
Total
production
yarns
(Iiiillions of
kwan) ''
1913
100
77.6
2.3
88.7
81.3
1914
103
81.2
2.4
95.1
82.3
1915
273
85.3
2.8
98.2
85.3
1916
240
94.3
3.0
108.8
93.0
1917
250
111.9
3.1
115.2
93.7
1918
285
132.8
.3.4
136.4
100.5
This development allowed Japan to meet the reduction in her imports of manu-
factured cotton products, and to some extent to capture from the United Kingdom
and other European countries the markets of the past for her manufactured pro-
ducts ^
Although we have no precise data on the subject, we can assert' that the
great decrease in European exports, especially in British exports, caused a consi-
derable increase in the production of yarns and fabrics in countries w'hich formerly
depended upon these exports, notably South America and Asia. Especially in
India, the production of fabrics, which reached 1,105.5 millions of yards in average
1909-13, has already exceeded the quantity of 1,614 millions of yards in 1917-18,
and furnished a current of exportation. "
To sum up, one may say that, although the war diminished the world produc-
tion of raw cotton, it strengthened the cotton industry in the U. S. A., in the United
Kingdom, in Japan and in lesser measure in Italy and in a few other countries
formerly dependent on imports.
As is well known, under these conditions the prices greatly increased, especially
as a result of the inexorable and colossal demands of the war and of the risks attend-
ing navigation. The increase in the price of cotton at Liverpool between July 1914
and September 1918 has been calculated at about 300 %; for American Middlings,
the increase has been from 7.26d. per lb. to 21.68; for No. 1 Fine Oomras from 5,87
to 18,78, and for the Egyptian quality known as F. G. F. Brown from 9,44 to 30,97. ^
III.
POSITION AFTER THE WAR
12. At the close of hostilities, the cotton industry experienced the same initial
period of prosperity that characterised almost all branches of the world's economic
activities.
According to Customs statistics, the export of raw cotton from the United
States rose from 1,052.58 thousand tons in 1917-1918, lo 1,527.59 in 1919, though
tiieso quantities still fell below the pre-war exports.
' Financial and Economic Annual of Japan, 1918-20.
- 1 Kwan = 3.75 kg.
' See the Report of the Departmental Committee, etc., 1918. In this Report, fear of Japanese
competition is very marked, especially in view of the low scale of wages obtaining in Japan, her
proximity to her markets, her knowledge of commercial usage and of local requirements, etc.
* See the Cotton Year-Iiook and 7'he Times Imperial and Foreign Trade Supplement.
Cotton Section. London, 1919.
^ See Review of the Trade of India in 1913-14 /1919-20, prepared for both Houses of Parliamen t
by command of His Majesty, London, 1921. See also the Report of the Departmental Committee, etc.
" See tiie Cotton Year-Book.
This increased output was mainly absorbed by the United Kingdom (from
540.91 to 734.42 thousands of tons), France (from 123.11 to 180.62), Italy (from
79.7 to 127.37) and Japan (from 132.36 to 199.81).
The United States, however, being no longer compelled to provide for her
war requirements, increased her export of cotton fabrics, especially to the South
American countries and to China.
A considerable increase, moreover, occurred in the export of yarns, which
before the war formed an insignificant part of the exports of the North American
Republic.
At the same time, the special qualities of raw cotton which the United States
imported from other countries rose from 51.12 to 79.56 thousands of tons; the small
quantities of cotton fabrics which she had been able to import in 1918 also showed
a similar increase. India and Egypt in the same way increased their exports of
raw cotton, the former country by nearly 250 per cent, and the latter by
34 per cent.
An increase in imports, especially from Allied European countries and Japan,
also took place.
In the United Kingdom the imports of raw cotton, mainly from the United
States (as has already been pointed out) and Egypt, rose from 675.45 to 888.28
thousands of tons; a total, however, which was still inferior to the pre-war figures.
Re-export showed a marked increase, while exports of yarns rose from 46.13 to
73.75 thousands of tons.
It must, however, be observed that, though the export of fabrics to Switzerland,
Italy, Greece, the occupied Turkish territories, China and a few other countries,
showed an increase, the export figures to South America, Africa, Egypt, India,
and the other British possessions showed a considerable diminution, the total of
these exports being, in fact, regluced from 3,699.3 millions of yards in 1918 to 3,523.7
in 1919.
This decrease must be attributed in great measure to a local development in
the cotton industry, to which attention has already been drawn under § 11.
In Japan the increase in the imports of raw cotton was not only relatively
greater, but even exceeded the quantity imported before the war, giving rise to
an increase in the export of fabrics, especially to China.
It must be observed that in Japan the proportion of cotton imported from
the United States has increased as compared with her total imports.
With the 1.9 million spindles in Alsace-Lorraine, France, in spite of her pre-
occupation with the task of reconstruction and the destruction of 1.4 million spindles,
was able to import, chiefly from the United States, 218,55 thousands of tons of
raw cotton and waste as compared with 142.3 in 1918, and to export yarns and fabrics
to a very considerable amount.
The rapid recovery of Belgium was worthy of special attention. In 1919 she
imported 62.6 thousand tons of raw cotton, of which she re-exported 11.15; and she
succeeded in exporting a large quantity of manufactured goods.
In Italy, although the quantity of raw material imported did not vary greatly,
the quantity of imported American cotton increased in 1919 — sure evidence of
an improvement in the ItaHan manufacturing industry. The export of yarns
and fabrics also increased, exceeding even the pre-war figures. Moreover, the im-
ports of manufactured goods (mostly goods of the finer qualities, which Italy
had had to import before the war) remained below the pre-v/ar figures, which also
indicates an improvement in Italian manufactures.
13. This general revival was greatly assisted by the large stocks available
throughout the world at the close of hostilities (already referred to in § 10) —
which, although they have not been accurately determined, must have been very
considerable — and by the increased yield of the 1919 crop in the three principal
cotton-producing countries.
lU
— 14G —
According to the data of the International Institute of Agriculture, this increase
was itself due to the extension of the areas under cultivation and the high yield
of cotton in the case of India.
United States . .
India
Egypt
Total
1915-18 1919
Thousands of hectares
13,784 13,584
8,672 9,450
613 661
23,069
23,695
United States . .
India
Egypt
Total
1915-18 1919
Thousands of metric tons
2,492.0 2,478.5
735.0 1,051.6
236.2 250.3
3,463.2
3,780.2
14. This industrial prosperity was aided by the opening of large markets,
by the restoration of free and safe means of transport and the general revival of
confidence due to the cessation of the war.
Though partly hampered by the introduction of the eight hours' day, it was
favoured on the other hand by the continuous rise in prices which ensured high
profits for the producers, who were so overwhelmed with orders that they were
compelled to refuse some of them.
It seemed in 1920, with the increase in the tonnage on the high seas, the begin-
ning of an improvement in transport by land, the almost complete discontinuance
of prohibitions on export and the gradual recovery of the devastated countries,
that this condition of prosperity was bound to improve; but the economic crisis
which occurred in the spring of 1920 completely changed the situation.
In spite of the extension of the areas under cultivation in the United States
and Egypt and the marked increase in the crops in these countries and elsewhere,
the cotton industry was brought to the verge of ruin.
United States . .
India
Egypt
Total
United States
India . . . .
Egypt . . .
1919 1920 1921
Thousands of hectares
13,584 14,991 10,732
9,450 8,505 7,650
661 768 543
23,695
24,264
Thousands of tons
18,925
2,478.3
2,913.9
1,700.0
1,051.6
645.2
550.0
250.3
271.1
150.0
Total
3,780.2 3,830.2
2,400.0
The foreign exchanges, steadily growing worse and rendering trade almost
impossible, from which the devastated countries suffered more and more, and the
withdrawal of American credit from AlHed countries, etc., sensibly diminished
the demand for manufactured goods; As a result, prices fell, factories were reduced
to working only for a few days a week and a few hours a day, and a considerable
nuinhiir of 9|)iniiles and looms in the factories stood absolutely idle.
— 147 —
The following figures are the result of an enquiry instituted by the International
Federation of Master Cotton-Spinners : —
Number of 48-hour weeks T)uring which the spindles were idle
Six months ending on Six months ending on
Great Britain
France.
Germany
Italy
Czecho-Slovakia
Spain
Belgium
Switzerland
Poland
Austria
Sweden
Portugal
Finland
Denmark
Norway .
Japan
Canada
Mexico
Brazil
It must be noted that, with the exception of Poland and a few other less-impor-
tant countries, the inquiry took into account almost all the spindles in the countries
under review.
A general reduction in the exchange of raw materials and manufactured goods
and a falling off in the 1921 crop followed, due to:
(a) The reduction of areas under cultivation, itself the consequence of the exis-
tence of large stocks, especially in the United States, where the stock has been
estimated at approximately 1.8 million tons;
(6) The drought and the ravages of thie cotton-worm.
Under these circumstances, Egypt thought it advisable to introduce temporary
duties on the cotton produced, that is exported (P.T. /35 per Kantar ') after August
1st, 1920, subject to periodical revision".
15. The considerations which have been rapidly dealt with above cannot
fail from their gravity and importance to impress all those who are specially interested
in the state of the industry as it is at present; but those, on the other hand, who
concentrate their attention on the more permanent factors which have developed
in the period under review will be especially impressed by two other circumstances
31. 1. 1921
31. 7. 19
6.04
12.92
2.3
6.92
7.5
5.48
0.99
3.11
13.3
8.76
4.7
9.17
7.5
12.94
1.39
3.39
10.71
5.80
10.89
?
4.43
7.50
20.93
8.41
1.0
0.60
5.8
15.12
3.8
11.57
0.09
21.25
0.765
1.56
2.77
0.17
0.96
(about) 2.0
' 1 Kantar = 450 kg.
2 Mr. Ashley, of the Board of Trade, informed us that in November 1919 the British High
Commissioner for Egypt had communicated to the British Government that the Egyptian Govern-
ment thought it necessary to increase its revenues and to raise the duty on goods exported from
Egypt from 1 % to 2 % ad valorem. This increase chiefly affected cotton, which, in 1919, repre-
sented 84 % of the total value of Egyptian exports. In January 1920, Lord Allenby again in-
formed his Government that, on account of the delay and diiTiculty in obtaining the necessary
consent of Great Britain, France, Italy, Belgium and Russia (Italy was opposed to it), the Egyp-
tian Government proposed to levy a tax on ginned cotton.
A favourable reply having been received from Lord Curzon, the Decree of April 18th, 1920,
instituting this tax, was passed and came into force on August 1st, the tax being payable before
the ginned cotton leaves the factory.
— 148 —
which will probably cause alterations in the character of the world's cotton
industry:
(1) The more striking of the two is the development of the Asiatic and to some
extent, the South American manufactures, which may prevent the European
cotton industry from placing on these markets the enormous stock of manufactured
goods which they were able to dispose of there before the war.
It is probable that the full consequences of this factor will be mitigated by the
fact that for some time it will be possible to rely on the markets offered by European
countries in process of reconstruction, which are only now beginning to show signs
of activity in the manufacture of cotton; but everyone is aware of the precarious
position in which the industry may one day stand.
(2) The other circumstances in the remarkable advance in manufactures in
the United States and the diminution, which will probably result from it, of the
American export of raw cotton, which, as already shown, forms the chief sources
of the world's supply.
This is a circumstance which is already engaging the attention of other manu-
facturing countries and gives rise to hopes of an improvement in the qualities
produced in India and Egypt and of a greater development in the growth of cotton
in other countries — in the East African British possessions, in the French Soudan,
in Italian Somaliland, etc. '
One cannot say, however, how far these hopes are justified. The best prospects
of success belong undoubtedly to the United Kingdom, which has experience in
wider and more productive areas and can draw upon abundant capital".
It is impossible, therefore, to ignore the possibility of a decadence of the cotton
industry in those countries which become deprived of their markets or find it im-
possible to obtain the necessary raw material.
IV.
SUMMARY AND CONCLUSIONS
I.
On the eve of the war, the world cotton industry depended on crops which are
mainly produced in the United States, in China, in British India and in Egypt.
Indian and Chinese cotton was generally of inferior quality. Chinese cotton was
almost completely absorbed in China; Egyptian cotton, on the contrary, was almost
entirely exported; Indian cotton was exported to the extent of about 50% and
American cotton to about 68 %.
II.
The United States and the British Empire (including Egypt) disposed of respec-
tively 58 % and 21 % of the world production, and 72 % and 28 % of the total
exports of all producing countries.
III.
Just as the United States was obliged to import raw cotton of different quality
from her own, so the United Kingdom imported cotton from the United States
and a considerable proportion of Egyptian and Indian cotton was exported to
other countries.
' It must also be noted that a change in the quality of cotton used in a country demands
a change of tools: for instance, a reduction in the import of American cotton into the United
Kingdom must lead to a reduction in tlie spindles specially adapted to the spinning of that cotton.
In 1915 these constituted 75 % of the total of the spindles in the United Kingdom.
- See Report of the Departmental Committee, etc., 1918.
— 149 —
IV.
38.4 % of the spindles and 28.3 % of the existing looms in the world were
in the United Kingdom ; 22 % and 23 % in the United States.
Other producing countries which were large consumers of raw cotton were
China, Germany, India and Russia, followed by Japan, France, Italy, Austria-
Hungary and certain lesser countries.
The export trade of the United Kingdom exhibited a great superiority
over all other manufacturing countries; the United Kingdom supplied the whole
world with yarns and fabrics, the export of which surpassed that of Germany
and all other exporting countries. On the other hand, the United States worked
mainly for their home markets and exported only small quantities of fabrics which
were, for the most part, sent to South America and the Philippine Islands.
VI.
Among the European countries, France, Italy and others exported much more
yarns and fabrics then they imported, but Germany imported, principally from
the United Kingdom, about three times as much cotton yarns as she exported.
VII.
Asia provided the principal markets for the export of manufactured goods;
but in Japan the cotton industry, working principally with Indian cotton (60 %),
and American cotton (30 %) supplied a large quantity of manufactured goods
to the markets of the East.
VIII.
The declaration of war caused a great diminution of the trade in raw cotton
and a different orientation in the trade, due mainly to the blockade of the Central
Powers. The large quantities of raw cotton which, before the war, had been absorbed
by these markets were thus made available for other countries.
The United States was able to keep in her own country a greater proportion
of raw cotton than formerly and to intensify her export of manufactured goods;
the United Kingdom was able to increase its imports of Egyptian cotton, for which,
towards the end of the war, a Commission of Control was instituted which realised
large profits.
On the other hand, the United Kingdom ■ — like the other countries - — by
means of the prohibitions of exports, was able to devote a large proportion of its
own exports to internal consumption, and to economise in civil consumption so
as to supply the needs of the army. The United Kingdom was able, moreover, to
help France considerably after the invasion, by means of large exports of yarns
and fabrics.
Japan, on the other hand, was able to increase her own imports of raw cotton.
XX.
Together with the reduction in traffic and with the changes thereby involved,
there was a corresponding reduction in the harvests of the three raw-cotton-pro-
ducing countries.
X.
There was, on the other hand, a considerable increase in the number of spindles
and looms and the producing capacity of the United States, United Kingdom,
Japan, Italy and other countries.
XI.
At the end of the war, the cotton industry experienced a period of prosperity;
there was an increase in the export trade of raw materials from the three producing
— 150 —
countries, a large export of manufactured goods from the United States, including
a considerable increase in the export of yarns — previously without importance — •
and there were also increased exports from other manufacturing countries, including
Japan, Italy and, to a small extent, France.
Belgium's effort was particularly remarkable.
The United Kingdom increased its exports of yarns but not of fabrics, pro-
bably on account of the development of the cotton manufactures in India and in
other countries which, before the war, were the principal markets for the British
cotton industry.
XII.
Worthy of note also is the growing importation of American cotton into Japan
and Italy indicative of improvement in the cotton manufactures in those countries.
XIII.
This revival in trade was due to the stocks of cotton accumulated during the war
and to the increase in the areas under cultivation and of the harvests, to the return
to free commercial traffic, to the general conditions of confidence and the continually
increasing prices which assured accruing profits to the manufacturers.
But this period was of short duration. A fresh economic crisis arose and the
situation was reversed. Under these circumstances Egypt introduced a temporary
tax on the cotton produced, that is to say, exported.
XIV.
At present, the cotton industry is in great difficulties; the working hours are
very short, orders are scarce, and prices have fallen to an incredible level.
The discouragement of producers, still further increased by the existence of
large reserve stocks, has led to a reduction of the areas under cultivation and
harvests.
XV.
Setting on one side purely temporary circumstances, two features have deve-
loped which may be destined to make profound changes in the cotton industry
of the world:
(1) The development of the Asiatic and to some extent also the South
American manufacturing industries, which will lead to attempts to secure
markets hitherto reserved for the manufacturing activities of other countries,
which will be unable to profit for more than a short time from the demands
of the devastated European countries, a demand which in every case will
place them in a precarious situation;
(2) The development of the cotton manufactures in the United States, from
which there is reason to fear a systematic restriction in the export of raw
cotton from this country, which has been hitherto, and still is, the principal
source of the world's cotton supply.
Efforts which are being made at present to extend the cultivation of cotton
are more likely to succeed in the case of the British Empire than in the case of
other countries.
The possibility must therefore be reckoned with that a country which is no
longer able to command markets or the necessary raw materials may see its cotton
industry fall into decay.
IV. STATEMENT OF THE POSITION CONCERNING
COAL
PREPARED BY
DOCTOR SLOUTSKI AND PROFESSOR VINCI
CONTENTS
I.
Position before the War 152
1. Importance of coal in the economic life of the world 152
2. Progress of the world production of coal 153
3. Preponderating position of the United Kingdom and Germany and
situation of the other countries 153-154
4. Production outside Europe 155
5. Special position of the three principal producing countries: United
States, United Kingdom and Germany 155
6. The coal trade in Europe and the competition between the United
Kingdom and Germany 155-157
7. The trade outside Europe 158
8. Consumption of coal in the principal countries of the world . . . 158-159
II.
Position during the War 159
9. Diminution of European production; production of Upper Silesia,
Sarre and Alsace-Lorraine 159-160
10. Production outside Europe and its importance in world production 160-161
11. Coal trade and consumption in Europe 161-162
12. Coal trade and consumption outside Europe 162-163
13. Restrictive measures affecting foreign trade in coal 163-164
III.
Position after the War 164
14. World production and the prevalence of American production. . 164-165
15. The position of Belgium 165-166
16. The special position of France and Germany (Upper Silesia, Lor-
raine and the Sarre) : delivery of coal by Germany 166-168
17. The supply of coal in France 168
18. The coal policy of the United Kingdom 168-170
19. The position of Russia and the production of coal in its various
basins 170
20. Coal production in some new States (Poland, Czecho-Slovakia,
new Austria) 170-171
21. The position of Italy 171
22. Coal production outside Europe 171
23. Present situation of coal production and forecasts for the future 171-172
IV.
Summary and Conclusions 172
OO A. L
I.
POSITION BEFORE THE WAR
1. Coal liad assumed an enormous importance in the economic life of the whole
world on the eve of the war. The development of its use is parallel chiefly with the
growth of industry.
With regard to the development of transportation, it is worthy of notice that
traffic on the railways, as well as the tonnage of the merchant service, increased
considerably in the 50 years preceding the war.
Certain countries have developed their systems prodigiously. ' Russia, for
example, between 1850 and 1890, increased her system 60-fold, Italy 30-fold, Austria-
Hungary 16-fold, France 12-fold, the German Empire 7-fold, etc.
In the following years, the length of the railways continued to increase, although
the increase was at a slower rate.
As regards the net tonnage of the merchant service, that of the United Kingdom
had more than doubled since 1875; that of the German Empire had been tripled
in the same period, even though that country has only one-quarter the net tonnage
of the United Kingdom. France only increased her tonnage by a half. Outside
Europe, we note the United States, which have more than doubled their tonnage,
and Japan, which, starting from a very small tonnage, has contrived to increase
her original amount 20-fold, thus surpassing France.
As far as the metal industry is concerned, in which coal plays so important a
part, Germany — between 1880 and 1913 — increased her production of cast metal
more than 9-fold; that of Austria-Hungary and of Belgium increased 5-fold, and that
of France was more than doubled. The progress of the United Kingdom was slower.
Outside Europe, we find that the United States increased their production of
cast metal 8-fold. The world's production in fact increased more than 4-fold
between 1880 and 1913.
As regards the production of iron and steel,we note a progress of equal magnitude
and importance.
If we take into account the coal used in other industries, and also for lighting
and heating, wo shall have some idea of tlie iniuicnse quantity which was necessary
before the war to supply the needs of the whole world.
' Annuaire slatislique de la France, Paris 1919.
2. How did the various
The table below shows
since 1 890.
— 153 —
countries succeed in supplying these needs ?
the production of coal in Europe and outside Europe
World Production '
Millions of metric tons
1890
1903
1913
Coal Lignite
Coal
Lignite
Coal
Lignite
143.1
324.2
517.0
184.5
234.0
292.1
70.2
19.1
116.6
45.8
190.1
87.2
8.9
15.3
11.5
22.2
16.5
27.4
1.0
2.3
1.2
5.3
1.1
8.8
26.1
34.9
40.8
6.0
—
16.9
• —
33.8
—
20.4
—
23.8
—
22.8
—
2.6
—
10.1
—
21.4
—
2.2
—
7.6
—
16.0
—
0.05
—
1.0
—
13.1
—
2.8
—
7.2
—
13.6
—
3.5
—
7.2
—
12.6
—
0.6
—
1.4
—
1.9
—
1.2
2.8
4.3
0.4
0.5
0.7
0.1
—
0.5
—
1.9
—
0.3
—
0.3
—
0.4
—
512
880
1,342
(Lignite
40)
(Lignite 75)
(Lig
dte 125)
United States
United Kingdom . . .
Germany
Austria
Hungary
France
Russia
Belgium
Japan
British India
China
Canada
Australia
New Zealand
Spain
Italy
Netherlands
Sweden
Approximate total for
the whole world . . .
We notice the large proportion of lignite in the total production of Germany
and Austria- Hungary. In 1913, the proportion of lignite in the total production
of pit coal in Germany was more than 45 %; Austria- Hungary produced in the same
year twice as much lignite as pit coal.
This distinction between the two kinds of fuel is necessary, in view of the diffe-
rence in heating power between lignite and pit coal; certain qualities of lignite
scarcely reach 30 % of the heating power of pit coal.
3. Before the war two countries occupied a preponderating position in the
production of coal in Europe, namely the United Kingdom and Germany.
One point, however, is to be noted: while the United Kingdom occupied the
first place as regards the production of coal, and Germany the second, Germany,
on the other hand, occupied the first place in the metal industry.
Indeed, in 1913, Germany produced 16.8 million tons of cast metal, but the
United Kingdom only 10.4. In the same year Germany produced 17.5 million tons
of iron and steel, while the United Kingdom only produced 7.7.
Moreover, in 1912, Germany had 62,692 kilometres of railways in working, while
the United Kingdom had only 37,845.
The United Kingdom, as we shall see, exported a considerable proportion of her
total coal-production, while Germany kept the major portion of her coal for home
consumption; again, the LInited Kingdom possessed a fleet which was of far greater
importance than that of Germany, and necessitated a larger consumption of coal.
It is interesting to note that, during the 10 years immediately preceding the
war, Germany increased her coal production by 65 % and her lignite production
by 89 %, while the United Kingdom increased her coal production by 24 %.
Annuaire statistique de la Prance, Paris 1919.
The third place in coal-production is held by Austria-Hungary. This country
increased her production of coal by 38 % and her production of lignite by 32 %
during the 10 years immediately preceding the war. It should be noted that the
Hungarian production formed a small proportion of the total production of Austria-
Hungary.
With regard to the metal inilustry, although unable to rival Germany and
England, Austria- Hungary nevertheless occupies an important position among
the other European States. It is above all its railways which consume coal, their
length (45,452 km. in 1912) entitling them to the fourth place, immediately after
France (50,993 km. in 1912).
During the 50 years which preceded the war, France more than trebled her
I)roduction, and during the years directly preceding the war she increased it by
17 %, but notwithstanding this development, she depended, and still depends,
largely on foreign countries for the fuel required in her manufactures. France
produces a very small amount of lignite. Of 40.8 million tons of coal produced in
1913, 40 million tons were composed of coal and anthracite, and only about 800,000
tons of lignite. The departments which are richest in coal are the Nord and the
Pas de Calais, which alone produced 27.4 million tons of coal in 1913. In France,
transport and the metal industry are closely connected. with the- coal question.
In 1913, the production of cast metal in France was about five times greater than
50 years previously, and the production of iron and steel 3.5 times larger.
On the other hand, France has greatly developed her railway system, but the
development of her merchant service has been slower in comparison with other
countries.
From 1903 to 1913, Russia doubled her coal-production, increasing it from
16.8 million tons to 33.8 million. It was the Donetz Basin which supplied with coal
not only the metal industry in the region bordering on Krivoi-Rog, but also that in
Central Russia. This basin is the most important: out of 33.8 million of tons
extracted in 1913, it furnished 25 % millions.
Thanks to this rich mining district, the Russian metal industry had acquired
an important place among European States; in the production of cast metal, Russia
held the fourth place in 1913, and from 1890 to 1913 it had increased its production
more than four-fold. As regards iron and steel, Russia held the third place just
before the war.
Nor must it be forgotten that Russia utilised, particularly in the centre of the
country, a considerable quantity of wood for the metal industry and the railways;
but coal was beginning gradually to supplant wood, the supply of which presented
increasing difficulties.
Belgium did not produce enough coal for her own use, but her dependence on
foreign countries was comparatively small. Out of 26 million tons which she
consumed in 1913, she produced 22.8 million tons herself. Between 1890 and 1913,
Belgium slightly increased her coal production and greatly developed her production
of cast metals, iron and steel.
Her mercantile marine was a small one, and did not require much coal.
As regards railways, Belgium, which held the first place in respect of density,
had also greatly increased the length of her railway system.
From the point of view of production, Spain stands very low in comparison
with other countries, even with Belgium, but she increased her production in coal
nearly four-fold during the ten years preceding the war, and increased her production
in ca^t metals, iron and steel. The development of her railway system has been
remarkable; she has increased it eight-fold since 1860, and has added one-third to
her mercantile marine, which was about four times as large as that of Belgium.
The production of coal in 1913 in other European countries was insignificant.
To the countries mentioned in the foregoing table (Netherlands 1.9 million tons;
Italy 0.7; Sweden 0.4) should be added Serbia 0.3, Bulgaria 0.2, Roumania 0.2 and
Greece (in 1910) 0.02 million tons.
All these countries imported almost the whole of the coal required for internal
consumption. The metal industry, which was already considerable in Sweden
and Italy, was little developed in the other countries.
— 155 —
4. In regard to production uuls'de Europe, the first place belongs to the United
States; the other countries are far behind, and their joint production cannot be
compared with the immense production of the United States.
It must, however, be remembered that the total production of the United
States includes 84 % of bituminous coal.
The production of lignite in the United States is negligible.
The United States have increased their production of coal by nearly 60 % ?ince
1903, Canada by 53 %; the most important increase has been recorded in China,
where production has risen from 1 milUon tons in 1903 to 13.1 million ton? in 1913.
The British Indies and Japan have increased their production by a little more
than half.
5. Although the estimates of the world's production of coal and lignite are
very uncertain, they may be calculated at 512 million tons in 1890, of which about
40 millions were lignite; at about 880 million tons in 1903, of which nearly 75 mil-
Hons were lignite; and at about 1,342 million tons in 1913, of which nearly 125
millions were lignite. '
According to these estimates, in 1913 the United States, Great Britain and
Germany were producing 81 % of the world's production of coal and lignite (the
U.S.A. 38.5 %, the United Kingdom 21.8 % and Germany 20.7 %).
In the case of coal alone the percentage was 82.1 %, of which 42.5 % was pro-
duced by the United States, 24 % by the United Kingdom and 15.6 % by Germany.
In 1890, the United Kingdom was the chief producing power in the world,
but in 1899 the United States came first; they still maintained this advance in 1913,
leaving all the other countries of the world behind them.
6. From what has been said, it will be seen that there were countries which
had an immense production of coal, others which had enough and others again
which produced none at all themselves and which were obliged to import foreign
coal.
Considering the European countries in the first place, it must be observed
that — according to official data for international commerce — just before the war
the export of coal from non-European countries to Europe was negligible. Great
Britain and Germany were supplying the remaining States of Europe, and the
first mentioned occupied the first place.
Exportation of British Coal in 1913.^
Countries to which exported Millions of tons
France 12.7
Italy. . 9.6
Germany 8.9
Russia 6
Sweden 4.5
Argentine 3.7
Egypt 3.2
Denmark . 3.0
Spain 2.5
Norway 2.3
Belgium 2
Netherlands 2
Brazil 1.8
Austria- Hungary 1
Total (including other coun-
tries) 71.1
Exports to British possessions 2.3
Grand total 73.4 (74.6 metric tons).
' Annuaire statistique de la France, Paris 1919, and Imperial Mineral Resources Bureau:
Coal, Coke and By-products, Part I, London 1921.
'■' Not including export of bunker coal, which in 1913 amounted to about 21 million metric tons.
— ir.fi —
We see tliat France, Italy and Germany were the three principal customers
of the United Kingdom before the war. The exports to these countries repre-
sented 42,5 % of the total British export.
Great Britain exports chiefly coal: the export of coke and briquettes was rela-
tively insignificant. Moreover, it must be noted that three-fourths of the exports
are of the sort known as " steam coal."
Between 1903 and 1908 the British export increased by 38 %, but from 1908
to 1912 the export from Great Britain remained more or less stationary; in 1913
it considerably increased.
The export of coal since 1908 is as follows: —
Millions of metric tons
1908
63.54
1909
64.08
1910
63.07
1911
65.73
1912
65.47
1913
74.57
In 1913 Germany exported 34.6 million tons of coal and 6.4 million tons of
coke to the following countries:
Export of Coal and Coke from Germany in 1913.
Millions of metric tons
Destination Coal Coke Total
Austria- Hungary .... 12.15 1.05 13.20
Netherlands 7.21 0.28 7.49
Belgium 5.72 0.93 6.65
France 3.24 2.37 5.61
Russia 2.11 0.54 2.65
Switzerland 1.63 0.36 1.99
Italy 0.89 0.18 1.07
Total, including other
countries 34.6 6.4 41.0
If we add to the above figures 3 million tons of all kinds of briquettes,
we obtain the figure of 44 millions as the total export from Germany in 1913.
This table shows that nearly one-third of the total export was sent to Austria-
Hungary, and that, in fact, Germany had only five countries who were really
important customers: Austria- Hungary, the Netherlands, Belgium, France and
Russia; these States absorbed about 80 % of the total German exports.
Germany also imported a certain quantity of coal, although she herself pos-
sessed a surplus. In 1913 she imported 18.3 million tons of coal of all sorts, of which
10.5 millions were pit coal.
It was from Great Britain that Germany imported almost all her coal. The
rest, and particularly lignite, was imported from Austria-Hungary (about 7 million
tons^.
(jcrmany had tlieroforc to compete against British coal, not only in the European
markets but also in her own country. The importation of British coal is mainly
accounted for by the fact that the cost of transporting it by sea from England to
German ports such as Stettin, Koenigsberg and Danzig was cheaper than that of
Iransporting German coal from the interior of the country to the industrial centres,
ill spit(^ of llu' fact thai I he latter transport was very often carried out by inland
waterways. As rcgaids the development of lier exporls, Germany was making
much more rapid progress than the United Kiiulgom.
— 157 —
Between 1903 and 1913 Germany more than doubled her export of coal, whereas
Great Britain only increased hers hy 60 % in the same period, allowance being made
for the abnormal increase of tlie English export in 1913.
All the other European countries import coal, but some of them not only import
a considerable quantity but are also exporters.
Austria-Hungary in 1913 imported about 15 million tons, of which nearly
14 million tons consisted of pit coal; ' and exported about 8 millions, 7 millions of
which were lignite. The coal came almost entirely from Germany; from England
Austria- Hungary only imported about 1 mUlion tons.
Austrian exports were almost entirely destined for Germany. Austrian exports
remained practically stationary during the 10 years prior to the war. Imports, on
the other hand, almost doubled during the same period, for in 1903 they were only
6.4 millions.
Belgium in 1913 exported about 5 million more tons of pit coal, more than
1 million of coke and more than half a million tons of briquettes; this is equal to nearly
7 million tons of raw pit coal. This country imported 8.8 million tons of coal and
a small quantity of briquettes. The total import, coke and briquettes, reckoned
in their ecfuivalent in raw coal, amounts to 10.8 million tons. Belgium received the
greater part of this coal from Germany — about 65 % of the total import; Great
Britain came second with 2.3 million tons of coal; from France, Belgium received
only 0.8 million tons.
The greater part of the Belgian export was destined for France — 4.2 million
tons of raw coal out of 4.9 millions: the rest was exported in small quantities to
more than 25 countries in different parts of the world.
From 1903 to 1913 the export from Belgium may be regarded as stationary.
This state of affairs may be explained by the fact that, on the one hand, Belgium
was steadily developing her metal industry, which required an ever-increasing
quantity of coal, and, on the other hand, by the fact that the coal trade was becom-
ing concentrated in the hands of Germany and Great Britain.
France imported in 1913 about 23 million tons of coal, coke and briquettes,
of which about 18.7 million tons consisted of pit coal. About 50% of the coal was
imported from Great Britain; the balance came from Belgium (4.8 millions) and
Germany (6 millions). The export from France was very small (1.7 million tons in
1913).
Thus the United Kingdom was the chief source of France's coal supply.
English coal shipped by sea to France was easily able to compete with German
coal, of which the transport by rail was becoming costly. It must not be forgotten
that the British mines are close to the coast and that coal can be loaded almost
direct on to British ships. For this reason British coal found practically no compe-
titors, especially in the West of France.
From 1903 to 1913 France increased her import by 60 %; her export was
doubled, but it still remained a negligible quantity.
Italy imported 11 million tons in 1913. Between 1903 and 1913 her import
doubled. She received almost the whole of her coal from the United Kingdom,
about 10 million tons; the rest was imported almost exclusively from Germany.
Austria-Hungary, France and the United States supplied only a very small propor-
tion of the Italian imports of coal.
Russia was also an importer; her import doubled between 1903 and 1913
(3.5 millions in 1903 and 7.7 millions in 1913). In 1913 Russia received half of
this amount from Great Britain; Germany supplied her with 2 million tons.
Spain imported 2.7 million tons of coal in 1913, almost the whole of which came
from Great Britain, the only great producing country which is within easy reach
of Spain, and from which transport is less costly.
' The differences between the statistics of the importing countries and the corresponding
statistics of the exporting countries have an obvious explanation.
— 158 —
7. Outside Europe, the first point which we note is that the export of coal from
the United States was almost exclusively destined for North America. The
following are the export figures for the financial year 1913-14:
Millions of tons
,, , Bituminous „ , ,
Coal „ , Total
Coal
Europe 0.01 0.9 0.91
North America 4.0 14.0 18.0
South America — 0.6 0.6
Other countries — 0.2 0.2
4.01 15.7 19.71
The export of coke was quite negligible (0.72 million tons).
The amount of export to Europe was thus quite negligible, and this is easily
understood. In spite of the reduced price of American coal, the freight rates from
the U. S. A. to Europe were so high that European countries could not, before the
war, think of obtaining supplies from a country so far distant.
France, if she had purchased American coal, would have paid 40 to 50 francs
per ton for it, whereas she could get Cardiil coal delivered at Havre for 30 francs.
It is therefore easily understood that the export from the U.S.A. was confined
to the American Continent; Canada took the largest quantity, receiving 16 million
tons out of a total of 20 millions exported.
Amongst European countries, Italy received the largest quantity of American
coal, almost exclusively bituminous, taking 85 % of the total export from the United
States to Europe.
The United States also imported a comparatively negligible quantity of coal
(in 1913, 1.4 miUion tons). The greater part came from Canada (1.1 millions in 1913).
The other extra-European countries exported coal in very small quantities.
Among them may be mentioned Japan.
8. The following are the details of stocks available for consumption in the prin-
cipal countries of the world ' :
European Countries 1913 Extra-European Countries 1913
Production
Stocks
Production Stocks
of coal
available
of coal available
and
for
and for
lignite
consumption
lignite consumption
(in rounc
1 figures, sho'
wing millions of metric
1 tons)
Germany . . . .
277.3
202
United States . .
517 499
United Kingdom .
292.1
193
Canada
13.6 31
Austria- Hungary
53.8
60
British India. . .
16 16
France
42.8
59.5
Japan
21.4 15
Russia
33.8
35
Australia ....
12.6 9
Belgium
22.8
26.4
Italy
0.7
11
Spain
4.3
7
The above figures include coal and lignite for certain countries; Imt Ihey do
not include coke or briquettes imported and exported by certain countries or include
llii'iii without any rcMluctioii. It is rather diflicull therefore to compare consumption
in llw. countries above luerilioned.
' For European counlrios, see tlie Hiijiftorl arneral sur f/nduslric /ra«fOisp by tin' French
Ministry of Commerce, Paris 1919.
For exlra-Iiuropcan countries, sec 1mi'i;iiiai, Institutf., Coid, Fnnilon I9l!().
— 159
If we restrict ourselves to the exclusive consideration of the production and
trade in coal in 1904 and 1913, we reach the following result for the United Kingdom
and Germany:
Millions of metric tons
United Kingdom
1904 1913
Production .... 236.1' 292.1
Import I'ei'y small very small
Export 64.4^ 95.6^
Germany
1904 1913
120.8' 190.1
7.3 iO.b
18.0 34.6
Available stocks.
171.7
196.5
110.1
166.0
In view of the fact that the export of coke and briquettes from the United
Kingdom was extremely small and that coke and briquettes must be added to the
German export — which, without any reduction, remained below 10 million tons —
we may assume that the United Kingdom always consumed a larger amount of
coal than Germany, but that the excess was less in 1913 than in 1904.
II.
POSITION DURING THE WAR
9. The coal production of Europe underwent diminution during the war.
On the other hand, outside Europe the production increased, especially in the United
States, a fact which partially compensated for the deficit in European production.
Production of Coal and Lign
Millions of metric tons
ITE
United States . . .
United Kingdom .
Germany
Austria
France
Russia
Belgium
Japan
British India . . .
Canada
Hungary
Spain
Netherlands . . .
Italy
Approximate world
total
1913
1914
1915
191fi
1917
1918
517
466
482
535
591
615
292
270
257
261
253
231
277.3
245
235
253
263
261
43.9
39
38
40.8
?
?
40.8
29.8
19.9
21.5
29
26
33.8
33
28
?
;)
0
22.8
17
14
17
15
14
21.4
22
20
23
26
28
16
17
17
17
18
21
13.6
12
12
13
13
14
9.9
9
9
?
?
?
4.3
4.4
4.7
5.6
6
>
1.9
1.9
2.3
2.7
3.1
3.4
0.7
0.8
1.0
1.3
1.7
2.0
1,342
1,210 1,190 1,270
1,.335 1,332
During the war, the United Kingdom showed a continuous decrease in produc-
tion; in 1918 the production was 79 % of that of 1913.
' Annuaire statistique de la France, Paris 1919,
2 Including 17.5 million tons used as bunker coal by foreign ships.
' Including 21 million tons of bunker coal.
'' Annuaire statistique de la France 1919, and Imperial Mineral Resources Bureau: Coal,
Coke and By-products, London 1921. This latter gives the following figures for Russia; 1913, 31.7;
1914, 35.6; 1915, 31.4; 1916, 34.3; 1917, 31.4. For the world total see United States Geolo-
GiCAi/ Survey : Report on the Mineral Resources of the United States in 1919, Washington 1920.
— 160 —
Belgium showed a considerable decrease in production, which fell from 22.8
millions in 1913 to 17 millions in 1914, to 14 millions in 1915, and, after a slight
recovery in the two following years, returned to 14 millions in 1918 (61 %).
In France this decrease amounted in 1915 to almost 50 % in comparison with
1913, in consequence of the occupation of the mines in the North, the richest in
France; hut in 1918 the production attained 63 % of that of 1913.
In Italy coal production did not decrease during the war. This country almost
trebled her production in 1918, although this was limited to lignite, which was
largely used during the war. Italy was compelled to increase her production as far
as possible, owing to the decrease in the importation of English coal.
With regard to Germany, the decrease in production reached 12 % in 1914 in
comparison with 1913; 15.7 % in 1915.
From 1916 onwards production increased till it reached in 1917 and 1918
94 % of the 1913 output.
The decrease in the production of German coal during the war refers especially
to pit coal; the production of lignite underwent a barely perceptible diminution
in 1914; in 1915 the production of lignite e.xceededtheproductionof 1913. and reached
in 1918 an increase of more than 13 % in comparison with 1913. "
The two mining coalfields which' supplied Germany with the largest quantity
of coal are the Ruhr and Upper Silesia. The former is the more important.
Production of Coal '
Millions of metric tons
Ruhr
Upper Silesia
Saar
Lorraine
Total pro-
duction
in Germany
1913
114.5
43.4
13.2
3.8
190
1914
98.3
37.0
10.0
2.9
161
1915
86.8
38.1
8.4
2.0
147
1916
94.6
41.7
8.9
2.0
159
1917
99.0
43.0
9.6
2.6
168
1918
96.0
39.8
9.2
2.7
160
In 1913 the Ruhr coalfield alone produced nearly 60 % of the total production
of pit coal in Germany, Upper Silesia 23 %. In 1914 the decrease in production
in the Ruhr amounted to 14 %; the lowest production during the war was in 1915
(decrease of 23 %), but from 1916 onwards there is a distinct increase in production.
Coming to Upper Silesia, we find that in 1917 her production almost reached
the 1913 level, but in 1918 there is a noticeable depression, which has continued
steadily since the war.
It is interesting to compare with the total German production the production
of the two remaining mining coalfields of Germany, one of whioh, the Saar, is at
present under a S|)ecial administration, while the other, the Lorraine coalfield, has
been incorjjorated in France.
The coalfield of the Saar is by far the more important of these two, although its
production cannot be compared with that of the Ruhr or of Upper Silesia.
As regards the Lorraine coalfield, its production is altogether negligible.
10. As we have mentioned above, the extra-European production of coal
during the war was entirely different from that of Europe.
The jiroduction of the United States, although showing a decrease of nearly
10% in 1914, increased considerably in llie lollowiug years, and in 1918 amounted
to 119 % of thai of 1913.
The production of Japan, after a fall in 1915, shows a distinct increase, reaching
in 1918 an increase of 133 % in comparison with 1913.
' MlNlSTiiRE DV TiiwAij,: Complc rendu </fs travaux au cours de I'annee 1920, Paris 1921.
— 161 —
British India has contrived to increase its production by 12.8 %.
As for Canada, after slight decreases, it succeeded in obtaining an almost
greater quantity of coal in 1918 than in 1913.
As a result of these increases the proportion of the world's output of coal pro-
duced by extra-European countries, and especially by the United States, has increased.
This proportion has still further increased in consequence of the reduction in
world production — • brought about, as we have already stated, by the reduction
in European production.
It follows then that the production of the United States, which formerly
amounted to 38.5 % of the world production, amounted in 1918 to 46.7 %, whilst
that of the United Kingdom fell from 21.8 % to 17.3 %, and that of Germany from
20.7 % to 19.6 % of the world production.
It must be noted that in 1918 the German production (of coal and lignite)
had already exceeded the English production.
11. The disturbance in the import and export of coal during the war was far
more sensible than in the sphere of production.
It should also be noted that during the war the coal trade ceased between
the Allies and enemy States.
In the case of the United Kingdom, the necessity for increasing home consump-
tion and the decrease of coal production gave rise to a decrease in the export of pit
coal amounting to almost 20 % in 1914, nearly 41 % in 1915, nearly 48 % in 1916,
by more than 52 % in 1917, and finally by more than 57 % in 1918.
With regard to the countries receiving English coal during the war, one special
feature is to be noticed: while the export of English coal decreased for all countries,
France, on the contrary, proved an exception to the rule.
It is true that there was in 1914 a very slight decrease in the export of English
coal into France, but since 1915, and until the end of the war, the quantity of
English coal exported to France remained about 41 % above pre-war export.
Needless to add that the majority of this coal was intended for war industries.
The United Kingdom decreased her export to Italy by more than half.
Nevertheless, France and Italy kept their predominant position, even during
the war, as recipients of British coal; France keeping the first place, which she had
long held, and Italy the second.
We give below a comparative table of the production, export, and stocks
available for consumption in the United Kingdom during the war.
Millions
of metric tons
Production
Export
Bunkers
Available Stocks
1913
292
78
21
193
1914
270
63
19
198
1915
257
47
14
196
1916
261
42
13
206
1917
253
39
10
204
1918
231
35
9
187
In this table, coke and the briquettes are reckoned by their equivalent in raw
pit coal (60 kg. of coke for 100 kg. of pit coal and 90 kg. of pit coal for 100 of
briquettes).
As we have already noted, the production decreased during the war, but the
export decreased in far larger proportions, a fact which enabled Great Britain to
increase her total consumption during the war. Thus the increase was made in
export alone.
We shall find that after the war, when the production of war material ceased,
consumption fell to the normal pre-war level.
1 1
— ir.2 —
In the case of France, the destruction of the mines in the North entailed a
marked decrease in her production as well as in her consumption, in spite of lielp
from the United Kingdom.
Here we will reproduce the table of the production, import and available stocks
of coal in France'
Millions of metric tons
Production
Import '
Net
Available Stocks
1913
40.8
23.8
64.6
1914
27.5
18.8
46.3
1915
19.5
20.8
40.3
1916
21.3
21.3
42.6
1917
28.9
18.2
47.1
1918
26.3
15.4
41.7
This table show clearly the considerable decrease in production during the war
and the decrease in net import and in available stocks.
Before the war, half the coal needed to supply the deficiency in national pro-
duction was imported from the United Kingdom; Germany and Belgium came next.
In 1914 the import of English coal had not decreased to any extent, but, on the
other hand, import from Belgium decreased nearly 40 %. Since 1915, and until
the end of the war, no coal had been imported from Belgium, but the import from
England increased; and in 1916 brings the general decrease in import down to a
little more than 11 %, as compared with the year 1913. In 1917 there was a
marked decrease in import from England, which fell yet lower in 1918.
It is worthy of note that American coal did not begin to come regularly into
France until the end of 1919. Before that date, import from America was exceed-
ingly small.
In Germany, Austria- Hungary and the Balkan countries, on account of
the blockade, the coal-trade at one stage of the war was reduced to a reciprocal
exchange. Belgium in this respect was similarly situated.
12. During the war, the United States markedly increased their production,
export and available stocks.
Export Available Stocks
Anthracite
Millions c
Production
'' Import
1913-14
83.0
—
1914-15
82.4
—
1915-16
80.6
1916-17
79.4
- —
1917-18
90.4
—
4.0
79.0
3.7
78.7
3.8
76.8
4.6
74.8
4.8
85.6
Bituminous Coal.
Millions of metric tons
Production Import Export Available Stocks
1913-14 434.0 1.3 15.9 419.4
1914-15 383.4 1.4 14.6 370.2
1915-16 401.5 1.6 18.9 384.2
1916-17 455.9 1.3 19.7 4.37.5
1917-18 500.6 1.4 21.2 480.8
' Import minus export, including coke and briqiieties as represented by their equivalent
in raw pit coal. The ligures for production an(i consumption dilTcr slightly from those given in
the preceding |iages, according to the various oflicial sources. For the figures given in Ihis table
see Coiii/tie rendu d<'s Travau.r par le MiNisTfenu nn Th.wail, Paris, 1921.
- SUilistical AhslracI of the United States, Washington 1919.
' The production is of the calendar year preceding tlii' fiscal year.
— 1G3 —
Export of Bituminous Coal
Millions of metric tons
To Canada
To Italy
To Europe in
general
Total (including
the other countries
1913-14
11.6
0.7
0.9
15.9
1914-15
8.5
1.6
2.0
14.6
1915-16
10.5
2.8
3.6
18.9
1916-17
13.1
1.1
1.7
19.7
1917-18
16.8
0.2
0.3
21.2
Anthracite is exported almost exclusively to Canada.
American export, although on the increase, remains, as we shall find, relatively
insignificant.
Export to Europe increased during the war, since the belligerent countries of
Europe were eager to increase their store of fuel from every possible source; but
already from 1916 to 1917, on account of the submarine warfare, this export began
to decrease.
This condition has contributed to the development of home consumption,
and therefore to the development of the metal, mechanical and transport industries
in America.
It may be added that, among the European customers for American coal,
Italy alone continued to import a more or less considerable quantity.
Japan imports but a very small quantity of coal. Before the war, her require-
ments in pit coal were covered by her own supply, a fact which enabled her to
export a large quantity; but during the war, though the production increased on
a large scale, export, on the contrary, decreased. Thus there was an increase of
consumption brought about by the rise in home industries. The export of pit coal
in 1918 shows a decrease of more than 38 % as compared with 1914. Japanese
export goes chiefly to China and Russia in Asia.
13. The abnormal conditions of production during the war and the general
upheaval markedly raised the price of coal in Europe.
During the war, the Allies made arrangements with a view to regulating the
coal trade and controlling prices. Until the middle of 1916, trade was free; from
the middle of 1916, the sale price was fixed. '
In France, control was exercised on the price of French as well as of English
coal, and this took place as the result of an agreement between France and the
United Kingdom.
Already in 1915, the United Kingdom had forbidden the export of coal to
neutral countries, except under special authorisation ; in the same year she instituted
licences for the import of coal.
By the Franco-British agreement the French Government issued import licences
which the British Government approved and transmitted to the Export Committee.
In June 1917 a code of directions was published, containing regulations for the
" The Report on the Coal Situation in Great Britain, made by R. Warhan and J. Thomas to the
1st Congress of the International Chamber of Commerce (London 1921, N" 7 , Secretariat general),
states that:
"Soon after the hostilities began, the British coal trade wished to assist the Allies in France,
Italy, and Belgium, by placing reduced maximum prices upon the value of British coal for export
to those countries. This was done by a purely voluntary arrangement of the coal-owners, and a
list of prices for coal and a list of rates of freights (also arranged voluntarily by the shipowners)
to all the ports of those countries were agreed upon.
"This arrangement came into operation on June 1st, 1916, before Government control of the
coal trade was instituted, and was continued under Government control until after the end of the
war, in fact, until 1919.
"The price (for example) for best Northumberland coal was fixed at 30 s. per ton and best gas
coal at 25s. per ton, and though these prices represented about double the pre-war price they
did not correspond to the increase in the cost of production."
— u;4 —
supply of coal for export and the supj)ly of vessels. The scale of prices was regarded
as fixing the prices for consignments to France or Italy and as a minimum for consign-
ments to other countries.*
In 1917, France created an International Coal Office, which collected infor-
mation as to the various restrictive measures concerning the price of coal and its
import and export.
It was thus possible, during the war, to check prices.
Similar steps were taken in Italy and in other countries
ill.
POSITION AFTER THE WAR
Ki During the brief period which has elapsed since the conclusion of peace,
it has not been possible for the pi'oduction of coal, its import and export, to recover
their normal level. The upheaval was too catastrophic for previous conditions to be
restored on the morrow of the war.
In the first year of peace, the situation became even worse. The coal production
of Europe in 1919 was, on the whole, with the exception of Belgium, lower than in
1918.
Outside Europe, production, as we have seen, increased during the war, but
here too we may note a general decrease in 1919, due to the very great fall in American
production. For this reason world production reached its minimum in 1919, and
we must return to 1910 to find an equally low figure.
In 1920 a general increase in world production took place. The production
of the United States increased to 586 million tons as against 494 millions, but, in
spite of this, the production of 1918 (615 million tons) was net reached.
As we have seen, the year 1919 is the worst as regards production of coal.
This is explained largely by the fact that, after the conclusion of peace, industrial
troubles arose in Europe and America, due principally to the closing down of muni-
tions factories, which consumed a large quantity of coal.
It is interesting to note the share of the various countries in the world produc-
tion of coal in 1919-20.
Would Production of Coal and Lignite '^
Millions of niotric tons in round figures
1913 1,342
1914 1,210
1915 1,190
1917 1,335
1918 1,332
1919 1,158
1916 1,270 I 1920 1 ,,300
' Imi'Kiual Minkral Resources Bureau: Tho Mineral Iniliislri/ <ij the nrilish Empire and
Foreign Countries: Coal, Coke and By-products, London 1921 (page 5.^).
■ Tile figures for 1919 and 1020 are given in (he publication of the Ijiperiai, Institutk.
Coal, London, 1920. See also Bulletin de Documrntations eronomi<iucs, No. IGC, (MJilcd hy llie
Belgian Ministry for Economic. Affairs.
1913
1918
1919
1920
292.1
231
233.5
232
216.9
209.2
175.6
211.3
4.3.4
39.8
25.7
31.7
13.2
9.2
9
9.4
3.8
2.7
2.4
3.2
40.8
26
19.4^
22
22.8
14
18.3
22.4
17.0
615
494
586
21.4
28
31
31
16.0
21
22.6
18
13.6
14
12
17
PnoDucTioN OF Individual Countries
Coal and Lignite *
Millions of metric tons
Europe
United Kingdom . .
Germany -
Upper Silesia . . .
Saar
Lorraine
France
Belgium
Outside Europe
United States ....
Japan
British India ....
Canada
In 1920 there was a certain improvement, due to increased production in Ger-
many, but the needs of Europe were suppHed chiefly by the various over-seas
countries; those countries which, before the war, did not export coal to Europe,
have, during and since the war, become the regular suppliers of Europe. Not
only the United States, but also Japan and other countries have themselves begun
to export coal to Europe.
In 1913, the first place as regards the production of coal was held by Europe:
in 1920, this place was taken by North America, as is shown in the following table: —
1913 1920
Millions of Percent- Millions of Percent-
metric tons
North America .... 531.6
South America .... 1.6
Europe 730
Asia 55.8
Africa 8.3
Oceania 15
age
metric tons
age
39.6
601.3
46.3
0.1
1.7
0.1
544
597
46.0
4.2
75.8
5.7
0.6
11.8
0.9
1.1
11.9
1.0
The whole world. . . . 1,342 100 1,300 100
15. In Europe, Belgium apj)roxiniately attained her pre-war production.
Although the production of Belgium is high, the export of coal from Belgium
is very small compared with that of 1913; consumption is also lower tiian in 1913,
on account of the decrease in import.
We give a table showng the production, import and export, and also
the consumption of coal in Belgium tluring the years 1919 and 1920.
' The figures for 1919 and 1920 (provisional for some countries) are taken from ttie Mineral
/nrfus/ry, etc., already mentioned, and the Report of the Ministry of Labour (Comple rendu du
Minislere du Travail).
^ Excluding the production of Upper Silesia, the Saar and Lorraine. The share of the Ruhr
district in Germany's production, according to the figures given above, is 114.5 in 1913; 96 in 1918;
71 in 1919; 88 in 1920.
' Without the Saar and Lorraine.
— 166 —
Production and Consumption '
(Coke and briquettes given in their equivalents in raw pil coal)
Thousands of metric Ions
1913 1919 1920
Production 22,842 18,343 22,414
Variation of stocks. ... +539 —759 —314
Imports"^ 10,753 133 1,845
Exports 7,009 4,104 2,125
Consumption-^ 26,046 15,131 22,448
The Belgian imports in 1920 amounted to one-sixth of the total imports of 1913.
Almost the whole of her coal came from Germany (1.4 million tons), whilst before
the war 65 % only of her imports came from that country; in 1920 she received
0.36 million from Great Britain (2.3 millions in 1913). In 1920 Belgium exported
2.1 million tons, 0.9 of which went to France (4.2 millions in 1913).
16. The question of the post-war coal production is a matter of quite special
importance for countries such as Germany and France.
The disturbances which have recently taken place in Upper Silesia and the
uncertain political situation of that country have naturally been obstacles to the
development of the coal production of this rich coalfield during 1921. It is difficult
to give the exact figures of the coal production in Upper Silesia during the first
months of the current year.
According to certain authorities, Upper Silesia produced 2.8 million tons in
January 1921, against 3.72 million tons in January 1913; in February this produc-
tion amounted to 2.3 millions ; in March to 2.7 millions The total production of the
lirst quarter of 1921 is therefore 7.8 millions, with a monthly average of 1.9 millions.
The average of 1913 was 3.6 millions.
,, ,) )) 1919 » 2.1 »
„ ,, » 1920 « 2.6 »
At the present time Upper Silesia supplies Poland, Austria, Czecho-Slovakia
Italy and Hungary.
■ In March last Upper Silesia exported nearly 700,000 tons (production 2.7
millions), distributed as follows: —
To Poland 305,000
,, Austria 202,000
,, Italy 100,000
« Czecho-Slovakia . . 55,000
.; Hungary 26,000
In April the exports amounted to 768,UUU Lous (production 2.9 millions),
distributed as follows:
To Poland 283,000
,. Austria 286,000
» Italy 92,000
» Czecho-Slovakia . . 57,000
.. Hungary .... 30,000
' The figures for 1919 and 1920 are approximate.
" Not includinf^' imports intended for use as l)unker coal.
■'The consumi)tion for 191;!, jihis the increase of stoclc in 19i:j, is rouKlily eqnivalcnl lo the
amount available for consuni|)lion which we have given for 1913 in N° S.
— 167 —
The position of Germany in 1919, 1920, and 1921 will be considered in outline.
In 1919, the output of Germany, including the Saar, was 116 million tons of coal,
and about 94 of lignite; in 1920, without the Saar, she produced a much greater
quantity: 132 millions of coal and 111 millions of lignite. The output of lignite
in 1920 was a record never previously reached (87 millions in 1913).
It will be interesting to compare the coal output of Germany in 1920 within
her present boundaries, with the previous output in the same area. '
Millions of metric tons
1913 173.0
1914 148.1
1915 136.6
1916 148.1
1917 155.8
1918 148.1
1919 105.3
1920 132.0
The output in 1920 was much less than that in the year 1913. If we take
into consideration the enormous output of lignite, which was Til millions of
tons in round figures, it may be said that the shortage in 1920 was to a
great extent compensated for by lignite. Germany is very rich in lignite, and at the
present moment she is making special efforts to develop her outjjut still more.
In the first half-year of 1921 Germany produced ":
Millions of metric tons
Coal 61,0
Lignite 52,0
Coal briquettes 2.2
Lignite briquettes .... 10.3
These figures do not include the yield of Alsace-Lorraine, the Saar, the Pala-
tinate and Upper Silesia.
In the first half-year of 1920 Germany produced (not including the Saar, Alsace-
Lorraine, the Palatinate, but including Upper Silesia) about 62 million tons of
coal and 52 of lignite; and in the first half-year of 1913, 84.7 million tons of coal
and 41.9 of lignite.
As a result of the Treaty of Versailles, Germany undertook to deliver a fixed
quantity of coal yearly to the various Powers. France was to receive, for ten years,
from 25 to 27 million tons per year — a quantity which represented her imports
of German coal before the war and the pre-war output of the ruined mines.
Belgium, Italy and Luxemburg were a'so to receive from Germany a certain
quantity of coal yearly. The Spa Conference revised the amount of coal to be handed
over by Germany. France was to receive for six months, beginning in August 1920,
1.6 million tons of coal monthly out of the 2 million tons delivered to the Allies, but
during the first half-year of 1920 she received from Germany only one-third of the
quantity laid down in the Treaty of Versailles. ^ During the period from August to
October the deliveries were made practically in accordance with the agreement.
The mining areas of the Saar and Lorraine provided France in 1919 with about
11.4 millions, and in 1920, with 12.6 millions of tons of coal.
Of these two areas, the Saar, as we have already seen, produced 9 millions
in 1919 and 9.4 in 1920.
' That is to say, the output of Germany exclusive of Lorraine and tlie Saar, l)ut including
Upper Silesia. The figures for 1919 and 1920 are provisional.
* Reichs Atizeiger, July 26th, 1921.
^ Compte-rendu, Ministere du Travail, Paris, 1921.
orraine
Saa.'
3.8
13.2
.2.4
9.0
3.2
9.4
— 168 —
The output of France within her 1914 frontiers and including the Lorraine and
Saar areas, was as follows *•
Pre-war Frontier
1913 40.8
1919 19.4
1920 22.0
The French output for 1920 (without Lorraine and the Saar) thus shows a
decline of 45 % as compared with 1913. If we add 12.6 millions produced in 1920
by these two areas, we obtain a total of 34.6 million tons produced in 1920.
The above figures thus show the importance of these two areas, which together
produced more than half the French coal produced in 1920 within the pre-war
frontiers. It must, however, be remarked that these two areas themselves consume
a large quantity of the coal which they produce. In particular, Lorraine consumes
a great deal more than she produces. In 1913 she consumed rather more than
11 million tons, and only produced 3.8 millions.
17. The import of coal into France after the war shows a remarkable decline,
as the result of the falling off of English exports. At the close of the war
England began to limit her export in order to keep her • coal for home
consumption.
In 1920 France received 13.2 million tons of English coal from the United
Kingdom, whereas in 1919 she had received 15.7 and in 1915, 19.5; but it must
be observed that these quantities still exceed the quantity imported in 1913 (11.4
million tons).
Belgium resumed her exports to France, which had been interrupted during
the war, but in 1920 France received scarcely one-third of the amount imported
in 1913. Germany also began her deliveries of coal to France, and in 1920 the latter
received from Germany one-third more than in 1913 (6.1 millions).
In order to give a summary of the position in France in 1920 from the point
of view of production, import and consumption of coal, we reproduce the following
table,^ which shows the sources from which France could obtain her coal supply
in that year.
Millions of metric tons
Production of coal and lignite 25.2
Saar, delivery in France 4.5
Imports from U.K 13.2
» » Belgium 0.9
» » U.S.A 3.7
Delivery by Germany estimated in pit coal 11.5
Total available for consumption in France 59.0
In France the position of dependence in which the country is placed with regard
to its coal supply is causing great anxiety.
Before the war — as we have seen in No. 8 — the amount available for consump-
tion exceeded production by rather more than 15 million tons; but in 1920 the deficit
reached about 30 millions, and it is expected that, as industry develops, it will
probably reach 40 million tons. '
It must, however, be observed that during 1921 France has been affected by
the e(;onomic crisis, which has restricted the consumption of coal.
This situation forced the Frencli Government to take steps to abolish the
restrictions on the freedom of trade in coal.
18. The coal question is of supreme importance for the United Kingdom,
seeing that this question is very closely bound up with that of the supremacy of
the Britisli lleet. During 1919 and 1920 the United Kingdom failed to raise its
' Compte rendu MiNi.STf;uE im> Thavail, Paris 1921. The figures are provisional.
- Report referred to above.
■'S(!e the Rapport jirnernl siir I'Jiuhtslrie jnirn-aise. Paris, I'.tl'.), and the Rei)ort submitted
by the Frencii delegates to the Chanibro de Commerce inteniationale (Brochure 1, ciuoted).
— 169 —
output, not only to the 1913 level, but even to that attained during the war before
1918. It is probable that the output for 1921 will be still lower, on account of the
recent miners' strike.
This state of affairs helps to explain the policy of restrictions on the interna-
tional trade in English coal.
In 1920 the Government fixed the quantity of coal to be exported yearly,
with a view to reserving a sufficient quantity for home consumption.
The countries which used to import English coal were seriously affected by
these measures. France and Italy, which obtained their supplies largely from
England, suffered the most.
In 1920 the quantity for export was fixed at 21 million tons. France was to
receive 45 %, Italy 20 % and the other countries were to receive the remainder.
This allocation was based on the estimate of an output of 240 million tons in
1920, but, although the quantity produced was only 232 millions, the export rose
to 24.9 millions as a result of the falling oif in the estimated home consumption.
The figures for the production, export and available stocks of coal in 1919 and
1920 are given in the following table:
(In millions of metric tons and in round figures.)
Production Bunker Coal Export ' Available Stocks
1913 ... 292 21 75 196
1919 . . . '2r33 12 36 185
1920 ... 232 14 25 193
It will thus be observed that the available stocks, although falling short of what
was anticipated, very nearly attained the level of 1913. The output showed a
rather marked decline, and so did the exports.
After the war the United Kingdom continued for some time its policy of
control for the coal trade, on account of the difference between the home price
and the export price, and also on account of the decline in output.
As a matter of fact, the foreign consumer paid a much higher price for coal
than that charged on the English home market.
The average cost of the production of coal in England in 1919 and 1920 was
about 27s. 7d. per ton at the pithead; the foreign consumer paid 495., whilst the
price for home consumption was 23s."
In Coal, Coke and By-Products, edited by the Imperial Mineral Resources
Bureau, we find the following passage on page 56: "The prices fixed by the Govern-
ment for coal for home consumption were intended (taking the coalfields as a
whole) to coverapproximately the cost of production; but the collieries were allowed
to obtain the best prices they could for coal exported or sold for foreign bunkers.
Although the volume of export and bunker coal was severely limited by the Govern-
ment, yet the prices obtained were so high as to produce a very large total profit."
It must be observed that the quality of the exported coal was probably superior
to that employed for home consumption.
Later there was a tendency towards the reduction of the price of coal intended
for export, due to the general crisis and the reduction of freights. This reduction
allowed countries which had been dependent on England to obtain their supplies
elsewhere, chiefly from the United States.
Thus, at the moment when larger su|>plies of coal became available, most of
the foreign markets remained closed to England.
' Excluding the negligible export of coke and briquettes.
- Comple rendu, du Ministere du Travau., Paris 1921 (page 385).
— 170 —
These circumstances, moreover, led to a change in the EngUsh policy and to
the abolition of tlisoiMniination in prices.
19. We possess no accurate figures with regard to the output in Russia. Accord-
ing to some information, coal production in the Donetz basin (wliich is, so to
speak, the Russian Ruhr) was lower in 1920 than in 1919, and more than six times
less than that of the same basin in 1913, wJiiie the decline in the number of workers
between 1913 and 1920 was 35 %.
In the Moscow area, as well as in the coalfields of the Ural and of Siberia, it
would appear that the output, although lower than before the Revolution, in 1920
was greater than in 1919.
In the Moscow area, during the first half of 1920, the output was 23 % higher
than in 1919, but 23 % lower than in 191fi, that is to say, before the Revolution.
In the Ural basin, during the same period, the production in 1920 was about
8 % higher than in 1919,' but 20 % less than in 1916.
In the Siberia basin, the production in the first half of 1920 was 28.5 % higher
than in 1919, but lower than that in 1916.
The total production of the four basins in the first half of 1920 is 10 % below
that of 1919, on account of the large decrease in the producLioii of the Donetz
basin, and 77.7 % below that of 1916.
We see by these data that the last three basins, which are in Russia proper,
where the political situation is more stable, production was on the increase in 1920
as compared with 1919, although on the decrease as compared with the year before
the Revolution.
Thus it may be said that the coal situation in Russia is connected with the
stability of the political situation in the Ukraine, where the Donetz basin happens
to be.
20. After the war, Europe underwent a marked political transformation owing
to the creation of several independent States.
Amongst these States, Poland is especially worthy of mention from the point
of view of coal, more especially having regard to Upper Silesia.
In 1913, Poland produced nearly 9 million tons of coal; she received from Upper
Silesia 7 million tons of coal; from Germany 0.2 million; and from the Donetz
Coalfield 1 million tons altogether, including imports from other countries, about 9
million tons. The production and import of coal therefore amounted to 18 million
tons; 19.4 millions was required for consumption. The remaining 1.4 millions arc
represented by the production of lignite and the import of coke and briquettes.
Thus we find that almost the whole of the coal imported in 1913 came from
U|)per Silesia (35 % of its annual consumption).
At the present moment, Poland is producing rather more than (i inilliiui metric
tons (6.1 millions in 1919 and 6.4 millions in 1920). In 1919 she imported rather
more than a million tons, and, in 1920, 3.4 millions. In 1919 she consumeil 7 mil-
lion tons, and, in 1920, 9.7 ;nillions, about half of the consumption of 191.1. '
Czecho-Slovakia received a great part of the reserve of coal of the former
Austro-IIungarian Empire.
In 1013 Czecho-Slovakia (jrodiiced 12.6 million Ions of coid, and 2'i.8
millions nf lignite; in 1!II9, 10. 'i niilliiuis of coal and 17 millions of lignite; in
1920, 11 million tons of coal and 19.7 millions of lignite. Thus, in 1920, the
' Willi I'ct^'ard lo llu; quesUon of coal alone, it is dear Ihal, tlif ilrliiiilc sellleiiuMil of llu; Uppor
Silesian (lUosUuii is vital l)olli for Ocrmany and for I'oland.
According lo llio partition proposed by the l-Ajague of Nations, tlic productive capacity of the
Sile.sian coalfield — on the basis of the data for 1913 — would be approxinialcdy divided in the
proportion of 76 "/„ to Poland and 2\ "/o to Germany.
See Bureau Olliciel de Slalisliiiue alleniande, yVirlscliaft und Siatistik, No. 10.
— 171 —
production of coal was 12.6 % less than in 1913, and the production of lignite was
less by 20.8 % as compared with 1913.
Exact statistics for other countries, such as Jugo-Slavia and Hungary, are not
forthcoming.
With regard to the new State of Austria, the coal production was about 90,000
tons in 1919, and more than 140,000 tons in 1920. During the first half of 1921
production exceeded 65,000 tons. In 1919 Austria produced nearly 2 million tons
of lignite; in 1920 2.4 millions, and during the first half of 1921 about 1.2 million tons.
In 1920 she imported 2.5 million tons of coal, 1.2 millions of lignite and 255,000 tons
of coke. During the first quarter of 1921 she imported 1.2 million tons of coal
(615,000 in 1920) and 315,000 tons of lignite (359,000 in 1920).
According to the arrangements arrived at, Austria receives a certain quantity
of coal from Czecho-Slovakia, from Upper Silesia and from Poland, in si)ite of that,
in 1919 the deliveries were only 30 %; in 1920 still less, for from January to the end
of September Austria received only 26 % of her coal supplies.
21. After the war — we read in the Report submitted by the Italian Committee
to the First Congress of the International Chamber of Commerce ' — Italy only
imported half the quantity of coal which she required for normal use. In 1919
6 milliontbns of coal were imported, chiefly from the United Kingdom, and only 33, 140
tons as reparation from Germany. In 1920, 5 million tons were imported in all, 3
millionsof which came from the United Kingdom, 1 million from the United States,
1 million from Germany as reparation, and a small quantity from other countries.
22. Outside Europe, after the war, the production and consumption of coal
was highest in the United States.
In 1919, as we have seen, the United States produced 494 million metric tons,
and 586 miUions in 1920, as compared with 615 millions in 1918 and 517 millions in
1913. Consumption has also decreased, whilst exports, after a decrease in 1918-19,
increased in the year following.
Canada formerly absorbed the greatest quantity of American export coal, but
since the war, export to Canada has been on the decrease. In 1918-19, 15 % less
than for the year 1917-18 and, in 1920, the decrease is 39.7 %. Export to Canada
in 1920 is below even that in 1913.
We find, on the other hand, an increase in export to Europe.
The principal recipients in 1920 were: —
France
3.6 1
million tons
Italy
2.4
» »
Netherlands . .
2.1
» »
Sweden . . . .
1.2
!) »
Switzerland . . .
0.8
» a
Complete statistics with regard to Japan are lacking. According to official
sources, the production in 1919 being 31 million tons, the import 0.7, export 2 mil-
lion?:, Japan consumed in 1919 about 30 million tons, double the amount of her pre-
war consumption. The export in 1920 probably reached the same figure, for in the
first half of that year export amounted to almost a million tons.
23. The above considerations clearly show a distinct decrease in coal-produc-
tion after the war. In certain countries, apart from causes of a general nature,
there are special reasons for this decrease.
The destruction of the Northern mines in France hinders this country from
resuming her production promptly, while Belgium, not having had her mines de-
stroyed, has easily been able to recover her pre-war production. We must also note
the ill-considered exploitation of the mines during the war; the chief aim then was
Chambre de Commerce inteniationalc, Brochure N° 1, quoted.
to extract as much coal as possible and by any means, without troubling about
future consequences. But it is above all the strikes, the decrease in working hours
and the decrease of individual output which contribute to the falling-off in output.
The recent strikes of the English miners brought about a marked decrease in
the English production during the first half of the current year. In some of the coun-
tries, over and above the strikes, we must also take into consideration political
disorders. In Westphalia, for example, in the month of August 1913, there were
390,000 workmen who produced 9.8 million tons. In August 1920, 460,000 workmen
only produced 7.5 million tons.
The reduction in the individual output in certain countries should also be
remarked. In France, the average daily [iroduction has decreased from 695 kg.
in 1913 to 448 kg. in 1919.
In the United States, there was a certain amount of depression in 1919, but in
1920 an improvement is to be noticed.
In certain countries particularly affected by the war, the under-nourishment
of the working classes may partly explain the decrease of individual output.
To all these reasons we must, of course, add reasons of a general nature, such
as the crisis which has arisen in almost all branches of economic activity in the whole
world and which has restricted the world's demand for coal. It is, moreover, easy
to anticipate that, as soon as these causes have partly or entirely disappeared, the
world's production of coal will revive — above all, thanks to the reconstruction of
Central Europe and Russia, in the requirements of countries such as the United
Kingdom and the United States, which developed their industries enormously
during the war.
It is, however, to ])e feared that the recovery of production will not be as rapid
as the increase in demand, a state of alTairs which may eventually increase the difTi-
culties encountered by the various countries with regard to coal supply, more espe-
cially if it is not found possible to make use of other combustibles or to exploit
new coal basins in which Europe and the other continents appear to be still rich.
IV.
SUMMARY AND CONCLUSIONS
Before the war three countries, namely the United States, the United Kingdom
and Germany, were predominant in the production of coal. Tlie United States had
38.5 % of the world production, the United Kingdom 21.8 %, and Germany about
20.7 %.
Tlie tinited States consumed the greater part of their proilinlioii. Their
consumption was equal to that of Germany, tlu^ United Kingdom and Austria-
Hungary put together.
II.
Before the war the Uniled States exported han-ly .'! % of their prddiiclion.
This export cannot bo compju'ed with theinni-ii larger expoi-t of f'ligland oi' Gerinany.
III.
in Euro|)e we are witnessing a struggle hetween Germany and the United King-
dom for the supply to iMiropean mark(>ts. ('KMiiiany increased not only its export
but also its consumption — a fact which allowed it to develop its industry to an
enormous (!xtent. The United Kingdom, in comparison with Germany, increased
its consumption less rapidly, hut, in spite of the extrem(>ly rapid progress of Germany,
the English export was still greater than that of Germany.
— 173 —
IV.
Austria- Hungary, France, Russia and Belgium had a more or less considerable
production, which was, however, insufficient for their home consumption. These
countries also exported a certain amount of coal on account of economic advantages.
The remaining European countries, whose coal production was insignificant or nil,
are almost exclusively importing countries.
V.
Outside Europe, with the exception of the United States, mention should be
made of Japan and the various British possessions as coal-producing countries,
which exported small quantities almost exclusively to the remaining extra-European
countries.
VI.
During the war the production of coal in Europe showed a marked decrease.
Outside Europe it increased, especially in the United States, which became the largest
coal-producers in the world.
Belgium and France showed the most marked decrease, owing to the German
occupation of their territory. As regards France, we must also take into
consideration the destruction of her richest Northern mines.
VII.
The course of import and export of coal in Europe was deeply modified during
the war. The decrease in production and the ever-growing requirements of the war
industries compelled the European States to restrict their export.
VIII.
The United Kingdom showed a decrease of more than half in export, but the
export of English coal to France, stimulated by war requirements, increased by
more than 40 %.
IX.
Coal prices underwent a considerable increase during the war, in spite of the
system of agreed prices and those prices fixed for the sale of English coal and the
restrictions and control of destination in the various neutral countries. This system
is one of the most striking examples of State intervention in private industry.
X.
After the war the world's production reached its minimum in 1919, and we
must go back to 1910 before we find the same figure. With the exception of the
United Kingdom and Belgium, all the European countries are on the decrease as
compared with 1918. The United States also show a decrease of nearly 20 % on
their production in comparison with the preceding year. The main cause of this
decrease is to be found in the closing dowTi of munition factories, which consumed
a large quantity of coal. The United Kingdom and Belgium show a decrease in
1919 as compared with 1913, whilst other European countries show a much greater
decrease. The United States show a smaller decrease as compared with 1913.
In 1920 there was a general increase in output: in Europe, especially in Belgium,
which reached its pre-war level; and outside Europe, in the United States, which
surpassed its pre-war output.
XI.
As a result of the Peace Treaty, the frontiers of certain countries underwent
considerable modifications. Owing to this fact Germany lost Lorraine and the Saar
basins (17 million tons in 1913 and 12.6 millions in 1920), the latter being under
special administration. The problem of Upper Silesia must also be borne in mind
(43.4 million tons in 1913 and 31.7 millions in 1920).
In 1920, exclusive of Lorraine and the Saar, Germany produced 132 million
tons of coal, as compared with 173 millions in 1913; but the production of lignite
increased to 111 millions, as comparpr' vvith 87 millions in 1913.
17^
XII.
The two coaKields of Lorraine and the Saar supplied France witii an amount of
coal equivalent to more than one-iialf of that produced in 1920 within the pre-war
frontiers. It must, however, be observed that these coalfields consume a considerable
quantity of the coal produced and that, by reason of the great reduction in French
coal production, France imports a much larger quantity of coal from America than
before the war.
XIII.
The United Kingdom continued to control its export for a certain period after
the war. The foreign consumer paid a higher price for English coal than the price
estabhshed for consumption in United Kingdom. This policy of control has,
however, been recently abolished by reason of the fall in prices and freights and the
competition of American coal.
XIV.
Among the new States, we must consider chiefly Poland and Czecho-Slovakia,
which have received almost the entire coal reserves of the former Austro-Hungarian
Empire. In the case of the first, moreover, we have to face the question of Upper
Silesia, whence, before the war, Poland imported a large quantity ofcoal.
We liave no accurate data with regard to Russia, but it appears that in the
Donetz basin, where the political situation is unstable, the production in 1920 shows
a great decrease as compared with that of 1919 and 1913, whilst in the other basins
the production in 1920 showed an increase as compared with 1919 and a decrease
as compared with 1913.
XV.
No accurate forecast can be made with regard to coal. The industrial, poli-
tical and social crises in certain countries have an. unfavourable influence on the
production of coal. To these must be added the destruction of the mines in the
North of France, the uneconomic exploitation carried on during the war and the
individual output, which shows a decrease almost everywhere. (-
It is, however, to be feared that the recovery of production will not be as rapid
as the increase in demand, a state of afTairs which may increase the difficulties
encountered by the various countries in securing their coal supplies, more especially
if it is not found possible to make use of other combustibles, or to exploit new coal
basins in which Europe and the other continents appear still to be rich.
i
V. STATEMENT ON THE POSITION CONCERNING
MINERAL OIL
PREPARED BY
DOCTOR SLOUTSKI AND PROFESSOR VINCI
SUMMARY
Position before the War 177
1. Importance of the oil question 177
2. World production before the war 177-178
3. Exceptional situation of the United States 178-179
4. Situation of various other oil-producing countries 179-180
5. European countries importing oil, and the predominance of tiie
United Kingdom 180-181
6. World's oil consumption, and the question of oil consumption in
the United States 181-182
7. Oil monopoly exercised by the "Standard Oil Company" and
the "Royal Dutch". .' 182
II.
Position DURING THE War 182
8. Important part played by oil during the war 182
9. Increase in production and import of oil in the United States . . . 183
10. Export of American oil to Europe, and marked increase in export
of fuel oil and motor spirit 183-184
11. Situation of the other principal producing countries of the world,
and world production of oil during the war 184-185
12. Import of oil into the United Kingdom, and marked increase in
the import of fuel oil and motor spirit 185-186
13. Import of oil into France. Oil policy adopted in France during
the war 186-187
170
III.
Position after the War 187
14. Important part played by the oil by-product "mazout" in the
metal industries, and its especially important part in transport
by sea 187
15. Oil question in the United Kingdom, and the question of maritime
supremacy. Oil policy of the United Kingdom after the war, and
the growing importance of the "Royal Dutch Shell" 187-188
16. Convention of San Remo 188
17. Struggle between the "Standard Oil Company'" and the ,' Royal
Dutch Shell". Protests of the United States against the British
policy of the "closed door" 188-189
18. Mesopotamian question. Djambi dispute 189
19. World's oil production since the war 189-190
20. Production and export in the United States. Export to Europe
of motor spirit and fuel oil 190-191
21. Increase in the United States consumption 191
22. Astonishing increase in oil production in Mexico. Oil export
since the war. Situationof the other chief producing countries 191-192
23. Fall in the price of oil 192
24. Question of substitution of oil for coal, and the exhaustion of
the world's oil reserves. Production of shale oil 192-193
IV.
Summary and Conclusions 193
\J^IIVE:FtA.IL OIL
POSITION BEFORE THE WAR
1. For half a century oil was nothing but a simple means of lighting, and there
were signs of it being driven out by gas and electricity. Although oil was an impor-
tant product in commerce, there was, properly speaking, no oil question; but, since
oil has been used as a combustible, the question has become of capital importance,
the same footing as the question of coal, iron, etc.
The tremendous development in the use of "mazout" and other products
derived from oil, was caused by the invention of the combustible engine, particu-
larly of the "Diesel" engine. Oil derivatives are being used more and more in
aviation, in motor traffic, on railways, in maritime transport and in industry. The
advantages of oil over coal (reduced weight, reduced personnel and greater heating
power) have forced the various countries to attempt to acquire possession of the
world's richest oil-fields in order to avoid being placed in a position of inferiority to
or dependence upon other countries. At the present moment the oil question is a
branch of international politics; it has already provoked a number of disputes and
been the subject of various international agreements.
2. Before the war the principal oil-producing countries were the following ' :
Production in thousands of metric tons
1913
1910
1900
1890
1880
1870
I860
United States
33,126
27,941
8,482
6,110
3,504
701
66
Russia ....
8,573
9,597
10,339
3,915
410
28
—
Mexico
3,457
444
—
—
—
—
—
Roumania . . .
1,885
1,352
227
53
16
12
1
Dutch E. Indies .
1,542
1,523
311
—
—
—
—
Galicia ....
1,088
1,764
326
92
32
—
—
British India . .
1,057
818
144
16
—
—
Total (comprising
other countries)
51,550 44,093 20,156 10,314 4,013 774 67
' Annuaire statistique de la France, Paris, 1919. The figures for r.ertain countries — e.g.,
Roumania — do not exactly coincide with those drawn from official sources. From Roumanian
sources it appears that that country produced 1,848 thousands of tons of crude oil in 1913, and
1,326 thousands of tons in 1910. The discrepancies are, however, of no importance.
12
— 178 —
The United States in 1913 held the first place in the production of oil. The
development of that production has heen extraordinary.
Russia came second; in 1900 this country was, in fact, first. In 1863 Russia
produced 6,000 tons; in 1913 her production had risen to 8.0 million tons. The years
1900 and 1901 were particularly brilliant for Russia, but the production in the
following years was stationary until 1905, when, as a result of the Russo-Japanese
War and the revolution of 1905, it fell to a third of the 1904 yield.
The United States and Russia were the two most important oil producing
countries before the war. Out of 51.^4 million metric tons produced in the whole
world in 1913 the United States and Russia produced more than 41.^4 millions,
the United States being responsible for 64.3 %, and R\issia for 16.7 %,of the world
output.
Before the war Mexico was next in importance after Russia as an oil-producing
country, but her production (3.14 million tons) cannot be compared with that of
the United States or even of Russia. Mexico only commenced to exploit her wells
about 1902; at that time her production was about 1,400 tons. In 1911 her pro-
duction increased almost four-fold as compared with the preceding year.
There remain only four countries, each of which in 1913 produced from 1 to
2 million tons of oil — namely, Roumania (1.9 miihons), the Dutch East Indies(1.5),
British India (1.1) and Austria Hungary (Galicia) (1.1).
The combined production of certain other countries — Germany, (140,000 tons),
Italy (7,000 tons), Egypt (13,000 tons), Japan and Formosa (259,000 tons), Canada
(30,000 tons), Trinidad (67,000 tons), the Argentine (19,000 tons), Peru (284,000),
etc. — was in 1913 less than a million tons.
From the above it can he seen that the number of countries producing a more
or less considerable quantity of oil is very small, which means that most countries
which consume oil are importers.
3. Among the principal exporting countries before the war, the United States,
Russia and Mexico — the three largest producers — exported oil over the whole
world.
The United States, with their immense production, held the first place as an
exporting country. They exported crude oil and especially refined oil (lamp and
fuel) and products of distillation. In the fiscal year 1913-1914, the quantity of
crude oil exported was 146.5 million gallons (465,000 metric tons), of which 47.8 tons
were exported to Europe*.
Three European countries received nearly the whole of the American crude oil
export to Europe: France(30.2 million gallons), Spain (12.1) and Italy (5.4 millions).
But the greater part of the American crude oil export went to North America
(75 million gallons), and of this Canada absorbed 70 %; then come Mexico and
Cuba. South America received 21.8 million gallons, almost the whole of which was
absorbed by the Argentine and Chile.
But the American export of crude oil was small compared with the export of
refined oil and, above all, of lamp ot7, which constituted the most important export.
In the fiscal year 1913-1914 the total export of lamp oil was 1,157 million gal-
lons; of this Europe received more that 61 %, Asia 23 %, and North and South
America the remainder.
' The gallon is the unit employed for measuring crude and refined oil in the official statistics
of the United States foreign trade, from vvhicli we liave drawn the data in this paragraph. Willi
regard to crude oil the following statement is employed to reduce gallons or barrels to metric
tons : 7.5 barrels containing 42 gallons ecjual 1 metric ion.
As the density of the various refined products is not the same, it is ditlicult to reduce
them to metric Ions. l<"or that reason we merely give in the text the figures in gallons for refined
oil.
— 179 —
In Europe the following countries received the largest quantity of lamp oil:
United Kingdom . . 197 milHon gallons
Netherlands .... 177 » »
Germany 79 . » »
France 58 » »
Belgium 56 » »
Denmark 53 » »
Italy 36 » »
Sweden 31 » »
Norway 24 « »
Portugal 7 » »
The United Kingdom and Netherlands received thus more than half of the
lamp oil exported to Europe. In Asia, Japan received one-third of the American
export, China rather less ; British India and the Dutch East Indies and several other
countries received the rest.
Fuel oil occupied second place in the list of American exports of refined oil.
In 1913-1914, 475 milhon gallons were exported. The exports to Europe
amounted to 248 millions, and the United Kingdom received the largest quantity.
United Kingdom . 198.0 million gallons
Austria-Hungary . 12.0 » »
Germany 9.6 » »
Netherlands . . . 9.0 » »
Belgium 6.4 » »
France. . . . . . 5.9 » »
Italy 4.2 » »
Total (including
other countries). 248.0 » »
Of the countries of North America, Canada received the largest share of the
United States export, and Chile received practically the whole of the amount
exported to South America.
The United States also exported lubricating oil and a few other products of
distillation, the quantities exported, however, being comparatively small.
It will be seen from what has been stated that, among European countries,
the United Kingdom is the most important purchaser of American lamp oil and
combustible oil.
Finally it must be pointed out that the United States imported a certain
quantity of oil, almost entirely crude oil. Nearly the whole of the crude oil came
from Mexico (737.7 million gallons out of a total import of 773), while a certain
quantity came from the British Indies and Peru. The quantity of refined oil
imported was negligible.
4. The other oil-producing countries also exported a certain quantity, but the
amounts — according to ofiicial statistics' — were small in comparison with the
total United States export. Mexico exported a large proportion of her (crude) oil
to the United States; a certain quantity was exported to South America, Canada,
Cuba and Europe (United Kingdom).
Before the war, the Mexican exports amounted to nearly 20 milhon barrels —
a quantity equivalent to 840 million gallons, or 2.7 million metric tons. The quan-
tity of refined oil exported from Mexico was comparatively small.
' In the case of Roumania we have specially consulted: La Roumanie economique,'BukaiTest,
1921, published by the Ministry for Industry and Commerce.
— 180 —
Russia exported, in 1913, 232 million gallons of crncle oil (736,000 tons), or
about a quarter of the export of Mexico. She exported also refined oil, spirit, etc.,
hut the total quantity, which did not amount to a million tons, was insignificant
in view of the export of the United States. A quarter of the Russian export went
to England; France, Germany and a few other European countries also drew their
supplies from Russia.
In Roumania, oil held a very important place among the products of the country.
In its foreign trade, oil took the second place, the first being held by cereals.
Roumania exported in 1913 nearly a million tons. The principal countries
receiving these supplies were the following:
England 232.8 thousand metric tons
Germany 151.4 » » ;>
Egypt 121.6 » » »
Italy 118.6 » » »
Austria- Hungary . . 77.0 « » »
Turkey 64.6 » » »
It must be noted that these exports — estimated in metric tons — included
not only crude oil, but especially lamp oil and distilled oil, as well as benzine, by-
products and gas oil.
Austria-Hungary (Galicia), in 1913, exported 244,000 metric tons of refined
oil. The largest quantity went to Germany (150,000 tons); then came France
(48,000 tons) and Switzerland (22,000 tons). The export of thick and lubricating
oils amounted to 154,000 tons, of which 68,000 went to Germany.
5. Turning to the chief importing countries — according to official statistics — ■.
the United Kingdom claims first consideration'. In 1913 it imported nearly 487
million gallons.
The quantity thus imported falls under the following heads:
Lamp oil 157 million gallons
Motor spirit 101 » »
Lubricating oil 68 » »
Gas oil 66 » »
Fuel oil 95 » »
Before the war, after the development of lighting by gas and electricity, the
import of lamp oil was not increasing. Three-fourths of the imports came from
the United States, and the remainder from Roumania, Russia and Mexico.
The import of fuel oil showed, on the other hand, a considerable increase, which
was most marked during the last few years before the war. Oil products began to
be employed more and more in industry generally, and in particular for transport
by sea.
In 1906, the import of fuel oil was, indeed, only 13.8 million gallons; in 1913
it was 95 millions — twice the amount in 1912 (48 millions).
The United States have always supplied the United Kingdom with the greatest
quantity of fuel oil. In 1913 the United States supplied 54.7 % of the total quantity
imported; the other countries were Roumania (27.3 %) and Mexico (12.0 %).
From her overseas possessions the United Kingdom received in 1913 only about
two million gallons.
' It must be noted that the figures given for importing countries do not coincide with the
corresponding figures of exporting countries on account of thi> \ve]l-l<nown dilTercnces in the
customs statistics of tlio various countries.
It will easily be understood that these differences are specially marked during the war period.
— 181 —
Attention should also be directed to the imports of lubricating oiljwhich increased
during the years immediately preceding the war, and to the imports of gas oil,
which also showed a marked increase. Of these two kinds of oil, the United
States supplied the largest quantity.
The United Kingdom imported motor spirit (benzine) in ever-increasing
quantities. The development of motoring and aviation necessitated the increasing
consumption of motor spirit. In 1906, the motor spirit imported amounted to
26 million gallons (this quantity included all kinds of spirits, and not only petrol
for motors) ; in 1913, the quantity imported was more than 100 million gallons
(exclusively petrol for motors).
The United States, the Dutcli possessions, and Russia were the chief countries
from which the United Kingdom drew its supplies of petrol. Borneo, the Netherlands
and Roumania supplied the remainder. From its overseas possessions, the United
Kingdom received one-fifth of its total imports.
France imported crude oil from the United States, Roumania and Russia.
In 1913, she imported nearly two million hectolitres (about 145,000 tons or 46 mil-
lion gallons) of crude oil, of which more than one million came from the United
States; 2.6milHon hectolitres of refined oil, of which 1.8 milhons came from the United
States, 0.5 million from Austria- Hungary and the remainder chiefly from Roumania,
Germany and Russia; 2.4 million hectolitres of petrol, of which 0.9 million came
from Roumania, 0.6 million from Russia and the remainder from Austria- Hungary,
the Dutch Indies and a few other countries. With regard to the by-products of
petroleum it was from the United States and Russia that France drew practically
the whole of her supplies.
Germany imported chiefly lamp oil. In this case also, before the war, the
United States supplied her with the largest quantity. In 1913, Germany imported
more than 0.7 million tons of this oil, of which more than 0.5 came from the United
States; Austria- Hungary, Roumania and Russia supplied the remainder.
Germany imported, among other oil products, lubricating oil (0.2 million tons
in 1913, of which 0.1 came from the United States) and benzine (159,000 tons in
1913). The last-named product was obtained chiefly from Roumania, Russia and
the United States.
Italy imported the greater part of her oil from the United States. In 1913 the
quantity imported rose to 115,400 metric tons; the quantity supplied by the United
States was 80,400, Roumania coming next with 24,200 tons. The remainder was
imported from Austria-Hungary and Russia. In the space of five years — namely,
from 1909 to 1913 — Italy increased her imports of oil by nearly 23 %.
Italy also imported various mineral oils, by-products and benzine (30,600 tons
in 1913), especiafly from the United States.
6. As already pointed out, the consumption of oil has continually increased,
especially since the development of its use as fuel. As a result of the difficulties
in the way of expressing the quantity of refined oil in terms of crude oil, it is not
easy to determine the quantity of oil consumed in the United States. It is, however,
quite certain that in 1913 the United States consumed the greater part of their
enormous output and held the first place among consuming countries.
Even before the war the American railways used a very considerable quantity
of oil; the remarkable development of the American railway system and the
increasing use of automobiles (which has no parallel in any other country) necessi-
tates an enormous consumption of oil and oil products.
The consumption of oil in the United States is one of the most important
economic questions, and is closely connected with the question of the oil reserve
in the United States. We shall see later the influence exerted by this question
upon the international oil policy of that country.
With regard to Mexico a rough estimate of 'the consumption in this country
may be obtained by subtracting the quantity of oil exported from the quantity
— 182 —
produced, for Mexico imported a comparatively insignificant quantity. As its
exports on the eve of the war were about 2.7 milhon tons and its production nearly
3,5 millions, it may thus be said that Mexico consumed nearly 0.8 million tons.
Russia exported only a very small quantity of her oil. In 1913, out of a pro-
duction of 8.6 miUion tons she exported 736,000 tons of crude oil and a small quantity
of refined oil and derivatives. The remainder was therefore used for home consump-
tion.
Roumania, which before the war produced 1.9 million tons, exported one
million, but as this quantity consisted chiefly of refined oil, it must be inferred that
she consumed less than 0.9 million tons.
With regard to the chief countries which produce little or no oil, such as the
United Kingdom, France, Germany, Italy, etc., the yearly consumption is equal
to the imports, minus the small quantities re-exported.
Thus, before the war, three countries may be said to stand out as the chief
consumers of oil — the United States, Russia, and the United Kingdom, which among
them consumed the greater part of the world's output.
7. Before the war the production of oil was an industry carried on mainly in
America, where the richest oil wells are situated (Pennsylvania, California, Okla-
homa, etc.). It was chiefly in the United States that the most important oil trust
in the world — "The Standard Oil Company" — was formed and developed. Before
and during the war, this company could be described without exaggeration as
dominating the world's oil market. Its outstanding feature is that it is principally
concerned in the refining and distribution of oil, but in the United States there
are many oil-producing companies which are absolutely dependent upon the
"Standard Oil Trust", for it owns the whole or the greater part of their share capital.
It is true that the "Standard Oil Trust" had a rival, especially just before the
war, in the "Royal Dutch", a company of Dutch origin which absorbed the inde-
pendent enterprises in the Dutch Indies; the "Shell Transport", an English company
for exploiting J:he oil in the Dutch Indies, the Caucasus, Roumania and also the
United States; the "Mexican Eagle", an English company which carried on opera-
tions in Mexico; the "Anglo-Persian Oil" and the "Burman Oil", English companies
for exploiting the oilfields in Persia and Burma; the "Turkish Petroleum", for
working the Musul wells, etc. But the "Standard Oil Trust" nevertheless remained
the most powerful of all. As will be seen, it played a predominant part during
the war, and became the chief agent for supplying the Allies.
The struggle between the "Standard Oil" and the other companies did not
reach a climax till after the war, when it led to the amalgamation of the "Royal
Dutch" and the "Shell Transport" and the San Remo Agreement between the United
Kingdom and France.
II.
POSITION DURING THE WAR
8. During the war, oil, more particularly in its I'cfined products, played a most
important part. It was the great development of motor and aerial locomotion
during the war that brought out the importance of this product, an importance
which grew even after the war; and thus tlie "oil problem" arose.
The part played by the United States as purveyors of oil to 1 he Allied Govern-
ments is the most noteworthy fact of this period of the war. As Russia and Rou-
mania were not in a position to transport oil, it may be said that almost the whole
amount of oil consumed by the Allies during the war came from the United States,
which, moreover, kept on imjiorling from Mexico larger quantities of oil.
— 183 —
9. The production of oil in tlie United States during the war steadily increased
— this also holds good of the import. The following is a table of the production
during the war ' : —
Years
Millions of gallons
Millions of metric tons
1913
10,434.7
33.1
1914
11,162.0
35.4
1915
11,806.4
37.5
1916
12,632.2
40.1
1917
14,083.3
44.7
1918
14,949.0
47.5
The import of every kind of oil also shows an increase after the depression
during 1914-15. The export increased as well, but in a comparatively small pro-
portion.
Years Imports Exports
Millions of gallons
1913-14 791.1 2,281
1914-15 662.2 2,187
1915-16 871.4 2,443
1916-17 1,078.8 2,784
1917-18 1,403.7 2,876
These figures point to a considerable increase in consumption.
Of the various oil products imported during the war, a consideralile increase
is shown in the import of crude and refined oil.
The import of crude oil doubled during the war; this oil is imported, as before
the war, almost exclusively from Mexico.
The import of refined products has increased twenty-three fold, from 1.9 million
gallons during 1913-14 to 45 mifiion gallons during 1917-18. Up to 1917 the import
of this product was small, but from 1917 the import began to increase: 1915-16,
2 million gallons; 1916-17, 33.4 million gallons; 1917-18, 45 mifiion gallons. Almost
the whole amount of this refined oil came from Mexico.
Amongst the products exported we note a decrease in the export of lamp oil
and an increase in the amount of raw oil and fuel oil. The increase in the case of
raw oil is not very marked: from 146 million gallons during the year 1913-14 to
185 mfilion gallons during the period 1917-18.
10. This increase in the export of raw oil does not affect Europe, which has very
considerably reduced its imports from the United States, these having fallen from
47.8 mUHon gallons to 1.5 million gallons. The largest decrease is shown in the
export to France.
During the financial year 1913-14 America exported 30.2 mifiion gallons of
crude oil to France, which amounted to more than 62 % of the total amount of
this product exported to Europe; during 1917-18 the export to France amounted
to only 0.3 million gallons.
On the other hand the export of crude oil to North America is increasing heavily.
It rose from 75 mfilion gallons during the year 1913-14 to 177 million gallons during
the year 1917-18. Almost the whole amount exported was sent to Canada.
The exports to Mexico fefi from 15 to 3 mfifion gallons during the war.
But while the exports of raw petroleum to Europe showed a marked decrease
during the war, the export of fuel oil showed a very marked increase: between 1913-
1914 and 1917-18 it increased more than three-fold, from 248 mUlion gallons to
more than 823 mifiion gallons.
Three-quarters of this oil was destined for the United Kingdom (198 mfilion
gallons in 1913-14 and 788 mifiion gallons in 1917-18), while the export to France
' Statistical Abstract of the United States, Washington, 1920.
— 184 —
showed a decrease of from 5.9 million gallons in 1913-14 to 4.7 million gallons during
1917-18.
The export of fuel oil to North America also continued to increase. The
export to Canada increased almost three-fold.
As for lamp oil, the American export to Europe during the war diminished
by one-half.
The most marked decrease in export was in the case of the Netherlands, Sweden
and France. The exports to the Netherlands fell from 177 milhon gallons during
1913-14 to 0.6 million gallons during 1917-18.
11. Mexico has also increased its production of oil during the war, and to a
considerable extent. The production during 1918 is more than 21/2 times greater
than that of 1913, the figures rising from over 1 milliard gallons, that is to
say, about 3.5 million metric tons, to 2.7 milliards (about 9.5 million metric tons).
During 1913 Mexico was responsible for 6.8 % of the world's production, and
during 1918, 13.6%, which gives it the second place amongst the producing countries.
Mexico has also considerably increased its exports.
Export in millions of gallons
1914 865.2
1915 1,026.6
1916 1,264.2
1917 1,932.0
1918 2,381.4
We have seen that a large proportion of Mexican oil is exported to the United
States, which are thus enabled to meet the shortage in their own production, but,
during the war, Mexico considerably increased its export of oil to Europe, especially
to the United Kingdom, as we shall see later on.
The production of oil in Roumania during this period showed a considerable
decrease, as this country was compelled to destroy a number of its oil wells during
the invasion of its territory.
In 1913 its production was 1.9 million tons, and in 1918 1.2 million tons.
The most marked decrease occurred in the year 1917: 0.4 million tons.
Owing to circumstances arising out of the war there has been practically no
import or export of oil from Roumania.
The position was such that in 1917 Roumania was compelled almost completely
to cease production. The oil products destroyed by the Roumanian Government
during the retreat amounted to 837,000 tons, of which 213,000 tons consisted of
crude oil and 375,000 consisted of benzine. It has been calculated that in order
to revert to the normal production of 1913, about 120 more borings will have to
be made '.
The production of crude oil in Galicia (Austria- Hungary) has considerably
decreased during the war. The decrease in production during 1915 as compared
with 1913 amounted to more than 32 %. The production during 1915 was the
lowest. During 1916 production increased by 23 % as compared with the previous
year, but 1917 again shows a decrease (0.83 million tons), which continued in 1918
(0.78 million).
During the war the import of crude oil to Austria-Hungary underwent a marked
decrease, except during the year 1917. Refore the war Austria used to import crude
oil, especially from Roumania (in 1913 it imported more than 19,000 tons). In 1915
the import of Roumanian crude oil decreased to nearly 3,000 tons; in 1916 the import
was almost nil ; but in 1917, when the Roumanian territory was occupied by the
Austro-German troops, the import increased to almost 21,000 tons.
See La Rownanie economique, already quoted.
— 185 —
Before the war Austria- Hungary exported a fairly large quantity of refined
oil and other oil products. During the war these exports decreased considerably,
especially in 1915, when there was a decrease of more than 73 % as compared with
1913, but in 1916 the exports even exceeded those of 1913. In 1917, on the other
hand, a fairly considerable decrease is recorded. The exports from Austria went
chiefly to Germany and countries occupied by the armies of the Central Powers,
which could not obtain oil from other countries because of the blockade '.
We have few data bearing on the oil industry in Russia during the war.
The Geological Survey of the United States "^ has published the figures for oil
production in Russia : 9.4 million tons in 1917 and 5.5 million in 1918, as compared
with 8.6 millions in 1913. It may also be taken for granted that the exports of
Russian oil during the war were insignificant. It will be seen, for example, from the
ofTicial statistics of the United Kingdom that in 1915 imports of Russian oil sank
to a negligible quantity, and that from 1916 there were no further imports of
Russian oil ■*.
Generally speaking, it may be asserted on the basis of the statistics supplied
by the Geological Survey that the quantities of oil available throughout the world
increased considerably from 1913 to 1918:
World Production
Millions of metric tons
1913 1917 19IS
United States . . . 33.13 44.71 47.46
Mexico 3.46 8.25 9.51
Russia 8.57 9.42 5.52
Dutch Indies (a) . . 1.54 1.78 1.84
Roumania 1.88 0.37 1.21
British India. . . . 1.06 1.08 1.07
Galicia 1.09 0.83 {b) 0.78
Peru 0.28 0.34 0.34
Japan and Formosa. 0.26 0.39 0.33
Total (including
other countries) . 51.6 68.8 70.0
(a) Including British Borneo.
{b) In part estimated.
12. It would be interesting to consider, in a general way, the varying amounts
of oil imported into the United Kingdom and France during the war.
The first point that strikes us with regard to the United Kingdom is the great
variations in the quantities of crude oil imported. In 1913 imports were negligible.
In 1914 there was a considerable increase; more than 15 million gallons were
imported, of which more than 11 millions came from Mexico and more than 3 mil-
lions from British Possessions. In 1915 the import of crude oil amounted to 4 mil-
hon gallons, only to decline to zero in 1918.
' Die Mineralolindustrie Oesterreich-Unganis, Vienna, 1919 (published by the Scientific
Commission of the Ministry of War).
- Department of the Interior, United States Geological Survey, Report on the Mineral
Resources of the United States in 1919, Washington, 1920. (See also the i{e/)or/s of previous years.)
" According to Petroleum, published by the Imperial Institute in 1921, the production
of petroleum in Russia during the war was £is follows:
{in metric tons)
1914 9,574,360
1915 9,792,580
1916 10,400,160
1917 8,362,903
1918 3,143,960
— 186 —
We observe a marked decrease at the outset in the import of lamp oil; but in
1918, as a result of the increase in imports, the decline amounts to only about 6 %
(157 milHon gallons in 1913 and 148 million gallons in 1918).
The import of lubricating oil, on the other hand, considerably increased from
68 million gallons in 1913 to more than 102 million gallons. This increase is to be
explained by the activity of the metallurgic industries during the war, and especially
by the considerable consumption of oil in connection with aerial and motor trafTic.
The import of fuel oil, however, shows the greatest increase. The import
of this product, wliich amounted to 95 million gallons in 1913, had increased to more
than 842 millions by 1918. This indicates the part played by this product during
the war. Immediately after the war, as we shall see, the import of this product fell
very considerably, although it was still greater than before the war.
Besides importing three-quarters of its oil supplies from the United States
the United Kiijgdom drew a portion of its supplies also from Mexico, — a very small
proportion, it is true, in comparison with the imports from the .United States.
British Possessions also provided a certain amount of fuel oil.
The import of motor spirit, which was of great importance. during the war,
nearly doubled, increasing from 101 million gallons in 191.'! to nearly 193 million
gallons in 1918. The United Kingdom imported this product not only from the
United States, but also from Dutch Borneo, from certain Dutch Possessions,
from Mexico, and also a considerable portion from British Possessions. The
United States import of this product only represented 54 % in 1917.
13. During the war the oil question attracted a good deal of attention in
France. Its importance was all the greater because France's production of coal
had decreased considerably owing to the occupation of the mines in the northern
districts by a foreign army '.
The country's oil requirements for 1917 were estimated at 50.000 tons per
month, 30,000 of which were required for the army, while the import of oil amounted
to only 30,000 tons per month. This deficit was due to the difficulty of sea transport
and also to the comparatively small number of tank steamers at the disposal of
France.
The oil question was thus always a rather serious one, especially in France,
and great elTorts were made to deal with it. "It may be assumed ", as we read
in the report presented to the President of the Council in 1917, "that the problem
of suppUes will not arise, and that France will be able, without difficulty, to place
in the various producing countries, the contracts necessary to assure the aforemen-
tioned monthly quantities. "
Indeed the statistics of oil production, which were considered in the previous
section, afford clear proof of the enormous quantities of oil available throughout
tlie world during the war.
As France produces practically no oil, she consumed what she imported. During
the first two years of the war, the import and, therefore, the consumption decreased,
but it rose again in 1917-18, to exceed the pre-war consumption.
As regards motor spirit, however, we already note an increase during the
second half of 1914, when the import amounted to 276,000 tons of spirit as against
200,000 tons for the first Imlf-year. The total consumi>tion for 1914, therefore,
amounted to 476,000 tons; in 1915 the consumjilidn was 475,000 tons; in 1916,
640,000; in 1917, 610,000, and in 1918 about \ millioii tons. The greater ju'oportion
of (he spirit went to the army.
Tlie improvement in the oil imports to France in the last two years of the war
was due either to the agreements entered into with the Ignited Slates as to the use
of lank-steamers, and conse<iu('iilly I hi' niuuber of Ions to he imporli'd (this auiounled
J. BtuANGER, Le I'etrole et la France, I^aris, 1920.
— 187 —
to a iiiillioii tons in 1918), or to the special measures taken by the French Govern-
ment with regard to the foreign trade in oil.
On July 13th, 1917, the "General Oil Committee " was formed in France to
examine, co-ordinate and control the means of satisfying the needs of the general
public and the State services. This Committee organised both the consumption
of oil and its direct purchase.
The French Government, therefore, bought directly and on its own account
oils and spirits, more particularly from the "Standard Oil " and the "Royal Dutch "
Companies.
On August 21st, 1918, a "General Commissariat of Spirits and Fuels " was
formed, at the head of which Senator Henri Beranger was placed. The duty of this
Commission was to supervise the supply and distribution of spirits, heavy oils, etc.
The Commissariat was attached to the Ministry of Agriculture and Food.
It exercised a general control over all dealings in and treatment of oil. Purchases
were always made on behalf of the Government, which resold to an Oil Trust,
financially responsible to the Government.
In other countries the restriction and organisation — although less im])ortant —
of the import sale and consumption of oil are also to be observed.
III.
POSITION DURING THE WAR
14. The oil problem has since the war assumed considerable proportions and
an international character.
At present oil is of interest to the entire world, especially the residue arising
from the distillation of crude oil (mazout). Its use in the Navy is already notable,
and is increasing daily.
Quite recently, France has built a large ship, Paris, driven exclusively by
mazout, which apparently possesses a double advantage: increased radius of
action and considerable reduction of crew. Thus the steamer Paris will ship
6,250 tons of oil to carry her 8,000 nautical miles, while 5,375 tons of coal — the
maximum which she could ship — would carry her 5,000 nautical miles. Moreover,
the use of oil enables her to accommodate 280 passengers, and further to make a
return voyage from France to America \vithout taking in fresh supplies. As regards
the crew, instead of 260 men the Paris only requires 140.
Moreover, in the United States the use of oil on the railways is continually on
the increase, and it appears that mazout also offers great advantages for the metal
industry. The peace-time development of motoring and aviation has also given
benzine a very high importance.
15. The main characteristic of international politics with regard to oil since the
end of the war is the rivalry between two powerful groups: the American group
and the European group, or, one may say, the rivalry between the United States
and the United Kingdom.
For the latter the oil question is intimately connected with supremacy on the
seas. When ships were driven by coal, the United Kingdom, which possesses
extremely rich coal-mines, controlled one of the vital elements of naval supremacy.
But as soon as coal began to be replaced by mazout as the fuel for ships, the
situation was completely, changed, as the United Kingdom possessed no oil-wells.
It must also be observed that the United Kingdom at first held the most impor-
tant place for the transportation of this fuel; but the United States soon began to
concern themselves with the construction of tank ships. The world tonnage of
tank ships on June 30th, 1919, was estimated at about 2,600,000 tons, of which
nearly 1,500,000 tons were under the English flag and 1,000,000 on the American
— 188 —
register. On June .iOLli, l!»20, Llie world tonnage amounted to about 3,400,000
tons, 51 % of which belonged to the United States.
In the first place, then, the United Kingdom was faced with the question of
the control of oil, both as regards its production and transportation.
Thus the oil policy of this country was directed — even before the war —
towards the formation of powerful companies for the control of the production of
oil wherever this was still jiossible; but in 1919 the "Shell Transport" combined
with the "Royal Dutch" to form the "Royal Dutch Shell". The latter in time
secured control of the "Mexican Eagle", and, with the "Anglo-Persian Oil", the
"Burman Oil" and other companies of less importance, it succeeded in controlling —
outside the sphere of the "Standard Oil " — important supplies in Roumania, the
Dutch and British Indies, Russia, Egypt, Persia, Mesopotamia, Burma, Venezuela,
Mexico and also the United States.
IG. France for a time took no part in these transactions, but since French
capital was also involved in various oil enterprises, and as she owned oil-fields in
her African and Asiatic colonies, and, moz'eover, wastoshare with the United King-
dom the German and Tvu-kish oil interests, it was clear that she could not long
remain uninterested in the movement. The United Kingdom secured the collabo-
ration of France. By the Convention of San Remo, signed between these two
countries on April 24th, 1920, the United Kingdom and France came to an agree-
ment to follow a policy of co-operation in all countries, "where the oil interests
of the two nations may be combined to practical advantage."
According to a White Book published in July 1920, this agreement binds the
two Governments to assist their nationals in dealings with the Roumanian Govern-
ment for the purchase of oil concessions, shares, or other interests. All shares and
concessions, which were formerly <;nemy property, will be equally divided between
English and French interests.
As regards the territories of the former Russian Empire, arrangements are
made for joint action in the case of new concessions and the export and supply of
oil.
With respect to Mesopotamia the English Government undertakes to hand
over to the French Government 25 % of the net output of crude oil produced in
that country at market prices. If the wells are exploited by private companies
the French Government will receive 25 % of the shares of these companies, but in
that case the local Government must be allowed to participate.
The agreement also imposes on the English Government an obligation to
grant to France facilities for obtaining oil supplies from the "Anglo- Persian Oil
Company " by means of the construction of special railways, pipe-lines, etc., and
to afford French subjects in English possessions the same advantages as are accorded
by France to Enghsh subjects in her colonies.
Finally, France is to afTord facilities to Anglo-French companies to exploit
oil-fields in French colonies or protectorates, including Algeria, Tunis and Morocco.
17. As against this European group, there is then the American group univer-
sally known under the name of the "Standard Oil Co.".
The oil question has assumed a special aspect for the United Stales since the
war ended. For a long time that country felt no anxiety in this Held; production
increased and was always about 70 % of the production of the entire world. But
it soon became clear — and especially so during the period of industrial prosperity in
1919 — that the stock was decreasing, 'fhe considerable consumption of the
United States was exhausting the reservoirs, wiiirli llie production was not sufficient
to replenish.
There were only two means with which to meet the danger: restrict ion of
consiim|)tion, which was impossible in view of the i)rogress of industry, or the
obtaining of concessions abroad, for the lalier purpose an important corporation,
— the "Sinclair Oil ", — was formed in the United States.
— 189 —
But the American representatives who were sent out to buy oil concessions in
various parts of the world collided at once with the European group, which put into
force — to employ the American expression — the policy of the "closed door"'.
Under these circumstances the American Government created in American
territory "reserves " where oil could not be exploited without permission.
Moreover the Geological Survey published amazing figures regarding the oil
reserves of the United States and the danger of the exhaustion of these resources
in the near future. It appeared that foreign countries were consuming 200 million
barrels per year, and that their reserves would last for 250 years, while the United
States consumed 400 million, and their supplies would last only for 18 years. Finally,
in May 1920, President Wilson, in reply to a request on the part of the American
Senate, sent a note containing a statement of the restrictions imposed upon the
purchase by foreigners of oil concessions in various countries.
An official exchange of correspondence took place on this subject between the
Governments of the United States and the United Kingdom. The former asked
for the adoption of the policy of free exploitation of oil resources, especially in
Mesopotamia, regardless of the question of nationality.
The British Government replied that its policy was in no way intended to
prevent American nationals taking part in the development of the world's oil
supplies. To refute the American allegations the Foreign Office sent the United
States a Memorandum drawn up by the Petroleum Department, which reviewed
the existing systems for the exploitation of oil-wells in the British Empire and
sought to prove that there was no general policy aiming at the exclusion of foreigners.
18. The Anglo-American question, especially as regards concessions in Meso-
potamia, deserves somewhat fuller treatment in view of the fact that it is connected
with the Mandate exercised by the United Kingdom over Mesopotamia.
Before the war, two countries had secured an important share in the Meso-
potamian oil concessions : Germany and the United Kingdom.
An agreement between German and English concessionaires led to the formation
of the "Turkish Petroleum Co."; but by the Convention of San Remo, France took
the place of Germany, though this company — and according to Article 7 of the
Convention of San Remo all Anglo-French concessionary companies — remained
under the permanent control of the British Government.
The United States regarded certain measures taken by the British Govern-
ment in Mesopotamia as indicative of a restrictive policy and maintained that,
in mandated territories, the rights of foreigners should be equal to those of the
nationals of the State exercising the mandate.
In addition to this dispute we must also mention the disputes between the
United States and the Netherlands in connection with Djambi oil (Sumatra). The
Netherlands intended to grant oil concessions in Djambi. The United States
claimed equality of treatment, and the Netherlands granted this equality, but
made the condition that reciprocity of treatment in the United States shoidd be
given to Dutch firms.
Finafiy, we must note that Japan, who consumes twice as much oil as slie pro-
duces, and who is almost completely dependent upon the "Standard Oil Co.", also
made proposals to obtain concessions to exploit oil in Djambi.
19. We will now deal with the statistical side of the question, examining the
production of, and foreign trade in, oil since the war in certain countries for which
we possess sufficient data.
' Bulletin of American Petroleum Institute, December 10th, 1920.
— 190 —
World ProduclLon*.
Thousands of metric tous
19i:? 1917 1918 1919 1920
United States. . . . 33.1 44.7 47.5 54.8 64.4
Mexico 3.5
Russia 8.6
Dutch Indies .... 1.5.
British India .... 1.1
Roumania 1.9
Gahcia 1.1
Peru 0.3
Japan 0.3
8.3
9.5
12.6
23.2
9.4
5.5
3.7
3.5
1.8
1.8
2.2
2.3
1.1
1.1
1.1
1.0
0.4
1.2
0.9
1.0
0.8
0.8
0.8
0.8
0.3
0.3
0.4
0.4
0.4
0.3
0.3
0.3
Total (including
other countries) . . 51.6 68.8 70.0 79.4 97.2
The figures for 1919 and 1920 are to be regarded as only approximate, especially
in view of the uncertainty existing as to the Russian production. A considerable
increase in the world production is noticeable, due especially to the* increase of the
production in Mexico and in America.
Comparing the production of 1913 with that of 1919, we note an increase of
27.8 million tons. In 1920 the increase was far greater: 45.6.
20. As usual, the United States hold the first place. In 1919 their production
amounted to more than 69 % of that of the world. In 1920, in spite of a larger
output, it fell to 66 % on account of the great increase of Mexican production.
The export of oil from the United States is increasing, compared with pre-war
export. This is largely due to the scarcity of coal in Europe.
In 1919 the export was 2.5 milliard gallons as against 2.2 milliard in 1913-14.
In 1920 the export amounted to more than three milliards. Both before and during
the war it was principally refined oil which was exported. Out of a total export
of 2.5 million gallons in 1919, crude oil amounted to only one tenth. In 1920 the
proportion was almost the same.
Compared to 1917-18, the last year of the war, the export for 1919 shows a
slight decrease, but in 1920 it had already become greater than that of 1917-18.
It would be interesting to compare the export of the principal oil products
in the financial years 1918 and 1919, in order to observe the effect of the cessation
of hostilities upon American exports to Europe, and on the total export.
Exports
Fuel on
Millions of gallons
Counlry of Heslinalion 1918 1919
United Kingdom 787.9 446.9
Canada 288.4 254.8
Chile 30.8 35.8
Panama 27.9 25.6
Mexico 20.4 23.1
Peru 30.8 35.8
Italy 26.5 31.3
France 4.7 3.9
Total (including other
countries) 1,223 898
' For 1919 and 1920 see: Imperial Minkral Rksourc.es Burkau, The Mineral Industry
of the British Empire and Foreign Countries, London, 1921.
— 191 —
Lamp Oil
Millions
of gallons
Counlrj' of deslination.
I'JIS
1919
United Kingdom
178
177
France
82
84
Italy
39
10
China
40
92
Brazil
22
22
Canada
12
3
Total (including other
countries)
528
717
Lubricating Oil
United Kingdom
106
93
France
65
44
Italy
20
18
Total (including other
countries)
270
273
Gasoline
United Kingdom
79
115
France
67
. 74
Italy
36
43
Total (including other
countries)
260
323
This table shows a decrease in the export of oil fuel immediately after the ces-
sation of hostilities. The most considerable decrease, as can be seen, is in the case
of the United Kingdom. The export of lamp oil shows an increase, thanks
especially to the increase of the export to China. In Europe export remains almost
stationary, except for a considerable decrease in the case of Italy.
A slight rise in the total exports of lubricating oil will also be observed in spite
of the falling off in exports to Allied countries, and a striking increase in the export
of gasoline, especially to the United Kingdom.
But it must be noted that in 1920 the American export shows generally a
considerable increase, especially in that of motor spirit.
21. In spite of the development of the production of American oil, the consump-
tion and exports of this country are such that it is obliged to import more and more
Mexican oil. Therefore the importance of Mexico to the United States is obvious.
American oil impoi'tation increases progressively: more than 50 million barrels
were imported in 1919, and more than 100 million in 1920.
It also became necessary to encroach upon stocks.
22. After the United States, Mexico now holds the second place among oil
producers, thus replacing Russia, where the production shows a considerable decrease.
Mexico, a country extremely rich in petrol, makes astonishing progress. In 1913
she was only producing 3.5 million tons. This production, compared with that of
other countries, was relatively high, but, compared \\ith the production of America
or even of Russia, it appeared neghgible. In 1919 the production increased to 12.6
million tons. In 1920, however, it made a considerable step forward, rising from
12.6 to 23.2 million tons. This amount is no longer so insignificant compared with
that of the Un ted States, as it represents 36 % of the production of that country.
— 192 —
The Unitpfl Statps and the United Kingdom control Mexican production.
A still greater development of Mexican prodnction may be expected in the near
future, rndoubtedly this country might have been able very largely to increase
her production were it not that her defective means of transport retard her progress.
Mexico herself consumes only a small amount of oil, and inconsequence exports
almost the whole of her production. In 1919 Mexico exported nearly 2.4 milhard
gallons to the United States — that is to say, more than 70% of the total export;
it exported more than 258 millions to South America, 126 millions to England,
105 millions to Canada and about the same quantity to Cuba.
Exact data regarding the production of oil in Russia are not forthcoming.
The figures given in Section 19 may, however, be considered as approximately
correct — that is to say, 3.7 million tons for the year 1919, and 3.5 millions for the
year 1920. Of this quantity, Baku produced more than 3 millions in 1919, and
more than 2.8 millions in 1920*.
The Roumanian production, after a fairly pronounced fall in 1919, increased
in 1920 and rose from 0.9 million tons to about one million, but the output still falls
below that of the pre-war period.
Before the war Roumanian export amounted to nearly one million tons, but
in 1919 it was much reduced, amounting only to about 44,000 tons for all kinds
of oil, of which more than 11,000 tons went to Gzecho-Slovakia, about 10,000 to
Bulgaria, and 8,500 to Turkey.
In 1920 Roumania exported nearly 230,000 tons, of which 58,000 went to
Austria, 50,000 to Italy, 50,000 to Egypt, 30,000 to Czecho-Slovakia, 11,000 to
the Serb-Croat-Slovene State, 15,000 to Hungary, and 6,700 to Turkey. But in the
first quarter of the year 1921, Roumanian export greatly decreased.
Galicia is now a part of the Republic of Poland. In 1919, its production
amounted to 831,000 tons, and in 1920 to 765,000, thus falling short of the pre-
war figures.
23. During the war, and up to 1919, the price of oil was considerably increased.
Later there was a marked fall in prices, which was attributed in part to the fall
in the cost of carriage. The question of the transport of oil has always been inti-
mately connected with the price of oil. The tonnage of the tank steamers was not
large enough, but, as we have seen, this tonnage is increasing more and more — a
fact which lowers the price of transport and consequently that of oil.
The decrease was especially great in the last two months of the first half of
1921. From $ 3.25 per barrel on May 19th, the price in the United States for "Penn-
sylvania" dropped to .^ 2.25 in the last days of June. In December 1920 the price
was $ 6.10.
Another reason assigned for the fall in the price of American oil is the dearness
of the dollar. Importing countries have been obliged to break into their stocks
while waiting for the fall in the dollar or in the price of oil, but, generally speaking,
the fall in the price of oil was to a great extent influenced by the economic crisis
whic'ii overtook the entire world in 1920, and is the cause of a decrease in the con-
sum |)tion of this product for industrial purposes. On the other hand, the fall in
(he price has probably contributed to lower production in 1921".
24. In view of the decrease in the world production of coal and the advantages
of using oil, the possibility of the substitution of oil for coal is one of the questions
of int(>rest at llie |)resent time to the economic world.
' See The Petroleum Times, July 17th, 1920, and July Kilh, 1921, and Velmleuw |ud)lish('d
by the Imi'ekial Institutr, London, 1921.
'■^ See Ini un national Cm am hi; h of (^ommi-uci:, Fmist Concukss, London, l',121 : /foir M titer ia Is,
I'ani|)hlct No. 7, I'aris.
— 193 —
World Production
(Millions of metric tons)
Yeai-
ComI
Percentage
Oil
Percentage
1913
1,341
100.0
51.6
100.0
1919
1,158
86.3
79.4
153.8
1920
1,300
96.9
97.2
188.3
But the table given above clearly shows that, although oil production has
undergone very rapid development during the last two years after the war as com-
pared to 1913, the quantity at present available only reaches 1 /14 of the coal
production. The comparison is striking, even taking into consideration that the
calorific power of coal is lower than (about one-third) that of oil.
On the other hand it must be noted that the coal-fields of the world known
up to the present are very much richer than the reserves of oil. The recent discovery
of oil-wells in the basin of the Mackenzie River in Northern Canada, as well as in the
Argentine, in Venezuela, etc., the development of the exploitation of the sources
already existing in Mesopotamia, Persia and elsewhere, will no doubt still further
increase the world production of oil. But if we consider that the new sources we
have mentioned involve a greater or less degree of uncertainty, and if, moreover,
we take into account the enormous coal-fields which could be exploited in Upper
Silesia, in China and in Canada, etc., it can only be inferred, on the basis of our
present knowledge, that it is quite possible that oil will take the place of coal for
uses where it ofTers superior advantages, but on account of inadequate supplies it
appears scarcely likely at present to supersede coal.
Moreover, as far as is known at present, an increase in the output of shale oil
— the cost of production of which is very high as compared with that of petroleum —
cannot appreciably modify the problem.
The British Empire, especially in Australia and Canada, owns the greatest
quantity of shale oil in the world. In Europe, after England, France and Germany,
mention must also be made of Esthonia in particular, and also of Sweden, Italy,
Spain and Russia'. It would appear that the United States are also endowed with
rich reserves of shale oil. But it must be pointed out that this oil — as was the
case with lignite — was used mainly during the war for special reasons.
In consequence of the blockade its production in Germany developed greatly
during the war. This national production is still continuing, as Germany, on account
of the depreciation of the mark, is not in a position to buy extensively in foreign
markets.
In Sweden and the United States important investigations are now being made
with the object of improving the methods of distillation and rendering the use of
this oil economically possible in normal circumstances -. So far, however, small
progress has been made in solving the economic problem.
IV.
SUMMARY AND CONCLUSIONS.
The question of oil is a very important one. From being a simple means of
illumination it has now, owing to the utilisation of mazout and other derivatives,
become an essential product for industry and, above all, for transport.
Kommerjielle Meddelanden, Stookliolm, May 2.5th, 1921.
In an article bv .1. O. Lewis in tlio Engineering and Mining Journal, September 25tli, 1920.
I
i:t
II.
Amongst the various oil-producing countries, the United States, which in 1913
was responsible for 64 % of the world's production, held an entirely exceptional
place. The second place was held by Russia, who, however, only produced about
17 % of the world's supply, while only nearly 7 % was produced by Mexico, the
third large oil-producing country.
III.
The United States was the most important exporter of oil. They exported
principally refined oil, and, in particular, lamp oil. In 1913-14, 61 % of this oil was
exported to Europe, and the United Kingdom and the Netherlands received more
than half of the lamp oil exported. Fuel oil only held the second place in the
American export, and 80 % of this went to the United Kingdom.
IV.
Mexico exported lier oil — almost exclusively crude oil — only to the United
States and to a few other countries of the American Continent." Her export to
Europe was comparatively small and was largely to the United Kingdom.
Russia exported but little and chiefly raw oil; but the export from Rouniania
and Austria consisted chiefly of refined oil.
v.
In the last years preceding the war, the importation of fuel oil, especially to the
United Kingdom, constantly increased. We may also note the considerable increase
in the importation of motor spirit.
Generally speaking, European countries imported most of their oil from the
United States, and a certain amount from Roumania, Russia and Austria-Hungary.
It should be noted that these countries always imported a greater quantity of refined
than of crude oil.
VI.
The United States were one of the greatest consumers of oil in the world. Before
the war the United States consumed the greatest part of their enormous output, and
held first place among consuming countries. Mexico, whose industries were not
developed, consumed but little oil; Russia, on the other hand, consumed most of
her oil. Roumania consumed less than half of her production. The non-producing
countries consumed about as much as they imported. Before the war, three coim-
tries consumed the largest quantities of oil: the United States, Russia and the
United Kingdom.
VII.
Before the war Europe was supplied with oil by the American "Standard Oil
Company", the "Royal Dutch" and other companies of less importance. The
"Standard Oil" was the most powerful, and held the leading place in the world's
output of oil. This advantageous position enabled it to compete without diflicult y
the struggle with its rivals and to exercise a groat influence on the price of oil.
VIII.
Dining the war oil played an extremely important part. The most charac-
teristic feature of this period is the part played by the United States as the chi(>f pur-
veyor of oil to the Allies. For this reason the production of oil in the United Stales
increased considerably. The importation of oil into the United States also
ncreascd antl was, as before tiie war, almost exclusively from Mexico.
The exp(u-lation of crude and lamj) oil to Europe was very gi'oatly reduced durin-
the war; on the olhei' hand, the exportation of fuel oil increased three-fold. Three
ourths of this oil was sent to the United Kingdom.
— 19:
IX.
Mexico also increased her production as well as her export.
Owing to the course of events in the war, the export from Roumania was in
general greatly reduced. Note should also be taken of the destruction of the oil
wells which was ordered by the Roumanian Government at the time of the retreat.
Austrian oil during the war was exported chiefly to Germany.
On the whole, the supplies of oil available throughout the entire world largely
increased.
x.
In view of the importance assumed by oil during the war, certain countries
instituted a policy of restriction as regards the trade in oil. In France particularly,
owing to the decrease in the production of coal, the oil question was of foremost
importance. France concluded certain conventions with the United States by
which the latter placed at her disposal the necessary tonnage for the transport of
oil, and bound themselves to supply France with a specified quantity of oil. The
purchase of oil was effected directly by the State; in 1917 the French Government
established an Oil Board, and in 1918 a General Commissariat of Spirits and Fuels,
which together controlled the trade in oil.
In other countries restrictions and organisations, though less important, were
also evident.
XI.
The importance of oil in industry went on increasing after the war. Another
oil product — benzine — has also become extremely important owing to the
enormous development of automobile traflic and aviation.
XII.
As regards the United Kingdom, the question of oil is of special importance, and
is bound up with the question of supremacy on the seas. Even before the war the
oil policy of the United Kingdom was directed towards the formation of powerful
companies for exploiting new oil-fields; in 1919, the "Royal Dutch" combined
with an English company, and, with the aid of other English companies, control
was secured — outside the sphere of the "Standard Oil" — of important sources
of oil supply in all parts of the world. By an agreement signed at San Remo on
April 24th, 1920, the United Kingdom secured the co-operation of France.
XIII.
The struggle between the European and American groups has become very
acute, and has even given rise to certain disputes.
The United States, faced with the imminent exhaustion of supplies, had endea-
voured to obtain concessions in various countries, but their representatives came
into collision with the concessions obtained by the European group.
The United States claimed that the policy of the "open door" should be adop-
ted in the mandated countries, particularly in Mesopotamia, where certain measures
taken by the English Government seemed to the United States to furnish proof of
a restrictive policy.
XIV.
The world production of oil increased after the war. The United States still
hold, as they have always lield, the first place. The export of American oil to Europe
is increasing, particularly as regards motor spirit and fuel oil. This increase is
largely due to the deficit in coed.
XV.
The United States continued to increase their consumption. In order to cover
the deficit in production they imported ever-increasing quantities of Mexican oil;
— lilli —
moreover, it was necessary to encroach on stocks. Mexico enormously increased her
production after the War, and for this reason slie has become a country of very
considerable importance to the United States.
XVI.
In Europe a large decrease must be noted in the production of oil in Russia,
and also an increase in Roumanian production and exports, which, however, still
fall short of the pre-war production and exports.
Production in Galicia still stands at the war level, i.e., it is below the pre-war
output.
XVII.
During the war and down to 1919 the price of oil kept on rising. Finally
a fall occurred which is attributed to the abundance of transport, to the deprecia-
tion of the currency in the devastated countries of Europe, and also, in a general
way, to the economic crisis which began to reduce the amount of this product
consumed in industry.
XVIII.
The diminution in the world production of coal and the economic advantages
offered by the use of oil have raised the question of the possibility of substituting
oil for coal. But the world production of oil only amounts to one-fourteenth of
the production of coal. This is a striking comparison, even if we take into con-
sideration that Ihe calorific power of coal is one-third lower than that of oil.
Moreover, the world reserves of coal seem to be much greater than those of
oil. Again, if we consider the possibility of developing coal production in Upper
Silesia, China, Canada, etc., we may well doubt whether the inadequate supplies of
oil that are available can really dethrone coal, even if we take into.account the disco-
very of new oil-fields and the development of the production of shale oil.
VI. STATEMENT OF THE POSITION CONCERNING
THE
IRON INDUSTRY
(IRON ORE, CAST IRON, STEELj
PREPARED BY
DOCTOR SLOUTSKI AND PROFESSOR VINCI
SUMMARY
I.
Page
Position before the War 198
i. The imj3ortance of iron ore and coal in the production of iron 198-199
2. The world production of iron ore in 1871 and 1913 199-200
3. Production, trade and consumption in the United States and
the United Kingdom 200-201
4. Production, trade and consumption in Germany 201-202
5. Production, trade and consumption in France. Comparison with
the countries previously discussed. The position in Russia 202-203
6. Production, trade and consumption in Belgium 203
7. Production, trade and consumption in Austria-Hungary. . . . 203-204
8. The situation in some of the other European countries .... 204
9. The heavy metal industry and the engineering trades before the war 204
II.
Position during the War 204
10. Disturbances in the metal industry caused by the war. The
world production of iron ore 204-205
11. The world production of iron ore and cast iron and the exceptional
situation of the United States. The world production of steel 206-207
12. Foreign trade in iron, and American export to Europe .... 207-208
13. Decrease in iron export from European countries. Considerable
increase in the export of English iron to France 208-209
III.
Position after the War 209
14. The world production of cast iron and steel 209-210
15. The importance to France of the Lorraine Basin from the point of
view of iron output. The considerable decline in the capacity
to produce iron in Germany. The coal and iron question in
France and the present output. Co-operation between France
and Germany 210-212
16. The commanding position at present occupied by the United
Kingdom and France in Europe in the iron industry. The
mineral wealth of Russia and her future 212
17. The foreign trade of France 212-213
18. The foreign trade of the United Kingdom 213-214
19. The foreign trade of the United States. Post-war exports to Europe 214
20. The considerable decrease in the production of iron in the United
States, the llnited Kingdom and France during the first six
months of 1921. The fall in the price of iron rmd the industrial
crisis . . . .' 214-215
IV.
Summary and Conclusions ■ ■ . . 215
Iron Ore, Oast Iron and Steel
I.
POSITION BEFORE THE WAR
1. The iron question is intimately connected with that of coal and iron ore.
In every country the production of cast iron, iron and steel, is dependent upon
its supplies of coal and iron ore.
This dependence holds good not only as regards the quantity, but also as
regards prices. The higher the price of coal and iron, the higher the cost of the
manufacture of iron — other things being equal. It is, therefore, not surprising
to find, as the tables below demonstrate, that the first places among iron-producing
countries are held by the United States, Germany and the United Kingdom, the
countries which are richest in coal and iron ore.
World's Production in 1913'
(Thousands of metric tons)
Iron Ore
United States .... 62,972
Germany 35,941-
France 21,918
United Kingdom ... 16,253
Spain 9,862-'
Russia 9,514
Sweden 7,476
Austria 3,039
Hungary 2,059
Italy 603*
Norway 544
Belgium 150
Algeria 1 ,349
Tunis 597
Ganada 136
Japan 172
Approximate totals for
the whole world . .
Coal
Lignite
517,000
190,100
87,200
292,100
40,800
?
33,800
400
43,00
?
?
16,500
27,400
1,100
700
8,800
?
?
22,800
?
?
13,600
?
21,400
?
(125.000
1,342,000
of which are
lignite)
' Annuaire slatUlique dc la France, Paris, l'.)19; and United Statks Gkoi.ogical Survky:
Report on the Mineral Hesources of the United Slates in 1919, WasFiinijlDii, 1920.
■ Inchiding 7.3 million tons of iron ore, produced in Luxt'nilnirt;.
■' Not inchiding iron ore containing silver.
' Not including iron ore containing manganese.
199
Cast Iron
United States .... 31,462
Germany 19,. 309'
United Kingdom ... 10,424
France 5,207
Russia 4,635
Belgium 2,485
Austria 1,758
Hungary 623
Canada 1,024
Sweden 736
Italy 427
Spain 425
Japan 240
World's total . . 79,000
(approximate)
Crude Steel
United States .... 31,802
Germany 18,935"^
United Kingdom . . 7,786
France 4,687
Russia 4,868
Belgium 2,467
Austria 1,840
Canada 1,060
Italy 9.33
Hungary 809
Sweden 591
Japan 255
World's total .
(approximate)
76,000
Moreover, it must be remembered that France, possessing as she did rich
deposits of iron ore, was able to develop her iron industry, thanks to her ability
to obtain supplies of coal in the neighbouring countries; while Belgium, who pos-
sessed a considerable amount of coal, also developed her iron industry, since she
was similarly able to obtain iron ore in the neighbouring countries, etc.
It is not possible to draw up exact statistics for the production of iron and steel,
as these two products are distinguished principally according to the amount of
carbon which they contain — the quantity varying according to the methods employed
in different countries.
The most trustworthy statistics are those which deal only with crude steel;
and it is to this product that we confine our attention.
2. The world production of iron ore has increased more than five-fold since
1870, that of cast iron six-fold during the same period, while the production of
steel increased in a lesser degree.
In 1870 the United Kingdom held the first place for the production of iron
ore. This production was more than 50 % of the world's production, about five
times greater than that of the United States, and about four times that of
Germany.
In 1913, the position was reversed. The United States had enormously increased
its production of iron ore. In the same period the United Kingdom had not deve-
loped her production at all, and it was, in fact, even a little below that of 1871.
As regards Germany, her production in 1913 was about eight times greater than
that of 1871^; and it must be noted that the Lorraine production accounted for
21.1 million tons out of the 35.9 millions produced in Germany, including Luxem-
burg. As regards France, the chief centre for the production of ore in 1913 was
in the department of Meurthe-et-Moselle (92 % of the whole).
' Including 2.5 million tons of cast iron produced in Luxemburg.
- Including 1.3 million tons of crude steel produced in Luxemburg.
' Annuaire statistique de la France, Paris, 1910.
— 200
1871
(Thousands of metric tons)
United Kingdom ... 16,597
Germany wth
Luxemburg. . . . 4,368
United States .... 3,440
France 2,110
Austria-Hungary . . . 1,093
Russia 791
Sweden 663
Spain 586
Algeria 172
Italy 86
1913
(Thousands of metric tons)
United States .... 62,972
Germany with
Luxemburg . . . 35,941
France 21,918
United Kingdom . . 16,253
Spain 9,862
Russia 9,514
Sweden 7,476
Austria- Hungary . . 5,098
Algeria 1,349
Italy 603
Approximate total for
whole world . . .
31,000
Approximate total for
whole world . . .
175,000
As regards the production of cast iron and steel, we notice almost the same
phenomenon in every case; in 1870 the United Kingdom holds the first place and
the United States the second. In 1913, however, the United States produced three
times more than the United Kingdom. The latter country increased the production
of cast iron by more than 51 % between 1871 and 1913, while the United States
increased its .production thirty-fold.
Retween 1880 and 1913 Germany (including Luxemburg) increased her pro-
duction of cast iron more than nine-fold and her production of steel to as till greater
extent. France and Russia also considerably increased their production.
3. At the outbreak of war, the United States held the first place among countries
engaged in the iron industry, and similarly the first place in the production of
coal. It is well known that the United States consumes the greater part of its
coal; its export of this fuel was therefore inconsiderable. We notice the same phe-
nomenon in regard to iron ore, the United States exporting — as is shown by official
statistics — a relatively small amount compared with its production of this raw
material.
We notice, in fact, that in 1913 the export of iron ore from the United States
was only about one million tons, a very small quantity compared to the immense
production of this country.
America exported principally to Canada. The export to Europe was very
small ; this was probably also due to the reason underlying the insignificance of
the pre-war export of American coal, i!'.e.,the high cost of transport. The United
States also imported a certain amount of iron ore — 0.8 million tons — the greater
part of which came from Cuba. Sweden supplied the United States with the iron
ore it obtained from European countries, but the quantity was very small.
On the other hand, the export of cast iron from the United States, in 1913,
amounted to about 290,000 tons, against 155,000 tons imported. The export trade
in iron and steel was equally insignificant in comparison with production.
Refore the war, the United Kingdom held third place as regards the i)rodiKtion
of cast iron and steel, and fourth as regards that of iron ore.
The Ignited Kingilom exported only a very small part of the iron ore which
siic produced. In 1913, the amount of this product i^xported was a little over 5,000
Ions out of a total production of 16 milliims in the same year. 40 % of the
exports went to France, 20 % to Japan.
The (!xport of cast iron was greater though slill small ccunjiared to production
— a littl(! over one million tons out of a total production of I'atlier more than 10
million tons. Among the European countries which imjiorted linglisli cast iron
are to be noted: France 158,000 tons, Germany 130,000, Italy 110,000, Sweden
95,000, etc. The llnitcd Kingdom also exported nearly 125,000 tons to the United
States of America.
— 201 —
As regards raw steel, out of 7.8 million tons produced in 1913, the United
Kingdom only exported 368 metric tons of steel in bars, and 1,135 metric tons of
rolled steel; the export, however, of all kinds of raw and manufactured iron and
steel ' amounted, in 1913, to five million tons.
The United Kingdom exported to a number of countries, and the amount
exported to foreign coimtries was practically identical with that sent to her posses-
sions. In 1913, out of over five million metric tons of all kinds of raw and manu-
factured iron and steel, 2.3 million tons were exported to British possessions. India
took the greater part of this, the figures for 1913 being 0.8 million tons. In 1913,
the exports to Europe had risen to 1.4 million tons.
The following are the principal countries to which England exported these
products:
France 203,000 metric tons
Germany 199,000 » »
Netherlands 146,000 » »
Italy 143,000 » »
Belgium 126,000 » »
Sweden 118,000 » »
Outside Europe, excluding the British Possessions, the United Kingdom exported
in 1913, 1.2 million tons to the following countries:
Argentine 358,000 metric tons
Japan 238,000 »
United States 176,000 » »
Brazil 115,000 >. »
The United Kingdom imported about 7.5 million tons of iron ore in 1913. This
is equivalent to about one-half of her production. The greater part of this amount
— 4.6 million tons — came from Spain. Other countries supplying the United
Kingdom with iron ore were: Algeria, about 0.8 million tons; Norway, about 0.5
million tons; Sweden, about 0.4 million tons; France, about 0.3 million tons.
The import of cast iron amounted in 1913 to 0.2 million tons, and the import
of all kinds of raw and manufactured iron and steel to 2.4 million tons.
The quantities of iron ore and cast iron available in the United Kingdom for
1913 were as follows:
(Millions of metric tons)
Iron Ore Cast Iron
Production 16.2 Production 10.4
Imports -|- 7.5 Imports + 0.2
Exports (negligible) Exports — 1.1
Quantity available 23.7 Quantity available 9.5
4. Although before the war Germany produced a much greater quantity of
cast iron and steel than the United Kingdom, the exports of all kinds of raw and
manufactured iron and steel from the German Empire (including Luxemburg)
amounted in 1913 to only 5.7 million metric tons, a quantity which did not there-
fore much exceed the exports of the United Kingdom, which in 1913 exported
5 million tons. The quantity imported was insignificant.
The exports of iron ore were much greater than those of the United Kingdom:
2.6 million tons against 0.005. However, compared with the German production,
which amounted to 36 millions in 1913,' the quantity exported remained insignificant.
Germany in 1913 consumed a large quantity of iron ore. Her production did
not suffice for her requirements and, in 1913, the quantity imported was 14 million
tons.
Bars, pipes, iron wire, etc., and including cast iron to an amount of l.t million tons.
— 202 —
Three countries in particular supplied Germany with cast iron: Sweden, France,
and Spain; from these countries Germany imported, in 1913, respectively 4.5,
3.8 and 3.6 million tons, i.e. more than 85 % of the whole of her imports. Other
countries from which she drew supplies were Russia (0.5 million), Algeria (0.5
milhon), Norway (0.3 million), etc.
In 1913, the amount of iron ore available in Germany was therefore as follows:
(Millions of metric tons)
Production 36
Imports + 14
Exports — 2.6
Quantity available 47 . 4
It was thus twice that of the United Kingdom (23.7).
With legard lo cast iron, the import of this product into Germany was insigni-
ficant, and in 1913, amounted to 0.12 million tons; during the same period Germany
exported about 0.8 million, of which 0.3 went to Belgium, 0.1 to France, 0.1 to
Austria- Hungary, etc.
Germany had thus at her disposal nearly the whole of the cast. iron produced
and about double the amount available in the United Kingdom.
(Millions of metric tons)
Production 19.3
Imports + 0.12
Exports — 0.8
Quantity available 18.6
5. Before the war, France exported a fairly large amount of ore. In 1913,
she exported 10 million metric tons, which found a market almost exclusively in
Germany (4 millions) and Belgium (5 milHons) '.
The remainder was exported to the Netherlands and to Great Britain.
Before the war, the import of iron ore was limited to 1.4 million tons, imported
mainly from Germany (0.8 million tons in 1913), and Spain (0.4 million). France
received from Algeria and Tunis only 4 % of the exported. The greater quantity
went to the United Kingdom (58 %) and the Central Empires (37 %).
The consumption of iron ore in 1913 was therefore as follows: —
(Millions of metric tons)
Production 21.9
Imports -f 1.4
Exports — 10
Quantity available 13.3
During the same period, the United Kingdom consumed 23.7 million tons of
ore, and Germany 47.4.
France, in 1913, imported 0.05 million tons of east iron and 0.2 million tons
of iron and steel, and exported 0.8 million tons of these products.
Pig iron was im|)orled mainly from Sweden and the United Kingdom and expor-
ted to Belgium, Switzerland and Germany. Iron and steel were imported from
Germany, the United Kingdom, Sweden and Belgium, and exported to Germany,
Belgium, Switzerland and a few other countries.
(Millions of metric tons)
I'roduction 5.2
Imports + 0.05
Exports (negligible)
Quantity available 5.25
' The data derived fnun I lie eommerciul statistics ot exporliii;^ countries are not lo be
compared \vi(h the corresponding,' data of llie im|iorlin^ eounlries in view of tlie well-known
differences between them.
— 203 —
It will thus he seen that France had at her disposal almost the whole of her
production of cast iron — a quantity which, however, continued to be much smaller
than that available in the United Kingdom (9.5) and in Germany (18.6). As regards
exports of iron ore, France was in the front rank with 10 million tons in 191.3, as
against a German export of 2.6 millions, and an insignificant quantity of English
exports. On the other hand, Germany and the United Kingdom could be regarded
as the most important sources for the supply of iron and steel in Europe.
No statistics dealing with Russian commerce are available and, therefore, no
comparison can be instituted between Russia and other countries. It is probable,
however, that that country which — as we have seen — produced a considerable
amount of iron ore, exported a fairly large quantity of ore, extracted mainly in the
Donetz Basin, and did so in spite of the development of its iron industry.
6. Belgium, whose output of iron ore is negligible, nevertheless holds a rela-
tively important place in the production of cast iron and steel. Her production of
cast iron was, in 1913, larger than that of Austria- Hungary, but her output of steel
was nearly the same as that of Austria-Hungary.
The lack of raw material compelled Belgium to import much iron ore. In
1913, her imports amounted to rather more than 7 million tons, of which 4,7 miOions
were imported from France. The other countries which supplied Belgium with
iron ore were Luxemburg (1.6 miUion tons), Norway, Spain, Germany and a few other
countries.
In 1913, Belgium exported 0.7 million of iron ore, including untreated iron
residue, of which 0.5 million were sent to Germany.
As her output of cast iron, before the war, was insufficient for Belgium she
imported a certain quantity. In 1913, these imports amounted to 579,400 tons.
Germany, which supplied Belgium with more than 221,000 tons, Luxemburg about
141,000, Great Britain more than 130,000, and a few other countries, were the chief
sources of Belgium's supply. Her exports in 1913 amounted to 16,700 tons, of
which nearly 14,000 were sent to France. Imports and exports of iron and raw steel
were insignificant in 1913, abort 80,000 tons being imported and 158,000 tons
exported.
The imports and exports of raw steel in bars were negligible.
The quantities of ore and cast iron a\ailable in Belgium, in 1913, are given
in the following table:
(Millions of metric tons)
Iron Ore
Cast Iron
Production
0.15
Production
2.5
Imports
+ 7.1
Imports
+ 0.6
Exports
— 0.7
Exports
— 0.02
Quantity available 6.55 Quantity available 3.08
7. The development of Austria-Hungary s iron industry steadily increased,
and this necessitated an ever-increasing import of iron one, for she did not produce
sufficient to supply her own industries.
In 1913, she imported 942,000 tons of iron ore as against 374,000 in 1909, while
her exports amounted in 1913 to 106,000 tons, as against 178,000 in 1909. The
quantity available in 1913 was as follows:
(Millions of metric tons)
Production 5.1
Imports -)- 0.9
Exports — 0.1
Quantity available 5.9
— 204 —
It is worthy of remark tliat during tiie same period Frauee had at lier disposal
13.3 millions and Belgium 6.4 million tons.
Imports of cast iron also increased from 196,000 tons, in 1909, to 306,000 tons
in 1913. Exports of cast iron, which had always been insignificant, decreased,
as did the exports of ore: in 1909, 60,000 tons were exported and in 1913, 49,000.
I Millions of metric tons)
Production 2.4
Imports + 0.3
Exports —0.05
Quantity available 2.65
The consumption of cast iron was therefore smaller than in Belgium (3.08)
and in France (5.25).
It will also be seen that the imports of iron and crude steel which amounted
to 39,000 tons in 1909 and to 65,000 in 1913 increased. It must, however, be noted
that, in 1913, imports showed a decline of nearly 27 % as compared with 1912.
Exports also continued to increase. In 1909, the figures were 43,000 tons and in
1913, 76,000.
Austria-Hungary is the last country with which we have to deal which, while
not producing sufficient iron for her own consumption, nevertheless showed a compa-
ratively large output.
8. The other countries have no very advanced iron industry, and their require-
ments as regards raw material are comparatively unimportant.
Among these countries Sweden and Spain exported much of the iron ore they
extracted and had iron industries on a very modest scale. Swedish steel, however,
enjoys a high reputation. As regards Italy, which is rather poor in iron ore, her
production of cast iron in 1913 was 427,000 tons and her imports were 240,000 tons,
i.e., nearly 60 % of her production.
As regards steel, the production of which in 1913 was a little loss than 1 million
tons, Italy imported only 7,000 tons.
9. Finally, it must bo noted that the development of the iron industry was
very closely connected with that of the engineering trade and that the value of
the exports of machinery was greater in Germany than in the United Kingdom, and
arcater in the United Kinsdom than in the United States.
II.
POSITION DUHIN(i THE WAR
10. The war occasioiuMl considerable disturlmnce in the metallurgic industry.
This industry was compelled, not only in belligerent, but also in neuti'al, countries,
to adjust ilscir l<> the constantly increasing demand for nninitions and ariiiaments.
The metallurgic industry had become a war industry; tlie majority of factories which
had hitherto produced all kinds of machiuory and implements had to undergo
important alterations in their equipment in order to bo abh^ to devote themselves
exclusively to the exlroinoly lucrativii occu])ation of producing munilious and
armaments.
During the war the cousuui|)tion of large; (|uantiti(;s of iron in counoclioii with
these industries resulted in a prodigious demand for iron ore and coal.
i
— 205 —
The problem of iron ore was less acute in Germany owing to the fact that she
was in occupation of the richest mines in the north of France and was able, during
the war, to import iron ore from Sweden without difficulty. It sliould be added
that the decline in the production of coal in Germany was not very great.
In France, on the other hand, which was unable to work its northern mines,
the production of iron ore fell from 22 million tons, in 1913, to 1.7 million tons in
1918 '. The coal production in that country also fell considerably.
The production of iron ore also fell in the United Kingdom, although the decrease
was not so heavy as in France; in 1913 the United Kingdom produced 16.25 million
tons and in 1916 13.7 million tons, but in 1917 its production increased to 15.3 mil-
lion tons. The production of coal in the United Kingdom showed a marked decline.
The production of iron ore in Sweden during the war showed a relatively slight
decrease. In Spain, on the other hand, the decrease was fairly considerable, that
country producing 9.9 million tons in 1913 and 5.6 million tons in 1917.
The United States, after a very marked decrease in 1914 (42.1 million tons
as compared with 63 million tons in 1913), showed a marked increase in its produc-
tion during the war. In this country the same phenomenon is to be observed as in
the case of coal.
The following table gives the world's output:
World Production of Iron Ork '
(Thousands of metric tons)
1913
United States . . 62,972
Germany .... 28,608
Luxemburg. . . . 7,333
France 21,918
United Kingdom . 16,253
Spain 9,862
Russia 9,514
Sweden 7,476
Austria 3,039 ^
Hungary .... 2,059 *)
Italy 603
Norway 544
Belgium 150
Algeria 1,349
Tunis 597
Canada 136^
Japan 172
It is not possible to give an approximate extimate of the amount of iron ore
available throughout the world during the war: but, judging from the figures we
possess, it would appear that — as in the case of coal — in spite of the increase in
output in the United States — the quantity available in any year of the war never
reached 175 million tons, i.e., the amount at which we have estimated the 1913
production.
1914
1915
1916
1917
1918
42,103
56,415
76,370
76,494
70
,773
20,505
17,710
?
?
■,)
5,007
6,139
6,752
4,509
'jt
11,252
620
1,681
2,035
1
,672
15,105
14,463
13,711
15,083
15
,285
6,820
5,618
5,857
5,551
?
?
?
?
?
p
6,587
6,883
6,986
6,217
?
4,182
?
1,238
?
?
?
?
?
?
706
680
947
999
695
652
715
880
?
?
82
5
30
17
0.5
1.115
819
939
1,065
782
248
286
367
606
?
222'
361
250
195
188
136
136
159
?
?
' 83 "/„ of the French output of iron ore used to be drawn from the invaded zone and
9 ", „ tronni the zone occupied by the armies.
- For 1913 see Table in No. 1; and for the following years: United States Geological
Survey; Report, etc., already quoted.
^ Exports in 1913: 278.
* Exports.
1913
1914
1915
1916
1917
1918
31.5
23.7
30.4
40.1
39.2
39.7
16.8
12.6
10.1
11.5
11.7
11.3
3.9
2.4
1.8
2.1
2.0
1.8
1.2
0.8
0.7
0.8
0.8
0.7
10.4
9.1
8.9
9.1
9.5
9.2
5.2
4.5
1.3
1.4
1.7
1.3
2.5
1.5
0.07
0.1
0.008
?
2.4
2.0
2.0
2.4
;)
■>
0.7
0.6
0.8
0.7
0.8
0.7
0.4
0.4
0.4
0.5
0.5
0.3
0.4
0.4
0.4
0.5
0.4
0.4
2.5
1.8
1.7
1.8
1.4
1.3
4.6
4.3
3.7
3.7
'>
?
0.2
0.3
0.3
0.4
?
•J
1.0
0.7
0.8
1.1
1.1
1.1
— 206 —
11. The table given below illustrates llie effect which these variations have
had upon tJie production of cast iron.
World Production of Cast Iron '
(Millions of metric tons)
1913 1914
United States
Germany^
Alsace-Lorraine
Saar
United Kingdom
France
Belgium
Austria- Hungary ....
Sweden
Italy
Spain
Luxemburg
Russia
Japan
Canada
It will be seen that among the great producing countries, the United States
alone have increased their production of cast iron during the war, while the pro-
duction of the other countries, for which complete information is available, has
diminished. The reduction in the case of the United Kingdom is almost imper-
ceptible; other countries, however, show a very marked reduction.
In spite of the considerable decrease in the production of cast iron in Europe,
it does not appear that world production during the war fell off to any great extent.
This result was due to the increase of production in tlie United States, which during
the war became the chief source of supply for the Allies of this product as well as
of coal and many other commodities.
Moreover, the production of steel in the United Kingdom and in other countries
during the war showed a considerable increase.
The production of this commodity decreased in Germany, but in a compara-
tively small degree.
Production of Raw Steel*
(Millions of metric tons)
1913 1
United States
Canada
United Kingdom
France
Germany
Belgium
Italy
Russia
Austria-Hungary
Luxemburg
Sweden
Japan
1913
1914
1915
1916
1917
1918
31.8
23.9
32.7
43.5
45.8
45.2
1.1
0.8
0.9
1.3
1.6
1.7
7.8
8.0
8.7
9.3
10.0
9.7
4.7
3.2
0.9
1.9
2.2
1.8
17.6
14.0
12.3
14.9
15.1
14.1
2.5
1.4
0.1
0.1
0.009
0.01
0.9
0.9
1.0
1.3
1.3
1.0
4.9
4.8
4.9
?
?
?
2.6
2.2
2.7
3.3
2.9
1.8
1.3
1.0
1.0
1.3
1.1
0.9
0.6
0.5
0.6
0.6
0.6
0.5
0.6
0.3
0.3
0.4
p
i'
' Annuaire slatistiquc tie la France, 1919, and Report, alreaily (luoted, of the U. S. Oeolocical
Sunvn Y.
'' Not includinf; Luxemburg, Alsace-Loriaiae and the Saar.
' liKAOUE OF Nations: Monthly Bulletin of Statistics, No. 7, and U.S. Gf.oi.ooical Suhvey,
Report, etc., already (]uoted.
— 207 ~
The belligerent States, owing to the necessity of maintaining a constant and
ever-increasing supply for the needs of their armies, were compelled to intensify
their production of armaments and munitions to the utmost possible extent;
hence the increase in the production of steel, which was mainly due to the import
of cast iron from the United States to Europe and to the constantly increasing use
made of scrap iron for the production of steel.
Two countries — France and Belgium — suffered the most marked decrease
in the production of steel, the causes being the same as those already referred to
as tending to a decrease in the production of iron ore and cast iron in these two
countries.
Italy, as we are aware, increased her production of iron and steel. In spite
of this, the amount produced was not sufficient for requirements, and Italy was
forced to import considerable quantities during the war.
12. Foreign trade in steel was profoundly affected during the war.
Germany was forced entirely to suspend the export of iron, and her trade in
this product was limited almost exclusively to exchange with Austria Hungary.
Both the United Kingdom and France diminished their exports considerably. The
United States alone was able to increase her exports to an appreciable extent.
Import trade also decreased, and, in the case of certain countries — France for in-
stance— the special cause of this decline was the scarcity of means of transport and
the reduction of her merchant marine.
But the difficulty of transport by sea and the submarine war made it impossible
for the countries of Europe to import all the iron ore and cast iron which they
required. We shall see that, in the case of certain countries, the importation of
such semi-manufactured or even finished products as required a smaller amount of
tonnage, increased consideraljly during the war.
The United States, as we have said, perceptibly increased their export of iron,
but there was no export of iron ore from the United States to Europe before the
war, nor did this develop during the war. Exports of iron ore from the United
States were exclusively directed to Canada. The exports of this substance remained
approximately stationary during the war, excepting for a considerable decrease
in 1915.
The position with regard to cast iron is quite different.
Export of Cast Iron
(Millions of metric tons)
Total (including other
parts of the world)
1913-14 49.0 129.0 205.0
1914-15 79.0 42.0 132.7
1915-16 180.5 100.0 '291.3
1916-17 679.0 144.0 848.0
1917-18 205.0 128.5 369.3
This table shows a considerable increase in the export of American cast iron
to Europe during the war. The increase was smaller in 1917-18 than in the previous
years on account of the submarine campaign and the intervention of the United
States in the war. A decrease in the export of this product to North America may
be noted during the first two years of the war. The following are the European
countries of destination:
19-1 'i-15
1915-16
1916-17
1917-18
36.8
107.5
287.5
100.0
40.7
50.0
1.36.5
94.5
0.3
—
—
—
0.9
1.9
26.3
—
0.05
—
—
—
0.005
17.5
127.7
8.4
—
2.1
3.0
—
—
1.3
4.2
—
—
0.1
22.2
2.0
—
—
19.5
—
—
—
38.9
—
—
—
14.5
—
— 208 —
(Thousands ot metric tons)
1913-14
Italy 18.5
United Kingdom . . 17.9
Belgium 4.6
Netherlands .... 2.6
Germany 2.2
France 0.5
Switzerland .... —
Russia —
Norway —
Denmark —
Sweden —
Spain —
.\ustria- Hungary . . 2.7 — — — —
Tlie export of American cast iron to Italy showed a marked increase, but
the comparative increase was still more considerable in the case of France, which
obtained the bulk of her supplies of this product from the United States. Exports
to the United Kingdom also greatly increased. Thus the three great allied coun-
tries in Europe were able to make good to some extent the deficit in the production
of cast iron caused by the war. The decrease in the export of European cast iron
forced the neutral countries also to obtain supplies from the United States, and
we see such countries as Denmark, the Netherlands, Switzerland, Norway, Sweden
and Spain becoming the customers of America for a large amount of cast iron,
whereas, before the war, they obtained all their supplies in Europe.
A great increase in American exports of manufactured iron and steel, more
especially to Europe, is also to be noted.
The total exports of iron bars for all countries were five times as great in 1917-18
as in 1913-14, but the greatest increase was shown in the year 1915-16 (316,000 tons,
as against 46,000 tons in 1913-14). In this year nearly one-third of the total exports
of iron bars was effected to Europe; in 1913-14 the amount exported to Europe
was negligible.
In 1915-16 one-half the iron exported to Europe was sent to the United Kingdom-
France received rather more than 23 % of the total amount exported. The rest
was exported to Portugal, Greece, Russia in Europe and certain other countries.
In 1916-17 the amount of iron bars exported to the United Kingdom was only
22 % of the amount exported in 1915-16, and in 1917-18 the proportion fell to
11 %. A considerable reduction is also to be noted in the case of France and other
European countries.
On the other hand, the export of iron bars to Italy greatly increased in 1916-17
and 1917-18. In 1915-16 the amount exported was negligible, but in the following
year it had increased to 9,000 tons, and in 1917-18 to 10,000 tons.
Almost the same phenomenon was to be observed in regard to export of steel
bars and wire. It should, however, be noted that in regard to Italy a much greater
increase took place in steel exports than in iron exports.
13. All the belligerent countries in Europe were compelled to reduce their
exports of iron and steel very considerably by the introduction of various regulations
governing the production of, and trade in, iron products in order to have as much
as possible available for their own use.
The United Kingdom in 1913 exported rather more than 5,000 tons of iron
ore, whereas in 1918 it only exported 160 tons. An exception, however, is to be
noted in regard to the export of cast iron and iron to France. It is well known
that during the war the United Kingdom greatly increased her export of coal to
France and greatly reduced her coal exports to other countries. The same pheno-
menon is to be noted in regard to the export of iron to France. In 1913 the
— 209 —
total English exports of all kinds of cast iron amounted to rather more than
1.1 million tons, of which 0.16 millions went to France; in 1914 the total amount
exported was 0.8 million tons, of which only 0.09 went to France; in 1915 the
total exports of cast iron amounted to 0.6 million, of which 0.14 went to France;
in 1916, of a total of 0.9 million tons of cast iron exported, France received rather
more than 0.5 million; in 1917 a considerable reduction in the total amount exported
took place, and a very slight reduction in the amount exported to France; in 1918
there was a very great reduction in the total exports — 0.5 million, and of this
amount France received approximately 0.4 million tons.
With regard to export of all kinds of iron and steel both crude and manufac-
tured, very much the same developments are to be observed, namely, a reduction
in the total exports and an increase in the amount exported to France.
In the case of Italy, English exports of cast iron in 1915 and 1916 showed an
increase; the same applies to exports in 1915, 1916 and 1917 of all kinds of iron
and steel, whether raw or manufactured.
III.
POSITION .AFTER THE WAR
14. In 1919, vsath the close of the war, we are faced with a world-wide dimi-
nution in the production of cast iron. In Europe, we find a noticeable decrease
in the production of cast iron, especially in the United Kingdom and Germany,
whether in comparison with 1918 or 1913. Outside Europe, the United States
reduced their production of cast iron in 1919, but only in comparison with 1918.
In 1920, however, a general recovery took place in the case of certain countries-
In France, the production of cast iron was increased, thanks on the one hand to
the recovery of the northern mines occupied during the war by foreign armies,
and, on the other hand, to the incorporation of Alsace-Lorraine, which possesses,
as is well known, very rich iron mines.
The following table shows the production of cast iron in the principal coun-
tries of the world in 191.3, 1918, 1919 and 1920:
Production of Cast Iron'
(Millions of metric tons)
1913 1918
United States .... 31.5 39.7
Germany 2 12.9 9.2
United Kingdom . . . 10.4 9.2
France 3 5.2 1.3
Alsace-Lorraine' . . . 3.9 1.8
Belgium 2.5 ?
Luxemburg 2.5 1.3
Canada 1.0 1.1
Practically the same phenomenon is to be observed in the production of raw
steel, except in the case of France.
1919
1920
31.5
37.0
6.3
2.0
7.5
8.1
1.29
2.2
1.1
1.1
0.2
1.1
0.6
0.7
0.8
1.0
2
League of Nations: Monthly Bulletin of Statistics, No. 7.
Not including Luxemburg and Alsace-Lorraine.
• Not including Alsace-Lorraine.
* MiNiSTERE DU Travail: Compte rendu des travaux au cours de I'annee 1920, Paris, 1921.
14
— 210 —
Production of Raw Steel
(Millions of metric tons)
1913 1918 1919 1920
United States .... .31.8 45.2 35.2 42.8
Germany 17.6 14.1 ? ?
United Kingdom ... 7.8 9.7 8.0 9.2
France' 4.7 1.8 2.2 2.1
Belgium 2.5 0.01 0.3 1.2
Luxemburg 1.3 0.9 0.4 0.6
Canada 1.1 1.7 0.9 1.1
15. As a result of the Treaty of Versailles, Germany lost one of her richest
deposits of iron ore by the incorporation of Lorraine with France. We must also
mention here Luxemburg's retirement from the German Customs Union.
The two tables below demonstrate the important influence exercised by the
Lorraine basin on the production of iron ore in France and in Germany.
France: Production (1913 frontier) . 21.9 million metric tons
Lorraine 21.1
Luxemburg 7.3
» . » »
)i » »
Productive capacity . . 50.4 » » »
Germany : Production for 1913 (including
Luxemburg) 35.9 million metric tons
Productive capacity . . 7.5 >;
»
The output of the Lorraine Basin was almost equal to that of the whole of
France. Germany's pre-war productive capacity would ajipear to be now reduced
by about one-fifth. Before the war, France received only a comparatively insignificant
supply of ore from German Lorraine, the production of this area being almost
entirely absorbed by Germany and Luxemburg.
It is of interest now to consider the importance for France and Germany of
the two basins of Lorraine and the Saar as regards the production of cast iron
and steel.
With regard to the iron industry, the Saar Territory only supplied a small
proportion of Germany's output, as is shown by the following table:
Production in 1913
C^st Iron Steel
(Millions of metric tons)
Rhineland and Westphalia . 8.2 10.1
Lorraine 3.9 2.3
Saar 1.2 . 2.1
Silesia- 1.0 1.4
Other regions 3.5 1.7
Total for Germany . . 16.8 17.6
Total for Luxemburg . 2.5 1.3
19.3 18.9
' Not including Alsace-Loiraine.
■ It appears that, as a result of the partition of Silesia between Germany and Poland,
which has been proposed by the League of Nations, the production of coal, ore, cast iron and
steel will be divided up, on the basis of the 1913 statistics, in the following manner:
Percentage falling
to Germany. to Poland.
Coal 24.1 75.9
Iron ore 3.1 96.9
Pig iron 47.9 52.1
Cast iron 62.7 37.3
Cast steel 52.9 47.1
Raw steel 13.6 86.4
i
i
— 211 —
As a result of the incorporation of Alsace-Lorraine in France, the special
arrangement concerning the Saar Territory and the output of Luxemburg, the
productive capacity of France in respect of cast iron and raw steel should, ceteris
paribus, be more than doubled.
Production in 1913
Cast Iron
France: Production (1913 frontier) . 5.2 million metric tons
Lorraine 3.9 » » »
Luxemburg 2.5 » » »
Saar 1.2 » » »
France:
Productive capacity . 12.8 » » »
Raw Steel
Production (1913 frontier) . 4.7 million metric tons
Lorraine 2.3 » » »
Saar 2.1 » » »
Luxemburg 1.3 » » »
Productive capacity . 10.4
Cast Iron
Germany: Production for 1913 (inclu-
ding Luxemburg) . .
Productive capacity . 11.7
Raw Steel
Germany: Production for 1913 (inclu-
ding Luxemburg)
Productive capacity . 13.2
19.3 million metric ton?
18.9 million metric tons
The reunion of Lorraine to France considerably altered, as we have already
seen, the iron output of that country. France, however, remains relatively poor
in coal in spite of the possession of the Saar. On the other hand, Germany, which,
in spite of the loss of the Saar, is rich in coal, has become very poor in iron. Thus
some system of co-operation between these two countries, which, as will be observed,
are dependent upon each other, appears practicable. At present France can only
vely upon the quantity of coai with which Germany is obliged to supply her, in
virtue of the Treaty of Versailles.
Mention must also be made of the great furnaces at present under construction
in France with a capacity of 618 thousand tons, and the new converters and Martin
furnaces'.
The monthly figures for the production of coal, cast iron and raw stee! for the
first six months of 1921 are given below":
(Thousands of metric tons)
Goal and Lignite ^ Cast Iron ^. Raw Steel ^.
January 1921
3,246''
293
268
February »
2,875
292
264
March »
2,969
300
251
April »
3,009
292
257
May »
2,919
283
244
June »
3,258
285
245
' Rapport general sur Vindustrie jran^aise, Paris, 1919.
■' League of Nations: Monthly Bulletin oj Statistics, etc.
^ Including the Lorraine and Saar output.
* Including 75,000 tons of lignite.
'" Including in the Lorrae output.
— 212 —
It must be pointed out that, unless the production of cast iron and raw steel
in the second half of 1921 is much greater than the production for the first half,
France (including Lorraine^ will have produced barely 3.5 million tons of cast iron
and 3 millions of steel for the whole year — i.e., a quantity far below her productive
capacity.
Special conditions in France and the industrial crisis which overtook the whole
world in the middle of 1920 supply the reasons for this greatly restricted output;
16. When the special position of Germany is taken into account, two countries
now appear to be predominant in the production of iron in Europe — the United
Kingdom and France; but among other countries, Russia appears to have a great
future before her in regard to the iron industry.
Russia is a country extremely rich not only in coal but also in iron ore. Besides
the well-known district of Krivai-Rog, which alone supplied three-fourths of the
total production of ore before the war (9.5 million tons), that country also possesses
an equally rich district in the Ural Mountains.
A considerable development of tlie iron industry had also taken place in the
same district.
The production of iron during the war and down to 1917 increased in Russia
except during the year 1915, when a fairly marked decline is to be observed. But,
since the Revolution, jtroduction has decreased very considerably.
In 1920 (nine months of production) the production of iron ore fell to slightly
over 110,000 tons.
The production of iron in Krivai-Rog was nil. It must not be forgotten that
this district is not in Russia properly so-called, but in the Ukraine, where political
conditions are less suitable.
The civil war, which was more acute in this district, naturally inflicted serious
injury on production generally.
In the Ural basin, which is not, however, in Russia properly so-called, pro-
duction was not brought entirely to a standstill, although it fell to one-tenth of the
production before the war.
We observe the same decrease in the production of manganese, a substance
essential in the manufacture of iron. Russia was one of the richest countries in
manganese, and this product was also to be found in the Ukraine. In 1913 the
production of manganese amounted to nearly 300,000 tons, and in 1920 to not
quite 4,000 tons^
17. We will first examine the special foreign trade of France (including Alsace-
Lorraine since 1919).
Special Foreign Trade "
(Thousands of metric tons)
1913 1918 1919 1920
(provisional)
) Imports 1,410 119 304 404
Iron Ore j ^^^^^.^^ 10,066 68 1,997 4,407
DifTerence —8,656 -f 51 —1,693 —4,003
Cast Iron I Imports 203 1,962 1,360 1,026
Iron and Steel i Exports 1,008 145 367 1,359
(including slag) — ■
Difference — 805 -M,917 + 993 — 333
\ Imports 33 376 95 121
Last Iron j ^^^^.^^^ jOO 7 130 297
(residue from processes of casting and
refining and " spiegel ") — — ■ —
DiiTerencc —66+369 —35 — 176
' Ehm. Jizn, November 13th, 1920; January Isl and February 27th, 1921.
■^ MiNisTERE uu Travail: Compte rendu des travaux au cours de Vannee 1920.
— 213 —
We see, therefore, that Frencli imports of iron ore for 1919 and 1920 remain
considerably below the imports for 1913, but above those for 1918. Alsace-Lorraine,
when united with France, provided, as we have seen, a considerable quantity of
iron ore, thus lessening the necessity for France to import this raw materiaT
In view of the increase in the export of iron ore in 1920, we may say that, after
the reconstruction of the devastated districts, France will play an important part
amongst the countries which export iron ore.
The imports of cast iron, iron and steel are, aS we see, decreasing, although
they still exceed the imports for 1913.
The exports of these substances, on the other hand, are increasing, and are
even beginning to exceed the exports for 1913.
The data furnished above tend to demonstrate once more the importance to
France of the Lorraine Basin.
French iron ore is exported principally to Belgium. During the month of
January 1919 France exported 2.1 thousand tons; in the same month of 1920
she exported more than 100 thousand tons, and in January 1921 nearly 250 thou-
sand. Since 1921 France has b^gun to export iron ore to Germany (nearly 25.4
thousand tons during January 1921).
18. The United Kingdom exports little iron ore, but its exports of cast iron
are fairly large.
In 1919, however, the export of every kind of cast iron was considerably less
than that of 1918 (357,000 tons against 483,000). We have seen that the exports
of English cast iron during the war were chiefly effected to France, and that the
export of this product was even greater than before the war.
In 1919 the export of cast iron to France decreased by more than 83 % as
compared with the year 1918, and by more than 90% as compared with the year
1916 — the year in which the export of English cast iron to France was greatest.
It should, however, be noted that the amount of cast iron exported in 1919 to all
countries only decreased by 25 % as compared with the year 1918. This is explained
by the considerable increase in exports to several neutral countries. Export to
Sweden, for instance, amounted in 1917 to nearly 13,000 tons, as against rather
more than a thousand in 1918; to Norway, 7,000, as against 300 tons; to Denmark,
8,000, as against 655 in 1917 (none in 1918); to the Netherlands, 15,000 tons, as
against 11 tons; to Switzerland, nearly 4,000 tons, as against 160, etc.
We must also take into consideration the resumption of export to Belgium,
the fairly considerable increase to Italy, and also to Japan and the United States.
In 1920 the export of all kinds of English cast iron greatly increased (nearly
580,000 tons as against 357,000 in 1919). Export to France remained stationary.
On the other hand a considerable increase in the export of English cast iron to
Belgium may be noted.
Export to Italy is also on the increase as well as to neutral countries and coun-
tries overseas. We may also note a revival in the export of English cast iron to
Russia, which, however, still remains inferior to that of 1913.
There is a considerable increase in the export of all kinds of iron and steel,
raw and manufactured, in 1919, as compared with 1918, but the total export is
still inferior to that of the years prior to 1918. In France, the export figures are
twice and a-half less than in 1918, although it is still greater than the amount ex-
ported in 1913.
The increase in the export of all kinds of iron and steel from 1918 to 1919 is
due to the increased export to European neutral countries and to certain overseas
countries.
A considerable rise may also be noted in the export of all kinds of iron and
steel in 1920.
The economic crisis, but in particular the miners' strike, greatly affected the
production of, and trade in, iron in the United Kingdom in 1921.
— 214 —
The monthly output of coal, cast iron ami raw steel for the first half of 1921 is
given below ' :
(Thousands of metric tons)
Coal Cast Iron Raw Steel
January 18,854^ 653 501
February 17,661 ^ 471 491
March 16,712* 392 365
April 60 61 69
May 60 14 6
June 60 1 2
Exports also greatly diminished while imports increased.
19. The United States increased their export of iron ore in 1920, but this
increase is relatively small as compared with that of the year 1919.
A slight increase is to be noted in 1919 in the export of all kinds of cast iron
as compared with the year 1918, but in 1920 a marked decrease is already notice-
able. The most striking decrease in the export of American cast iron is in the case
of Italy. Exports to the United Kingdom decreased by about one-third as compared
with 1919. Finally, we must note the resumption of the export of American cast
iron to Belgium.
A fairly marked decrease generally in the export of iron and steel is to be noticed
in 1919 and 1920. The decrease in the case of the United Kingdom is very con-
siderable. In 1918 the United States exported about 650,000 tons of steel bars to
the United Kingdom, but in 1920 the export of this product did not amount to
more than about 133,000 tons. The greatest decrease, however, is observed in the
case of France; from an amount of 681,000 tons of steel bars exported in 1918, the
American export to France fell in 1919 to rather more than 77,000 tons, and fell
still further in 1920 to a little over 3,000 tons.
Export to Italy has likewise undergone a considerable decrease, dropping from
210,000 tons of steel bars in 1918 to rather more than 50,000 tons in 1919, and to
21,000 tons in 1920.
Speaking generally, therefore, a considerable decrease in the export of American
iron to Europe after the war, and especially during the year 1920, is to be observed.
Since the consumption of iron after the war very naturally considerably decreased,
it was no longer necessary to have recourse to the United States for supplies of
iron on a great scale.
20. The decrease in American export to Europe observable in 1920 was accen-
tuated by the industrial crisis which was then general. It is very likely that Ameri-
can export in 1921 will show no increase as compared with 1920. The production
of iron in the United States is decreasing. The trade in cast iron and in iron ore
is undergoing a period of depression. Prices continue to fall. The same decrease in
the production of iron, accentuated by other special circumstances, has, moreover,
been noted in France and the United Kingdom, in the first six months of the year
1921. We give below a table of the monthly production of cast iron and raw steel
in the United States during the first half-year of 1921:
(Thousands of metric tons)
Coal
Cast Iron ■'
Raw Steel
January
1921
43,267
2,456
2,659
February
34,984
1,969
2,111
March
34,299
1,622
1,896
April
31,993
1.210
1,465
May
37,048
1,240
1,528
June
37,784
1,082
1,211
' League of Nations: Monthly Bulletin of Statistics, No. 7.
•^ Four weeks.
■' Incomplete figures of the "Survey of Current Business". See: League of Nations,,
Monthly Bulletin of Slalisties, No. 7.
— 215 —
If the production of cast iron and raw steel for the second half-year does not
considerably exceed that of the first, then the output of the United States in 1921
will be about 19 million tons of cast iron and 21 miOiontons of raw steel, — i.e., about
half the output of 1920. Even taking into consideration the fact that the figures
in the above table with regard to cast iron and steel do not represent 16 % of the
total production of the United States, the decline remains none the less striking.
IV.
SUMMARY AND CONCLUSIONS
The question of iron is closely connected with that of coal and iron ore. Before
the war the iron industry of the United States, the United Kingdom and Germany
had been very extensively developed, thanks to the preponderance of their coal
and iron ore supplies.
France and Belgium — the former being rich in iron ore and the latter in coal —
were also able to develop their iron industry by obtaining the necessary supplies
of coal and iron ore respectively from neighbouring countries.
With regard to Europe, the production of iron in Germany had been enormously
developed before the war and had surpassed that of the United Kingdom. The
United States, however, held first place; the production of iron ore in that country
was more than double that of Germany. In Europe two countries — the United
Kingdom and Germany — supplied the rest with iron. The export of iron from the
United States to Europe was negligible.
III.
The United Kingdom exported mainly iron and steel. The quantity of cast
iron exported was much less, though it was greater than the amount of iron ore
exported. The United Kingdom imported a great deal of iron ore — nearly one-half
of her production.
IV.
Germany also imported a large quantity of ore (nearly 40 % of her production
in 1913) from Sweden, France and Spain. German exports mainly consisted of
iron steel; the amount exported in 1913 was rather more than that exported by
the United Kingdom.
France exported a considerable quantity of ore (rather less than 50 % of her
production), almost all of which went to Germany and Belgium. She exported
nearly four times as much iron ore as Germany, and the proportion was still larger
as compared with the United Kingdom. In regard, however, to the export of iron
and steel, she could not compete with those two countries.
VI.
Belgium was not rich in iron ore. She imported a great deal, especially from
France. She also imported cast iron, since her production was not sufficient for
her requirements. Belgium exported a very small quantity of her iron and steel.
— 216 —
VII.
Austria- Hungary had greatly developed her iron industry and this necessitated
the importation of a considerable quantity of ore. She also increased her impor-
tation of cast iron and iron. The remaining States were for the most part importing
countries, but mention must be made of Sweden on account of the high reputation
enjoyed by her steel.
VIII.
During the war an enormous amount of iron was used for war material. Ger-
many occupied the richest mines of Northern France. She was therefore in a position
to satisfy more or less readily her own requirements in iron.
In France the production of ore during the war fell to hardly more than 1.7
millions in 1918, as against 22 millions in 1913. Production also diminished in the
United Kingdom, as also in Sweden and Spain.
The United States, on the other hand, after a reduction in 1914, greatly in-
creased her production of ore.
Speaking generally, the amount of iron ore available throughout the world
during the war would appear to have decreased.
IX.
In spite of the great decrease in the production of cast iron in Europe (slight
in the case if the United Kingdom, but very strongly marked in the other great
producing countries), it does not appear that the world's production of cast iron
fell off to any marked extent during the war. This was due to increased production
in the United States, which became the great source of supply for the Allies during
the war.
Moreover, the production of steel during the war increased greatly in the United
Kingdom and other countries, but declined to a marked degree in Germany, France
and Belgium.
The amount of iron exported by European countries decreased very greatly
because the belligerents had to retain the greatest possible amount of iron for their
own use.
During the war European countries had recourse to the United States, which
became the principal source of the Allies' supplies of iron and steel. They could
not, however, import as much as they wished, on account of the submarine war
and the entry into the war of the United States, which was therefore forced to
increase its own consumption. Neutral countries also obtained supplies from the
United States, owing to the impossibility of importing from European countries.
With regard to the export of English iron to France, it should be noted that,
whereas the United Kingdom appreciably reduced her export of iron to neutral
countries, she increased the amount exported to France.
XI.
In 1919 a diminution in the world production of cast iron and steel is to be
noted as a result of the reduction in the quantity used for war material. In 1920
a general increase in production took place
XII.
Thanks to the restoration of Alsace-Lorraine and to lier control over the Saar,
France has greatly increased her productive capacity as regards iron. On the other
hand, Germany, by reason of the loss of the Lorraine Basin, could now produce
only one-fifth of her pre-war output.
— 217
XIII.
France has become very rich in iron but is still relatively poor in coal, whereas
Germany is still very rich in coal, in spite of the loss of the Saar, but very poor
in iron. Co-operation between these two countries would therefore appear advisable.
XIV,
It seems probable that France will hold an important position in Europe
for the production of iron. Of other European countries, it should bo noted that
Russia, which is extremely rich in iron and coal, may have a great future before her.
XV.
The European iron trade, after undergoing a period of depression in 1919,
once more increased in 1920.
In particular a great increase in French exports of cast iron, iron and steel
is to be noted. French exports for 1920 actually exceeded those of 1913. This
increase in exports was doubtless due to the increased production of iron conse-
quent upon the reunion- of the Lorraine Basin to France.
XVI.
Exports of American iron to Europe are decreasing rapidly. On the conclu-
sion of the war it was no longer necessary, in view of the falling off in consumption,
for the belligerent European countries to have recourse to the United States to
the same extent as during the war. The industrial crisis which overtook the whole
world about the middle of 1920 also afTected the production of, and trade in, iron.
A noteworthy feature of the first half of 1921 is the marked decline in the
production of iron in the United States, the United Kingdom and France. In the
United Kingdom the effects of the crisis were reinforced by the miners' strike
which reduced production to a very low figure. In the case of France, the special
difficulties conn-ected with her iron production must also be borne in mind.
American exports to Europe have still further declined, and world trade is
passing through a period of depression.
VII. STATEMENT OF THE POSITION CONCERNING
■ CHEMICAL MANUHES
PREPARED BY
DOCTOR SLOUTSKI AND PROFESSOR VINCI
SUMMARY
I. Page
Position before the War 221
1. The employment of manures for the improvement of land .
Classification of chemical manures 221
2. Nitrogenous manures. Importance of production of nitrate of
soda in Chile. Concessions 221-222
3. Sulphate of ammonia. Situation in Germany and the United
Kingdom as regards production •. . 222-223
4. Cyanamide of calcium and its production in Europe and America 223
5. Nitrate of hme and the development of its production in Norway 223
6. Phosphate manures. The production of natural phosphates in
Europe, United States, Tunis and in certain other countries 224-225
7. Hyperphosphate of lime in Europe. Considerable development
of its production in the United States 225-226
8. Bone hyperphosphate and its use in agriculture 226
9. Basic slag. Influence of the development of the iron industry
on the production of slag; place held by Germany; impor-
tance of the Lorraine Basin 226
10. Potash manures. The Stassfurt and Upper Alsatian deposits.
Importance of this industry in Germany and the control
exercised by the State 226-227
11. Trade in manures. Export of nitrate from Chile and world con-
sump tion of nitrate of soda 227-228
12. Trade in and consumption of sulphate of ammonia. Importance of
the United Kingdom as exporting country. Large consump-
tion by Germany. Situation of the United States and Japan 228-230
13. Cyanamide of calcium and the small importance of trade in it . 230
14. Nitrate of lime. Great development of the export of nitrate of
lime from Norway. The Norwegian Nitrogen Company . . . 230-231
15. Phosphate manures. Exports from the United States and
Tunis. Import into Europe. Large consumption by France.
Contribution of the French Colonies, the United States and
the Pacific Islands to the world's supply 231-232
16. Trade in superphosphate of lime 233-234
17. Trade in basic slag. Germany and Belgium as exporting coun-
tries. Large consumption in Germany 235-236
18. Potash manures and their export from Germany 236
220
II.
Position during the war 236
19. General decrease in the production of manures and in the Euro-
pean stocks. Development of production in certain Euro-
pean and non-European countries 236
20. Nitrogenous manures. Increase in the production and export
of nitrate of soda in Cliile. Export to Europe and non-
European counti'ies. The "Nitrate of Soda Executive".
Considoralile increase in American export 237-238
21. Trade in and consumption of sulphate of ammonia 238-239
22. Considerable increase in the production of nitrate of lime in
Norway. Decrease in exports and increase in consumption 239
23. Phosphate manures. Increase in production in Spain. The
trade in natural phosphates. Tunisian phosphates .... 239-241
24. Causes of the decrease in the production of superphosphate . . 241
25. Basic slag and its importance as manure during the war . . . 241-242
26. Potash manures. Decrease in ex])orts antl increase in consump-
tion in Germany. Development of production in the United
States 242
III.
Position after tiiic War 243
27. Difficulty of giving a complete account of tlie sit\iation as to
chemical manures after the war 243
28. Position in Germany and France (Stassfurt and Alsace.) The
monopoly held by Germany and the competition of Alsa-
tian potash salts. State control of tlie potash industry in
Germany. The potash deposits in Spain. Increase in pro-
duction in the United States. Protection of the potash in-
dustry in the United States. The " United States Potash
Corporation" syndicate 243-245
29. The considerable development in the production of phosphates
in the United States 245-246
30. The situation of the potash industry in Tunis. France's share
in the export of Tunisian phosphate and the agreements with
Italy. The convention between the United Kingdom, Aus-
tralia and New Zealand for the development of Nauru Is-
land (mandated territory), and the price discriminations . 247
31. Synthetic nitrate manufactured in Germany 347
32. The crisis in the Chilian nitrate industry at the end of the war. . 247-248
33. The renewed crisis in Chile in 1921 ; the decrease in exports and
the fall in prices 248
IV.
Summary and conclusions 248
Oliemioal IXJ^aiiures
POSITION BEFORE THE WAR.
1. There are three classes of manures used in the improvement of land:
(1) Organic manures, especially dung — the only fertiliser used for many
centuries.
(2) Natural chemical manures, due to the discovery, in the second half of the
19th century, of natural wealth, such as Chilian nitrate, etc.
(3) Chemical manures synthetically prepared, particularly by the use of the
nitrogen in the air — processes representing the latest stage in the history of ferti-
lisers.
Before the war, natural chemical manures were largely used, especially in
Western Europe, and they were most important from tlie point of view of interna-
tional trade.
Chemical manures, natural and prepared, may be divided into three classes:
(a) Nitrogenous manures; (b) Phosphate manures; (r) Potash manures.
The principal nitrogenous manures are:
(a) Nitrate of soda; (b) Sulphate of ammonia; (c) Cyanamide of calcium;
(d) Nitrate of lime.
The principal phosphate manures are:
(a) Phosphates; (b) Hyperphosphate of lime; (c) Bones and hyperphosphate
of bones; (d) Basic slag.
The potash manures are the various potash salts, natural (kainite, etc.) and
prepared (chloride and potassium sulphate).
2. Nitrate of soda is one of the most important fertilisers. It is found in caliche,
of which there are important deposits in South America, especially in Chile. Nitrate
is also found, but in negligible quantity, in the United States, in Egypt and in a
few other countries.
Chilian caliche contains 15 to 65 % of nitrate of soda and a very small amount
of nitrate of potash. It also contains, in different proportions, sulphate of soda,
lime, magnesia and some other salts.
The production of nitrate of soda in Chile began about 1810. Very rudimentary
plant was used, which nevertheless produced about 1,000 tons a year. In 70 years'
time, when the value of nitrate became known to Europe, the production increased
enormously, and in 1878 amounted to about 100,000 tons. In 1890 it reached
1,000,000 tons. The development of production continued, as the following table
shows :
Chile's Production of Nitrate '
(In thousands of metric tons and in round figures)
1909 2,111
1910 2,465
1911 2,522
1912 2,587
1913 2,773
' The Statistics for the periods before and during the war are taken, unless otherwise stated,
from the International Year Book of Agricultural Statistics 1917-18 (Rome 1920).
— 222 —
Chile exported almost the whole of her nitrate. •
The nitrate industry was the most important in the country. The Chilian
Government levied an export duty on nitrate, which produced half of the total
revenue of the Chilian Treasury. If to this is added the revenue from the concession
of saltpetre deposits, it may be said that Chile's wealth was based upon this industry.
There is a whole series of legislative measures dealing with the concession of deposits,
sales by auction, etc. Speaking generally, it may be said that there are deposits
belonging to private persons, according to the old Peruvian law in force before the
Chile-Pcru-Bolivian war of 1879 to 1883, upon which no fiscal duty is levied, and
concessions granted by the State which are burdened with fiscal duties.
3. Sulphate of ammonia belongs also to the class of nitrogenous manures, and
is manufactured by saturating ammonia with sulphuric acid. Ammonia is found in
ammoniacal water obtained from sewage matter, in pit coal heated in a closed
receptacle, in coal schist, bones, etc.
Different processes exist for tlie distillation of ammonia and for the manufac-
ture of the sulphate.
We see therefore that the raw material used for the production of sulphate of
ammonia can be obtained in all the countries which possess gasworks, blastfurnaces,
schist deposits, sewers. It may be said that this raw material is abundantly found
in all countries wliich have a well-developed mining and metallurgical industry.
Accordingly, it is not surprising to find Germany, the United Kingdom and
the United States at the head of the list of producers of sulphate of ammonia.
Until 1911 the United Kingdom held the first place as producer of sulphate of
ammonia, but after that year the United Kingdom yielded her place to the German
Empire.
In 1900, the United Kingdom's production was about 64 % above that of
Germany. In 1910, the production of these two countries was almost the same,
and, in 1911, Germany produced more than the United Kingdom.
The following table shows the production of sulphate of ammonia in the differ-
ent countries of the world from 1909 to 1913:
Production of Sulphate of Ammonia
(In thmisands of inotric tons)
Countries 1909 1910 1911 1912 1913
Europe :
United Kingdom'. 354.7 373.5 391.1 394.2 438.9
Germany 330.5 373.0 418.0 492.0 549.0
France 53.6 57.3 62.0 69.1 74.5
Belgium 34.6 35.6 40.7 43.7 48.6
Austria-Hungary . 27.0 28.6 30.3 32.9 35.0
Spain 10.0 9.0 12.0 12.0 15.0
Italy 6.9 7.2 8.7 11.1 13.4
Netherlands. . . . 5.0 5.3 6.0 7.0 7.0
Denmark. . : . . 2.0 2.0 2.0 2.4 2.8
Sweden 1.4 1.4 1.3 1.3 1.4
Russia ? ? 0.5 4.0 13.8
America:
United States. . . 66.6 105.1 115.2 149.7 176.9
Asia:
Japan 0.8 1.1 3.9 7.3 8.0
Oceania :
Australia 3.5 3.5 2.9 3.0 5.5
Total (in round
figures) 897.0 1003.0 1095.0 1230.0 1390.0
' Tho figures given refer to llie lolal prmluclidn of aniinonia reckoned in sulpliatc.
22.0
24.0
10. .3'
15.0
13.9
22.1
5.0
7.5
6.0
18.4
6.0
7.5
4.5
7.5
— 223 —
This table shows the large production of sulphate of ammonia in Germany and
the United Kingdom, which together were responsible in 1913 for more than 70 %
of the total world production. Outside Europe, the United States alone produced
a more or less considerable quantity of sulphate of ammonia.
We may, moreover, note the progress made by Russia in the production of
sulphate of ammonia.
4. Cyanamide of calcium is obtained by the action of nitrogen on calcium
carbide. Before the war, cyanamide was little used as a fertiliser. The industrial
production of cyanamide only began about 1908, thanks to the invention of the
Frank Furnace.
In Europe, Germany was the country producing the largest quantity of cyana-
mide before the war, as is shown in the table given below:
Production of Cyanamide of Calcium
(In thousands of metric tons)
Countries 1909 1910 1911 1912 1913
Europe :
Germany 5.5 11.5 22.5
Italy 5.3 3.7 4.5
Norway 0.7 4.3 13.2
Fraive ? 1.0 1.5
Sweden ? ? 0.6
Switzerland ? ? ?
Austria-Hungary ? ? 2.0
America :
United States (and Canada). ... ? ? 8.0 32.0 48.0
Asia :
Japan ? ? 2.3 5.2 7.0
This table shows us the considerable progress made in the production of cyana-
mide during the five years which preceded the war. As may be seen, all countries
have developed their production.
Germany, however, still remains the principal European producer of cyana-
mide.
Oustide Europe, we note that the llnited States and Canada, from 8,000 tons
in 1911, reached a production 48,000 tons in 1913, nearly equalling the German
production.
5. Nitrate of lime is the last nitrogenous product employed in agriculture.
The production of nitrate of lime by various synthetic processes was concentrated
in Norway before the war. Here is a table of production of nitrate of lime in that
country.
Production of Nitrate of Lime in Norway
(In thousands of metric tons)
1909 12.0
1910 18.6
1911 13.1
1912 36.5
1913 73.2
We note, then, that, from 1909 to 1913, the production of nitrate of lime in
Norway increased by six times. We must note the extraordinary increase in 1912
compared with the falling off in 1911; the production in 1913 is double that of 1912.
' According to the Federazione ItaUana dei Consorzi Agrari, Italy produced 8,000 tons of
cyanamide of calcium in 1912.
— 224 —
6. Phosphate manures are valuable for agricultural purposes owing to the phos-
phoric acid which they contain.
Deposits of natural phosphates are found in many countries. In Europe, France
possesses the most important deposits; they are situated in the departments of the
Somme and the Oise. France is the largest producer of natural phosphates in Europe.
It must be noted, however, that, on account of their poor quality, almost the
whole of these phosphates are used locally. The second place among European
producers belongs to Belgium.
Before the war, these two countries produced almost all the natural phosphates
in Europe. The rest was furnished by Russia. Spain and Norway only produced a
negligible quantity.
The output of the United States is the greatest in the world. Tunis alone has
an output comparable with that of the United States.
The production of natural phosphates throughout the world for the five years
preceding the war, is given in the following table: —
Production of Natural Phosphates
(In Ihousaiids of metric tons)
Countries 1909 1910 1911 1912 1913
Europe:
France
Belgium
Russia
Spain
Norway
A merica :
United States
W. and Dutch Indies. .
French Guiana ....
Canada
Asia:
Christmas Islands. . .
Japan
Africa:
Tunis
Algeria
Egypt
Oceania:
Ocean Is. and Nauru Is.
Angaur
S. Australia
Makatea
Total (in round figures) 5,156.4 5,609.8 6,181.2 6,911.4 7,118.5
From this table it will be seen that in 1913 the United States were responsible
for nearly 45 % of the world's production and Tunis for a little more than 30 %.
These two countries thus accounted for 75 % of the world's output in 1913. The
increase in the world's production in 1913, as compared with 1909, is about 38 %.
The greatest reserves of natural phosj)hates, estimated at 10 milliards 520 mil-
lion tons, are found in tlie United States. These reserves have scarcely been touched.
The Federal Government attaches very high importance to its phos]ihate reserves
as being a product extremely important for the development of the agriculture of
that country. The United States Government does not readily grant concessions
for working the phosphate deposits, being desirous of avoiding the exhaustion of
national reserves through exj)ortatiou.
397.9
.333.5
312.2
330.0
335.0
205.3
202.9
196.8
203.1
2194
21.5
25.1
25.7
25.0
25.0
1.4
2.8
3.5
3.3
3.5
1.4
0.7
0.9
1.2
0.7
2,503.2
2,724.8
3,260.0
3,231.6
3,161.1
27.2
31.4
18.6
20.4
34.8
9.0
6.8
7.2
7.0
3.2
1.0
1.5
0.6
0.2
0.4
198.0
310.6
250.0
159.5
152.4
3.8
1.0
2.3
7.9
19.0
1,223.5
1,286.3
1,446.6
2,057.5
2,170.5
351.5
319.1
332.9
388.5
461.0
1.0
2.4
6.4
70.0
104.5
197.9
310.6
250.0
300.0
250.0
9.0
45.0
41.0
60.0
90.0
3.8
5.3
5.9
6.2
6.0
?
?
12.0
40.0
82.0
— 225 —
In South Carolina, for examjjle, a falling olT in the output of phosphates may
be noted. This is due, it is alleged, not to the exhaustion of the deposits, but rather
to the difficulties arising out of the concessions system.
Nevertheless, the output of phosphates in the United States has been increasing.
From 519,000 tons in 1890, the output reached 3,161,100 tons in 1913.
France, as we have seen, helds the first place in Europe as a producer of phos-
phates. It appears that the known supplies are being exhausted. At any rate, a
decline in output may be noticed in comparison with 1909. It should also be noted
that French phosphate is regarded as a poor product and that its greatest use is to
enrich basic slag obtained from ore containing little phosphorus.
The reserves in Belgium do not appear to be as considerable as those in France.
As regards Russia, she possesses deposits, especially in the heart of the country,
hut these have not yet been developed.
Northern Africa possesses remarkably rich supplies. Tunis, as the previous
table shows, was able to develop the working of these supplies much more rapidly
than Algeria. It appears that Morocco also possesses great phosphate reserves K
In Asia, Christmas Island a British possession in Malaysia has important
reserves, and although its output is small, it is the most considerable Asiatic pro-
ducer. The earths are. very rich in phosphates (78 %, sometimes 85 %).
Japan,. as was shown, has only recently begun to work her deposits, which
are very limited; her earths are exceedingly rich (about 75 %).
As for Oceania, reference may be made to Ocean Island, which is a British
possession in the East Pacific. It has deposits of high value (78 to 90 %), the work-
ing of which was begun only in 1901. The reserves are estimated at 50 millions of
tons.
Makatea Island, a French colony, possesses earths giving a rich yield (85 %);
the exploitation only began in 1910-1911, and the table given above records the
progress made.
Finally, the Nauru and Angaur Islands (former German colonies) have also
rich deposits, giving an average yield of 80 %.
7. Hyperphosphates of lime are produced by the action of sulphuric acid on
mineral phosphates. Superphosphate of lime is distinguished from natural phos-
phates by its solubility and by its higher content of phosphoric acid, which, in the
trade, determines the selling price.
The world's production of hyperphosphates of lime from 1909-1913 is given in
the following table:
Production of Hyperphosphate of Lime
(In thousands of metric tons)
Country
1909
1910
1911
1912
1913
Europe :
France . . .
1,641.6
1,634.4
1,750.0
1,950.0
1,920.0
Germany. .
1,267.2
1,353.6
1,540.8
1,718.4
1,818.7
Italy. . . .
936.6
1,050.0
944.3
1,018.8
972.3
Gt. Britain .
807.3
757.0
810.0
840.0
820.0
Belgium . .
349.2
394.2
420.0
450.0
450.0
Austria-
Hungary .
299.0
347.1
367.3
397.3
400.0
Spain . . .
156.6
208.8
220.0
210.0
225.0
Sweden . .
102.5
167.1
184.9
168.5
184.3
Russia . . .
64.8
88.2
174.4
205.2
?
Denmark. .
29.7
50.4
?
?
90.0
Portugal . .
?
?
?
?
126.0
America :
United States
1,089.6
?
;!
?
3,248.0
Oceania:
Australia . .
?
?
P
?
36.8
See Le Phosphate, April 15lh and May 1st, 1921.
— 226 —
It will be noticed that France formerly held flrst place in the world as regards
the output of hyperphosphate of lime. Just before the outbreak of war, however,
the United States, which possess deposits exceedingly rich in natural phosphates,
became the greatest producer in the world. We must not omit some mention of
Holland's production, for which we have no data.
8. In addition to hyperphosphates of lime, we may mention bones and bone
hyperphosphates used as manures. Bones, after being cleaned, yield a powder which
contains valuable substances, and is employed as a fertiliser. Bone hyperphos-
phate is the product obtained from a mixture of diluted sulphuric acid and bone
dust. As a result of the comparatively insignificant quantity of raw material and
the rather high cost of manufacture, the use of this fertiliser in agriculture is not
very extensive.
9. Basic slag is the last important phosphate product employed in agriculture
as a manure.
The slag, or residue resulting from the conversion of pig iron into steel, in cases
where the pig iron is derived from iron ore containing phosphorus, may be employed
in agriculture as a fertiliser, in consequence of the phosphorus whic"h it contains.
The extensive use of this fertiliser dates from 1878, when tlie Thomas and
Gilchrist process for removing the pliosjihorus was perfected.
The following table shows the production of basic slag in the various countries:
Production of Basic Slag
(In thousands ot metric tons)
Country
1909
1910
1911
1912
1913
Germany ' .
1,879.0
2,007.0
2,160.0
2,110.0
2,250.0
Luxemburg.
2
2
"2
253.0
250.0^
France . . .
463.0
534.0
602.0
679.0
730.0^
Belgium . .
335.0
488.0
471.1
534.0
655.0
United
Kingdom .
255.5
260.0
270.0
300.0
404.0
Austria-
'
Hungary .
69.6
78.1
85.3
94.7
50.8
Russia . . .
—
—
—
16.0
49.0
Sweden . .
6.9
12.3
12.7
15.0
18.3
Total (in
round figures) •*
3,009.0
3,379.0
•3,601.0
4,002.0
4,407.0
This table shows the preponderance of Germany in the production of basic
slag. This is not to be wondered at, in view of the progress of the iron industry
in Germany ; and particularly the production in the Lorraine Basin of pig iron
remarkable for the uniformity of its content of phosphorus, which makes it possible
to use the slag after a simple crushing process.
10. Potash salts are largely used for agricultural purposes. In industry,
potash is only used for the preparation of explosives and of salts necessary for
paint, pharmaceutical products, etc. It has been replaced by soda in the
manufacture of glass and crystals. It may, therefore, be said that the greater
|)ortion of potash is used for agricultural purposes.
There are few known deposits of potash salts.
The most extensive deposits occur in Germany (tlie .Slassfurl deposits). Bid
in view of the discovery of deposits of polasli in Ippcr Alsace, in Catalonia and in
' Including LuxiMnburg for the first tlireo years.
^ Quantity included in llie figures for Gernwny,
' ICstiniato.
— 227 —
some other regions, the Stassfurt deposits are liively to lose tiieir predominant
importance.
The salt springs in Upper Alsace are found in the districts South of Golmar.
The potash deposits in Upper Alsace were discovered in 1904, while the potash salt
deposits in Catalonia were discovered as late as 1913. Mention may be made of
less important deposits in the Dahlak Islands, in Galicia, the United States, Tunis,
Russia, etc.
Production of Potash Salts in Germany
(In millions of metric tons of pure potash and in round figures)
1880 ' 0.07
1890 ' 0.12
1900 ' 0.30
1909 0.68
1910 0.86
1911 0.94
1912 1.01
1913 1.11
Before the war, Germany produced nearly all the potash consumed in the world.
95 % of the German production came from the Stassfurt mines and 5 % from
Alsace. It \\'ill be shown that during and after the war some other countries also
began to increase their production of potash.
The production of potash in Germany was not always uncontrolled. On May
5th, 1910, a cartel of potash producers was created, which was protected and super-
vised by the German Government. The reason for this Government intervention
was the competition between the various German mines. The remarkable develop-
ment of the Stassfurt deposits brought about a veritable fever of over-production
resulting in a fall in the price of potash. The German Government intervened in
order to put a stop to over-production and to limit the sale of potash products.
The cartel was administered by a committee of seven members, of whom four
represented the Mining Association, and three, including the president, represented
the State. In case of any dispute, the president could appeal to the Reichstag.
In order to be able to sell his products the owner of a potash deposit must become
a member of the cartel. The cartel committee fixed annually the quantity of each
class of salts to be sold in Germany and abroad. It also fixed the prices of each
class, which differed according as it was destined for the home or for the foreign
market.
11. The trade in manures. The table given below will show the export of
nitrates from Chile for the five years preceding the war, and also the stocks available
on December 31st of each year, as compared with the production.
Production and Export of Nitrate from Chile
(In thousands of metric tons)
1909
1910
1911
1912
1913
2,111
2,465
2,522
2,587
2,773
2,133
2,339
2,451
2,494
2,740
Production
Export
Stocks available on
December 31st . . . 1,546 1,630 . 1,695 1,620 1,772
Before the war, Germany was the greatest importer of nitrate from Chile, and
was also the greatest consumer of this product. The United States came next,
' Report of thf. Interior United States Geoi.ogicai. Strvey, Potash in 1919, Washington,
1920.
— 228 —
then France, Belgium, llie Netherlands, the United Kingdom, and a few other
countries '.
(Thousands of metric tons)
Country Quantity Porcentage
Germany 835 32.7
United States 590 23.1
France 322 12.6
Belgium 318^ 12.4
The Netherlands . . . 203^ 7.9
United Kingdom . . . 130 5.1
Italy 50 1.9
Egypt 25 1.0
Spain 15 0.6
Other countries .... 67 2.7
Total 2,555 100.0
The Chilian Government levied certain export duties on the exported nitrate,
which constituted more than 50 % of the revenues of Chile
The high price of nitrate of soda from Chile was due partly to the levy of an
export duty and partly to the imperfections of the process of extracting and treating
the ore of nitrate and the unsatisfactory means of transport and lading.
12. It has been shown that, of the two largest producers of sulphate of ammonia,
Germany was first in 1913 and the United Kingdom second.
Below are given tables showing the imports and exports of sulphates of ammonia
in a few countries from 1909 to 1913: —
Imports of Sulphate of Ammonia in the Principal Countries
(In thousands of metric tons)
Countries 1909 1910 1911 1912 1913
Europe :
Germany 58.1 30.4 24.5 23.1 34.6
The Netherlands . 33.1 31.0 29.2 39.3 31.2
France 25.8 26.2 21.8 22.9 23.0
Italy 18.9 20.7 20.3 21.2 21.7
Belgium 17.2 16.2 8.7 . 20.0 17.7
America:
United States . . . 38.9 83.7 85.8 54.0 59.2
Asia:
Japan 42.2 69.4 74.2 84.6 111.5
Exports of Sulphate of Ammonia from the Principal Countries
(In thousands of metric tons)
Countries 1909 1910 1911 1912 1913
United Kingdom . 268.4 ■ 288.2 295.8 289.6 328.2
Germany 58.7 73.0 74.4 57.3 75.9
Austria-Hungary . 19.2 21.9 20.0 20.8 23.8
Belgium 11.0 13.6 16.9 17.9 16.4
The Netherlands . 7.4 23.5 23.9 31.3 18.7
Denmark — 2.5 2.3 2.7 2.8
France 0.9 0.8 1.3 2.0 1.2
Wo may now state the stocks in the above-mentioned countries.
Ministry of Commerce, General fieporl on Fn'nrh Industii/, I'aris, 1918.
' Part of which wont to Onniianv.
457.8
507.8
104.6
110.7
90.0
96.3
15.0
19.5
32.3
35.1
12.1
11.2
45.8
49.9
— 229 —
Stocks of Sulphate of Ammonia
(Thousands of metric tons)
Countries 1909 1910 1911 1912 1913
Europe :
Germany. .... 329.9 330.4 368.1
United Kingdom . 86.3 85.3 95.3
France 78.5 82.7 82.5
The Netherlands . 30.7 12.8 11.3
Italy 25.8 27.9 29.0
Austria- Hungary . 7.8 6.7 10.3,
Belgium 40.8 38.2 32.5
A comparison of the previous three tables with the table for production will
show the situation of the different countries.
It will be observed at the outset that Great Britain is the principal exporter
of sulphate of ammonia. It is the only one of the great producing countries which
does not import any of this product.
The countries to which British sulphate of ammonia was chiefly exported
in 1913 were as follows: —
Exports of Sulphate of Ammonia by Great Britain
(In metric tons)
Japan^ 116,416
Spain 53,195
Java 37,713
United States of America . . . 36,978
Germany 9,538
France 9,015
Canary Islands 8,631
Italy 5,915
Belgium 5,252
Total (including other countries). 328,238
Germany has increased her production and has thus been able to reduce her
imports and to increase her exports, which, however, still remain much inferior to
those of Great Britain.
Exports of Sulphate of Ammonia from Germany in 1913
(In metric tons)
The Netherlands 18,195
Dutch Indies 16,024
Belgium 15,775
France 7,428
United States 5,630
Italy 3,551
Total (including other countries) 75,868
Germany imported, in 1913, 34,627 tons of sulphate of ammonia, of which
21,204 came from Austria-Hungary.
Austria-Hungary is essentially an exporting country, being almost in the same
category as Great Britain. Her imports of sulphate of ammonia are neghgible:
56 tons in 1913.
Including Formosa and the territories held on lease in China.
I
— 230 —
Belgium had produced sufficient quantities of'sulphate of ammonia for her own
consumption, particularly during the years 1911, 1912 and 1913, though falling
slightly short of that standard in 1912. She had, nevertheless, imported fairly large
quantities of sulphate of ammonia, probably for the sake of certain economic
advantages; her exports have increased since 1909 except for a slight falling off
in 1913. Before the war practically the whole of her import came from Germany
(11,079 tons in 1913), from Great Britain (5,051 tons) and from the Netherlands
(1,405 tons).
Before the war, Belgium's export of sulphate of ammonia was principally to
France (5,698 tons in 1913), to the Dutch Indies (5,486 tons) and to the Netherlands
(2,049 tons). The remainder was despatched to a large number of other countries
in Europe and outside Europe.
The exports of the other countries are negligible. The only one requiring notice
is Denmark, who exports all the sulphate which she produces.
Among the importing countries we note France, who did not produce sufficient
for her own consumption. In 1913, her imports amounted to more than 31 % of
her production.
Italy also produces insufficient sulphate of ammonia. In 1913, she imported
nearly 22,000 tons and had only produced a little more than 13,000 tons. The
remaining European countries such as Spain, Russia, Sweden, etc. imported little
sulphate of ammonia, as they produced enough for their home consumption.
Outside Europe, Japan and the United States are the chief importers of sulphate
of ammonia.
The production of the United States was not sufficient for their own consump-
tion. Altiiough this production steadily increased during the five years preceding
the war, there was at the same time an increase in the import. As the United States
did not export sulphate, it may be said that before the war their consumption
equalled production plus import. In 1909, then, consumption was about 105,000
tons; in 1913, 236,000. In 1913, the United States imported an amount equivalent
to one-third of their production. Japan, which, before the war, produced an insig-
nificant quantity of sulphate of ammonia, imported a considerable quantity.
This country is the chief of all the importing States in the world; between 1909 and
1913, she almost tripled her import. By way of comparison, it should be observed
that in 1913 the total imports of all the European countries were about 135,000 tons;
in the same year Japan imported 111,500 tons.
13. The trade in cyanamide of calcium is of little importance.
In Europe, before the war, two countries exported a more or less considerable
amount of cyanamide: Norway and Sweden. The export from the former country
greatly increased between 1909 and 1913. In 1909, Norway exported only 752 tons;
in 1913 more than 22,000 tons. Sweden only began to export cyanamide about
1912. In this year her exports were some 4,000 tons, and in the following year
almost 17,000 tons. Germany also exported a certain quantity of cyanamide,
which appears in the German statistics among the other synthetic nitrogenous
manures.
Among the importing countries are the United States, wlio in 1912 began to
im|)ort this product (7,248 tons in 1912 and 14,891 in 1913). The other countries
imported relatively insignificant (piantities of cyaiiauiide; tlicii' statistics do not
show any separate estimate of the quantities of this product imported.
14. Norway, the chief producer of niti'uti' of linic, is also tiic only
country in the world which exports any considerable (|uaiitity of this product.
She lierself consumes little nitrate. In 191,3, she exported 70,927 tons out of the
73,214 tons produced. Her consumption in 1917 was, however, greater than the
dilTerence between production and export: 5,500 tons. As this country does not
import iiitrate of liuic, the lialance required for consumplion was taken out
of stock.
231
The following table shows the production, export and consuniplion of nitrate
(In 1
iietric tons)
1909
1910
1911
1912
1913
11,953
18,569
13,152
36,468
73,214
9,422
13,531
9,805
51,701
70,927
970
1,860
1,967
3,721
5,500
of lime for Norway, from 1900 to 1913:
Production .
Exports . .
Consumption
The Norwegian.Nitrates Company controlled the sale of nitrate of lime. Before
the war, this company had correspondents in all countries and it sold and delivered
the product direct to its agents. The countries of Northern Europe and Germany
absorbed the greater part of the Norwegian nitrate.
15. Phosphate mannrcs. The following table shows the imports and exports
of natural phosphate in the principal countries of the world from 1909 to 1913:
Natural Phosphates — Imports
(In thousands of metric tons)
Countries 1909 1910 1911 1912 1913
Europe :
France 645.2 687.2 740.4
Germany 663.4 723.3 833.3
United Kingdom .... 459.1 462.9 501.3
Italy 478.2 422.7 479.0
Spain 82.7 106.7 163.6
Belgium ? ? 195.2
Austria-Hungary .... 172.9 192.1 172.5
Sw^eden. . . / 75.1 66.9 91.4
The Netherlands .... 45.0 29.3 68.6
Denmark 35.6 25.7 20.1
Russia 23.2 24.9 29.0
A nierica :
United States 12.1 — — — —
Asia :
Japan 71.1 168.2 230.3 284.7 331.3
Oceania :
Australia 51.1 107.3 87.4 99.8 162.6
907.8
940.8
902.8
928.8
528.6
547.6
466.1
529.8
176.2
254.5
244.2
244.8
175.8
203.0
81.6
123.2
60.1
84.0
45.2
55.9
47.4
53.6
Natural Phosphates — Exports
(In lliousands of metric tons)
Europe :
France 47.6 44.4 31.4
Belgium ? ? 21.8
Germany. ....... 5.4 5.0 10.6
Italy 3.0 3.6 5.4
America:
United States 1036.9 1100.4 1266.6
Asia :
Straits Settlements . . . 107.2 139.9 155.3
Africa:
Tunis 1233.5 1293.2 1539.4
Algeria 33.4 317.3 335.0
Egypt ? 2.2 5.0
In Europe, France occupied the first place in 1913 among the importers of
natural phosphates. . As, on the other hand, she did not export much phosphate
in comparison with the amount produced, we see what an enormous supply of phos-
phate she had. .
22.1
21 . 1
22.9
18.2
7.0
6.9
1.3
4.2
225.9
1388.4
159.5
152.4
910.2
1984.9
377.6
438.6
52.1
64.2
— 232 —
Tlie following table shows her supply in 1913:
Production 335.0 thousands of metric tons
Import 940.8 » »
Export 21.1 )) »
Consumption 1254.7 » »
The table of phosphate production has shown us the decrease in French output
during the five years preceding the war. The import and export tables show the
increase in import and the decrease in export during the same period. The greatest
quantity of natural phosphate came from Tunis and Algeria. France also received
a large quantity from Belgium and Germany.
The following table gives the import of phosphate into France in 1913 from the
chief exporting countries:
Tunis 706.0 thousands of metric tons
United States 111.6 » »
Algeria 80.0 » »
Belgium 28.6 « »
Out of 941,000 tons imported, Tunis supplied 75 %. France exported her
phosphate principally to Great Britain (10.2 thousands of tons in 1913) and
Belgium (8.7).
Germany held the second place as importer of phosphate. As she produced
no natural phosphate, Germany imported a large amount, which, in 1913, was
almost equal to that imported by France. About 40 % of the imports came from
the United States.
. The United Kingdom and Italy are the last two countries which imported any
considerable quantity of phosphate in 1913. They imported the greater part of
their phosphate from Tunis and the United States.
Outside Europe, only Japan and Australia imported any considerable quantity
of phosphate.
Among exporting countries we can only quote the United States and Tunis
as of any importance. The exi)orts of other countries, except Algeria, are compara-
tively negligible.
The United States, in 1913, produced 3.2 million tons of phosphate and exported
1.4 million in the same year, thus leaving 1.8 million tons for their own consumption.
The export from the United States was almost entirely to Europe.
Outside Europe, the United States exported only to Japan.
As regards Tunis, she exported the greater part of her phosphate to France;
the Ihiited Kingdom and Italy were also important customers.
The table given below shows the stocks in 1913 and the contribution made by
Algeria, Tunis, the United States and the Pacific Islands to the natural sulphate
supplies of the principal countries in Europe ' :
Country of Origin :
Algeria and United States i'acific
Tunis Islands
(Metric tons)
France 794 135.5 —
United Kingdom 222 190 —
Germany. ^ 307 392 150
Belgium 102 110 9.5
Italy 466 101 —
Netherlands " . . 110 190 15
Spain 160 67 3
Total (including the otiier —
countries) 2,345.5 1,305.5 313.5
General Report on French Induxtnj, etc.
1912
l'J13
346.2
352.8
314.7
318.9
271.3
282.7
169.6
145.2
90.3
64.5
57.8
36.0
5.4
3.7
— 233 —
16. The chief countries exporting hyperphosphate of hme before the war
were the Netherlands, Belgium, Germany and France.
Below is a table of exports from the jjrincipal countries :
Hyperphosphate of Lime — Export
(In thousands of metric tons)
Countries 1909 1910 1911
The Netherlands . . . 232.3 233.3 280.3
Belgium 348.3 346.1 329.8
Germany 168.7 211.8 221.8
France 227.8 258.1 250.0
United Kingdom . . . 143.7 155.0 162.0
Sweden 17.2 51.2 61.2
Austria- Hungary ... 0.9 3.5 3.9
Asia :
Japan 6.3 14.9 15.6 20.5 18.7
Africa :
Algeria 5.4 4.7 3.5 3.3 8.0
Tunis — — — — 1.3
Oceania:
Austraha' 12.0 13.2 10.2 9.3 13.1
Owing to lack of information, the Netherlands do not appear in the table
showing the production of hyperphosphate before the war. But, as we see from the
table given above, this country occupies the first place as an exporter and re-exporter.
Leaving the Netherlands out of account, there are three countries — Belgium,
Germany and France — which exported a considerable quantity of hyperphosphates
before the war.
The exports of Belgium and France are, as we see, on the decrease, whilst the
German export is constantly increasing. The increase in German export in 1913
is about 70% as compared with 1909; the increase in production during the same
period is 43 %. Belgium and France also increased their production, but in a
lesser degree. We notice a very marked decrease of export in the case of the United
Kingdom; more than 62 % decrease in 1913 as compared with 1909, although the
production during the same period was slightly increased. We may therefore say
that the LInited Kingdom, which did not import this product, uses more and more
hyperphosphate at home, thus decreasing her export. Germany exported the greater
part of her hyperphosphate to Russia.
Below is the table showing exports of hyperphosphate in 1913 to the chief
importing countries:
(In thousands of metric tons)
Russia 108.9
Austria-Hungary . 68.0
Denmark 43.5
Switzerland. . . . 15.2
Spain 9.9
The Netherlands . 5.3
Brazil 4.2
Before the war, Belgium exported tlic greater part of her hyperphosphate to
France. In 1913, the quantity exported to France was one-third of th2 total
export.
' Including re-exports.
— 234 —
Bolovv is Lhe lablu of exports from Belgium to the piiiiciiJal iuipurling counlries
in 1913:
(In thousands of metric tons)
France 103.2
The Netherlands . 68.2
Great Britain . . . 39.4
Germany 28.7
Spain 23.8
Italy 15.1
Denmark 10.4
Belgium exported the remainder to a great number of countries in different
parts of the world.
The chief countries importing French hy[)erphosphate are: Spain (57.4 thous-
ands of metric tons in 1913), Belgium (30.2), Italy (21), Portugal (11.8). In 1913,
France exported 11.5 thousands of tons to her Colonies and Protectorates, 9.7 of
which went to Algeria.
Out of 64.5 thousands of metric tons of hyperphosphate exported in 1913,
the United Kingdom exported more than 27 thousands to her Possessions, 12.700
going to New Zealand. In Europe, the principal countries importing English hyper-
phosphate were: Denmark (more than 12,000 metric tons in 1913), Spain (6.7
thousand tons), Russia (4.8), France (4.2).
The following table shows the amounts of hyperphosphate of lime imported by
the principal countries from 1909 to 1913 :
Hyperphosphate of Lime — Imports
(In thousands of metric tons)
Countries 1909 1910 1911 1912 1913
Europe :
The Netherlands . . . 214.4 237.3 273.4 295.6 270.4
Russia 75.3 120.9 154.7 189.5 196.9
Spain' 177.4 237.3 258.6 161.0 150.2
Denmark — 65.4 87.3 102.1 119.2
France 123.4 132.5 79.4 89.1 100.8
Austria- Hungary . . . 67.4 65.4 62.2 79.5 75.2
Belgium 63.6 69.8 69.6 37.8 28.0
Germany 80.2 78.9 71.1 62.4 53.2
Africa:
Union of South Africa . 14.0 21.5 23.1 2.3 37.2
Algeria 19.7 25.4 36.3 28.2 18.2
Egypt . 2.2 3.3 9.5 11.5 13.1
Oceania : . . . .
Australia 38.5 60.8 63.8 ' 49.2 27.1
Apart from the Netherlands, we see that there were four or live countries in
Europe which before the war were large importers of hyperphosphates.
Among the importing countries we notice a marked increase in Russian import
(236 % in 1913 as compared with 1909); Deniuark's import has also increased.
On the other hand, Spain, France, Germany and Belgium have perceptibly
diminished their imports. With regard to Germany, the decrease can be explained
by the fact that this country has vastly increased her production — a fact which
has enabled her to reduce her import and increase her export.
France, which has also increased her production, although in a lesser degree,
has reduced her export, as we have seen, and has thus also been able to reduce her
im])ort. Belgium found herself in the sanx; position. Sjiain was increasing her
produetion aud had been able to decrease hei' iiujiort; we have seen lliat lliis couutry
expoi'Led no hyperphospliale.
' Including basic slag.
— 235 —
17. While Germany was, as we have seen, the greatest producer of basic slag,
she also, before the war, held the first place as exporter, and Belgium held the second.
Below are given the tables of export and import of basic slag for the principal
countries.
Basic Slag — Export
(In thousands of metric tons)
Germany. . . .
Belgium . . . .
The Netherlands
United Kingdom
1909
1910
i9n
1912
1913
360.9
415.6
499.4
663.0
713.9
416.3
521.5
550.8
681.8
685.9
57.8
101.6
128.7
154.8
197.8
222.3
235.0
199.0
159.7
167.7
1910
1911
1912
1913
195.7
273.1
340.0
438.1
344.3
403.8
372.8
441.1
145.7
145.5
203.5
212.8
131.4
139.6
185.1
186.4
98.8
118.0
1.30.4
144.6
114.2
114.1
118.2
119.3
42.7
47.4
54.2
55.8
16.9
23.0
50.1
52.0
Basic Slag — Import
(In thousands of metric tons)
1909
The Netherlands . . . 154.5
Germany 279.2
Austria-Hungary . . . 153.7
Russia 97.4
Belgium 97.4
Italy 93.1
Switzerland 43.7
United Kingdom . . . 15.5
Before the war, Germany was not only the largest producer of hyperphosphate,
but also the largest exporter and consumer of this product.
In 1913 the production was 2,250 thousand metric tons
» import » 441 » » »
» export » 714 » » »
» stock » 1,977 » » »
Thus, in 1913, Germany's stock was almost equal to the amount produced
in the same year by four other important European producers: Belgium, France,
United Kingdom and Luxemburg.
German export before the war was sent chiefly to the three following countries:
Austria-Hungary, the Netherlands and Russia.
Switzerland, Italy, France and Belgium absorbed the rest.
Germany also imported a large quantity of basic slag, almost exclusively from
Belgium (281,000 tons in 1913), and from France (141.3 thousands of tons).
In 1913, Belgium held the second place as an exporter, particularly as a re-
exporter. While Germany only exported this product to European countries,
Belgium exported to all parts of the world.
Almost half of her export went to Germany (more than 330,000 tons in 1913).
The Netherlands (71.8 thousand tons), Great Britain (68,000), Russia (45,000),
Italy (44,000), the United States (21,000) were amongst the principal customers
of Belgium.
In 1913, Belgium imported 144.5 thousand tons of slag, of which 133.2 thousand
came from France.
We can now tabulate Belgium's stock in 1913:
Production 655 . 0 thousand metric tons
Import 144.6 » »
Export 685.9 » »
Stock • 113.7 » »
We see that Belgium exported even more than she produced.
— 236 —
The United Kingdom largely reduced her export of basic slag and increased
her import. Out of 1G7.7 thousands of tons exported in 1913, 39.3 tons were sent to
the British Possessions. In Europe, Russia (27.5 thousand tons), France (27), Italy
(18.5), Sweden (13.8) and some other countries were in the same year regular
customers of the United Kingdom.
In spite of the increase in her production and the decrease in her export, the
United Kingdom increased her import. In 1913, this increase was 24 % as compared
with the year 1909. Out of 52,000 metric tons imported in 1913, 47.7 thousand tons
came from Belgium. Her stock in 1913 was:
Production 404 thousands of metric tons
Import 52 » »
Export 167.7 « »
Stock 288.3 » ))
AH the other countries, such as Austria- Himgary, Russia, etc., were importing
countries, either not producing at all or not producing enough for home require-
ments.
18. As Germany was before the war almost tlie only country which produced
potash salts, it is not surprising to see that this country was almost the sole exporter
of what is called Stassfurt salt. Until 1914, the export of j)otasli salts from Germany
was on the increase. She retained about 50-60 % of her production for her own agri-
cultural and industrial needs and exported the remainder.
Below is the table of exports from Germany during the five years preceding
the war:
(In thousands of metric tons)
1909 1910 1911 1912 1913
For Agriculture 284.0 406.9 425.7 440.4 467.8
For Industry 32.1 32.3 34.4 40.3 38.3
Total . 316.1 439.2 460.1 480.7 506.1
Tlie United States, tlie greatest consumer of German potash salts, the Nether-
lands, the United Kingdom, Austria-Hungary and Sweden were Germany's most
imj)ortant customers.
II.
POSITION DURING THE WAR.
19. The; war reduced the jjroduction of manures and disturbed the iiujtort
and export trade.
Giuierally speaking, there was a falling off in European production and stock,
which did a great deal of harm to agricidture. However, in a few neutral countries,
as for example in Norway for nitrate of lime, and in Chile for nitrale of soda, we notice
a fairly marked increase of output. Spain iluring the war also increased her output
of hyperphosphates oj lime and of some other chemical manures; Sweden also devel-
oped her manure industry. Outside Europe, we note that the United States and
Japan considerably increased their output of sulphalc of arnniouia and to a certain
extent of natural phosphates and hyperphosphates of lime.
We shall also not(! that tlie United States, wiiich consumed a very large quan-
tity of potash, imported almost exclusively from Germany, during the war deve-
loped her production of thisinaiuu-e on account of the interrujiliou of the Gornum
export.
— 237 —
20. After a slight decrease in 1914 and a more marked decrease in 1915, Chile,
during the last three years of the war, increased her production of nitrate of soda.
The table helow shows the production of nitrate of soda in Chile tluring the war:
(In thousands of metric tons)
1913 2773.5
1914 2464.4
1915 1763.6
1916 2914.5
1917 3011.8
1918 2875.9
It is not surprising to see a decrease in production in the year 1914-15. Before
the war, Chile exported large quantities of nitrate to Europe. In 1913, European
countries imported more than 2,000,000 tons of nitrate of soda. When the war
broke out, the nitrate industries in Chile, disorganised by this event, considerably
reduced their output, foreseeing that there would be a decrease in the export to
Europe. But since 1916, as a result of a marked increase in the export to the United
States, the Chilian industries have been able to resume their production of nitrate.
We must observe that the nitrate served not only for agricultural purposes, but also
for the manufacture of explosives.
Apart from the United States, Chile also found an important customer in
Japan, which during the war considerably increased her import of nitrate.
Below is a table showing export of nitrate of soda from Chile during the war
compared with her production.
(In thousands of metric tons)
1913 1914 1915 1916 1917 1918
Production. . 2,773.5 2,464.4 1,763.6 2,914.5 3,011.8 2,875.9
Export. . . . 2,740.0 1,847.6 2,031.0 2,991.8 2,787.4 2,9.30.7
Stock on 31st
December . 1,772.2* 1,087.9* 789.7* 695*0* 882.6* 812.0
The export from Chile to Europe, as we have already said, decreased during the
war. Countries like Germany, Austria, Belgium and Bulgaria completely ceased
to import nitrate from 1915 onwards.
In 1914, the import of nitrate of soda by European countries was about 1,670
thousands of tons as compared with more than 2 million in 1913. In 1915, European
import was about 656,000 tons; in 1916, there was an increase (864,000 tons), as a
result of the increased importation into France; in 1917, there was again a decrease
(724,000), while in 1918 the total was only 363,000.
Amongst European countries which perceptibly reduced their import of nitrate
we must mention the United Kingdom and the Netherlands.
Below is the table showing the import into these countries during the war:
(In thousands of metric tons)
1913 1914 1915 1916 1917 1918
United Kingdom .... 143.2 174.7 133.6 21.2 1.2 0.3
The Netherlands .... 203.6 149.8 50.9 60.9 55.8 1.1
France reduced her ftnport of nitrate in the years 1914-1915 and 1918 as com-
pared with 1913. On the other hand, she was able considerably to increase her imports
in 1916 and 1917, in spite of the increased activity in submarine warfare.
Below are the French imports during the war:
(Thousands of metric tons)
1913 322.1
1914 297.2
1915 254.0
1916 540.7
1917 453.7
1918. 238.4
* On the Chilian coast only.
— 238 —
Tlie average import during the war was 35G.8, whieli is liiglier tlian in 1013.
A large part of the imported nitrate was used for the manufacture of explosives,
and it should be noted that the sale and purchase of nitrate were centralised by the
Allied and Chilian Governments during the war in a "Nitrate of Soda Executive".
We stated that during the war Chile exported the larger part of her nitrate to
the United States.
Below is a table of tlie imports of the United States during the war:
(Thousands of metric tons)
1913 635.9
1914 550.4
1915 704.6
1916 1238.0
1917 1568.0
1918 1874.8
In 1913, the United States imported nearly 636,000 tons, and the European
countries put togetlier, during the same year, more than 2 millions. In 1918, the
United States imported five times more than all the European countrie.s put together.
21. The European production of sulphate of ammonia decreased during the
war. The two countries Germany and the United Kingdom, which before the
war produced between them about 70 % of the world-output, perceptibly reduced
their production during the war.
Below is a table of the production of these two countries during the war:
(In thousands of metric tons)
1913 1914 1915 1916 1917 1918
Germany 549.0 488.6' 341.3 341.3 281.6 262.7
United kingdom-. . 438.9 432.8 445.0 432.8 250.0 262.1
These figures must not, however, be regarded as authentic.
In 1918, European production was about 565,000 tons, as compared with
more than 1.2 millions in 1913. Thus there was a decrease of more than 50 %.
The export of sulphate of ammonia also decreased in a very large proportion
on account of the marked decrease of the exports of the United Kingdom, which
before the war was responsible for 70 % of the total European export.
Below are exports of the United Kingdom during the war:
(In thousands of metric tons)
1913 328.2
1914 318.4
1915 298.6
1916 263.5
1917 64.0
1918 19.5
The very considerable decrease in British exports is explained not only by the
decrease in production, but also by the increasing difficulty of exporting to Japan,
which before the war was the chief customer of the I'nited Kingdom. In 1913,
the United Kingdom exported to Japan 116.4 thousand metric tons of sulphate
of ammonia, 35% of the total export ; in 1914, the export amounted to 89.2 thousand
metric tons; in 1915, to a litth^ over 10 thousand tons; in lOKi, 9 thousand; in 1917,
4 thousand; in 1918, nil.
Tlie difficulty of exporting and importing during the war, together with the
necessity of increasing the fertility of the soil, resulted in an increase in the Tnited
Kingdom in the use of fertilisers such as suljihate of ammonia and basic slag.
' Total sales effected by TUnion dc vente.
- Total production of ammonia calculated in suliihate.
— 239 —
Before the war, Germany occupiecl tlie second place among the exporters of
sulphate of ammonia, although her export was mucli lower than that of the United
Kingdom.
During the war, owing to tlie decrease in her production and to the blockade,
the export of sulphate of ammonia was stopped.
In Europe, the Netherlands and Sweden, especially the former, were the only
countries which increased their imports. Even for the Netherlands the increase
was in the year 1914 and 1915 only. In 1917, the import was 2.7 thousand tons as
against 31.2 in 1913.
Outside Europe, Japan, the largest importer, showed a great decrease during
the war: in 1914, 105.6 thousand tons as against 111.5 in 1913; in 1915, 19.9; in
1916, 7.2; in 1917, 15.1 and in 1918, 1.1.
The United States, which occupied the second place amongst importing coun-
tries, diminished their imports of sulphate of ammonia during the war, except in
1914, when the import rose to 75.3 thousand metric tons (59.2 in 1913).
In 1915, import amounted to 33 thousand tons; in 1916, 13.2; in 1917, 7.4 and
in 1918, 3.0.
22. The import and export of cyanamide of calciimi and nitrate of lime consi-
derably decreased during the war.
Even before the war, trade in these products was on a small scale. The largest
pre-war importer (Germany) ceased to import these products during the war. France,
on the contrary, has considerably increased her import of these products, although
the quantity imported during the war was poorer than in 1913, in which year the
import may be considered as exceptional in comparison with the preceding years.
With regard to export, we note a considerable decrease in that of Norway,
except for the year 1914.
We give below the Norwegian exports during the war compared with its pro-
duction and consumption:
(In thousands of metric tons)
1914 1915 1916
80.0 80.0 80.0
75.2 .38.6 46.0
6.0 8.0 50.0
A considerable decrease in the Norwegian export is observed. The increase
in production and decrease in export contributed towards the increase in consump-
tion, which, as is evident from the table, is extremely large.
This increase, moreover, is due to the necessity of intensifying the production
of the soil on account of the difficulty in importing foodstuffs.
23. In Europe, omitting Russia with regard to which statistics are lacking,
Spain alone was able not only to maintain her production of natural phosphates,
but even considerably to increase it. The quantities, however, are negligible.
Outside Europe, the United States, which before the war occupied the first
place as producers of phosphates, reduced their production during the war. The
average production during the war was about 2,363,000 metric tons (3,161,100
in 1913).
The decrease is marked, but cannot be compared with the decrease in export.
Before the war, the United States exported a large part of her phosphates, almost
ail to Europe. During the war, in face of the difficulty of exporting to Europe,
the United States began to look for customers amongst their neighbours. In 1917-
1918, exports to Europe amounted to 123,000 metric tons as against about 1.4
millions in 1913-1914. The average yearly export to Europe during the war, from
1914-15 to 1917-18, was 218,000 metric tons.
The heaviest decline has to be recorded in the case of France and Italy, espe-
cially the latter.
Exports to the United Kingdom also underwent a decline, although in a lesser
degree.
1913
Production . .
73.2
Export. . . .
70.9
Consumption.
5.5
1917
1918
80.0
1.30.0
35.9
50.0
50.0
80.0
— 240 —
An incroasp in llie exports to Spain for the year.s J91<')-17 ard 1917-18 may be
noted.
The United States, in view of this unavoidable falling ofl' of exports to Europe,
increased its exports to Canada. Before the war, Canada received an insignificant
quantity of American phosphates. In 1917-18, exports were more than 14,000.
Nearly the same quantity was sent to Cuba, which before the war received no phos-
phate from the United States.
On the other hand, vvehave to record a discontinuance of American export to
Japan. The United States exported to that country in 1913-14 more than 89,000
metric tons. Moreover, Japan reduced all round her imports of phosphate during
the war, but thanks to the increase in output, she was able to make good in part
the decline in imports.
The output and import of natural phosphate in the case of Japan, during the
war, is shown in the following table:
(In thousands of metric tons)
1913 1914 1915 1916 1917 1918
Output. . . . 19.0 38.3 57.7 114.8 121.6 ?
Imports . . . 331.3 285.1 135.8 99.7 155.4 89.5
Stock .... 350.3 323.4 193.5 214.5 277.0 ?
As Japan exports no phosphate, her supply may be regarded as equal to her
production and her imports.
It may be said that Japan is beginning also to become an important producer
of phosphate. The sudden rise from 19.0 thousands of metric tons in 1913 to 121.6
in 1917 is extraordinary. For purposes of comparison, it may be said that, in 1913,
France and Belgium, two of the most important producing countries in Europe,
produced, the former 335,000 tons, and the latter 219.4 thousands.
Tiuiis and Algeria porceptiliiy diminished their output during the war.
(In thousands of metric tons)
1913 1914 1915 191G 191; 1918
Tunis . . . 2,170.5 1,388.2 1,384.4 1,695.3 999.3 819.0
Algeria. . . 461.0 355.1 225.9 389.2' 202.5' 234.8
The exports of these two countries are also declining.
(
1913
1914
1915
1916
1917
1918
1,984.9
1,427.2
1,114.1
1,034.7
612.4
938.1
438.6
355.1
225.9
389.2
234.8
198.5
Tunis . . .
.Algeria. . .
Before the war, France imported from Tunis the larger portion of her phosphate
manures. In 1913, she imported from Tunis more than 706,000 tons out of a total
import of about 941,000. She imported from Tunis more than 35 % of that coun-
try's total export. From Algeria, she imported in 1913 more than 80,000 tons,
representing about 18 % of the total Algerian export.
During the war, on account of transport difficulties, France cut down her imports
of phosphates from Tunis. In 1916, for example, she imported from Tunis only
251.4 thousands of tons, which represents a little more than 24 % of the total
Tunisian export, and from Algeria 233 thousand tons. In 1917, the imports of
phosphates amounted to 134.8 thousands of tons, of which 82.7 came from Tunis
and 36.7 from Algeria.
In these circumstances, France has decided to reserve for herself a certain
percentage of the quantity ))roduced by her colonies and to ration the remainder
among the other l']iM'oj)ean countries. It should be parlicuhu'ly noted that certain
agreements have been reached between Fi'ancc and Italv.
The imports of phosphates from the United States have also sulTered a vary
marked decline for the same reasons. The year 1917 was, in a very special sense,
' Export.
1914
1915
1916
1917
1918
1,600.0
600.0
350.0
243.0
412.0
924.7
912.9
867.7
289.0
480.0
?
685.0
631.5
495.0
584.0
220.0
194.2
315.2
210.6 '
p
350.0
100.0
40.0
?
?
— 241 —
disastrous of importing countries on account of the intensified submarine campaign.
Considerable differences may be noticed between the years 1916 and 1917.
Denmark, which in 1916 imported 108.9 thousands of tons, imported in 1917
only 8.4; Spain dropped from 288.3 to 130.4; France from 285.9 to 134.8, the United
Kingdom from 338.7 to 281.1; Italy from 4.34.7 to 230.2, and Sweden from 86.0 to
1.8. In 1918, on the contrary, an increase may be noted in the case of all these
countries except France.
24. Hyperphosphate of lime, the production of which depends on natural phos-
phate, has been affected by the same changes as phosphate of lime.
The production of hyperphosphate during the war by the leading producing
countries is shown in the following table.
(In thousands of metric tons)
1913
France 1,920.0
Italy 972.3
United-
Kingdom. . . 820.0
Spain 225.0
The Netherlands ?
The output of Germany, Austria-Hungary and Belgium is unknown to us.
The decline in the production and imports compelled the exporting countries
to cut down their exports as well. During the last three years of the war, the exports
of this product became negligible. France, which in 1913 exported 145.2 thousands
of tons, exported only 2.9 thousands of tons in 1918. The United Kingdom, which
in 1913 exported 64.5 thousands of tons, exported in 1918 only 2.5 thousands.
Outside Europe, Tunis, which until 1913 neither manufactured nor exported
any hyperphosphate, began to export this commodity in 1913, and during the war
increased her exports. But already in 1918 this export fell to zero. It may be noted
that Australia also increased her exports of hyperphosphate during the war.
The fall in the output of hyperphosphate was caused not only by the decline
in the production of natural phosphate, but also by the lack of sulphuric acid, which
was in very great demand during the war for the manufacture of explosives.
The United Kingdom, however, made the most successful attempt among the
Allied Powers to keep up the manufacture of hyperphosphate.
25. Germany, France, Belgium and the United Kingdom were the most impor-
tant producers of basic slag before the war.
During the war, the iron industry underwent a marked extension. Accordingly,
it is not surprising to see that in certain countries the output of basic slag has been
practically maintained or even increased; in other countries, the out put hasfallen
oil, but to a comparatively small extent.
Germany, which held the Lorraine Basin, of wliich the iron ores are famous for
their content of phosphorus, was able to produce during the war a sufficient quantity
of slag for her farmers.
In 1913, Germany produced 2,250 thousands of tons of slag (not including
Luxemburg, which alone produced 250,000).
The output of slag during the war (including Luxemburg) is given in the
following table:
(In thousands of metric tons)
1913 2,500.0
1914 2,067.0
1915 1,632.0
1916 1,914.0
1917 1,823.0
1918 1,476.0
First nine months.
16
— 242 —
Germany almost entirely ceased exporting this manure during the war, except
perhaps for certain quantities to some of the countries of Central Europe.
The United Kingdom was able not only to maintain its output of slag but even
to increase it.
From 404,000 metric tons in 1913, an advance was made in 1914 to 480,000,
in 1915 to 495,000, in 1916 to 508,000, in 1917 to 575,000 and finally in 1918 to
590,000 metric tons.
From 1915 onwards, the United Kingdom has imported nothing, and has consid-
erably reduced her exports, passing from 167.2 thousands of tons in 1913 to 134.4
in 1914, 119.2 in 1915, 39.2 in 1916, 1.8 in 1917 and 1.1 in 1918.
Thus, in spite of the cessation of import, the United Kingdom lias been able to
increase its stock of basic slag.
This increase has made good, in part, the shortage of other manures.
No data are yet available as to the production of slag in France, but it may be
presumed that during the war this was negligible, as a result of the destruction or
occupation of the factories of the north.
26. Potash salts, as we have seen, are produced almost exclusively by Germany.
During the war, that country consumed a considerable amount of these salts.
During the first three years of the war, the German production of potash salts
decreased a little, but from 1917 the production increased, and in 1918 it almost
reached the 1913 level.
The production of potash salts during the war was as follows:
(In thousands of metric tons; pure potash)
1913 1,110.4
1914 904.0
1915 680.0
1916 883.7
1917 989.6
1918 1,056.1
The amount produced was employed not only for agriculture, but also for
industry. The quantity supplied to industry, however, was very small compared
to that supplied to agriculture.
The export of potash salts naturally decreased very greatly during the war.
Such quantities as were exported went to a few countries in Central Europe. On
the other hand, the amount of potash salts supplied to German agriculture and
industry steadily increased.
The following table shows the export of potash salts compared with the con-
sumption in the country itself:
Su]iplies to German agricul-
tiu'e and industry ....
Supplies to other countries .
Grand totals ....
(In tliousai
[(Is ul' mel
ric tons)
1'J13
l'J14
1915
I'JIG
I'jil
1918
604.3
537.8
560.8
726.7
834.4
918.6
506.1
366.2
119.2
680.1
157.0
155.2
137.5
1110.4
904.0
883.7
989.6
1056.1
24;i
III.
POSITION AFTER THE WAR.
27. It is rather difficult to consider in detail the trade in, and, above all, the
world production of, the difTerent manures in the post-war period. We must there-
fore give merely a general outline of the question of the principal fertilisers after
the war, using the few documents, mostly official, which are in our possession.
28. Potash manures. In Europe, one of the interesting questions is that of
potash manures, the production of which is concentrated in Germany and Alsace.
In the first months of 1919, .3 to 6 thousand tons of potash per week were sent
from Alsace into France. But the deposits in Alsace are capable of very considerable
development. In view of the rich deposits at Stassfurt, Germany had no need to
develop unduly the productivity of Alsace; it is known that the production of potash
in Germany kept pace with the demand. But the separation of Alsace from Germany
will no doubt allow France to develop the production of Alsatian potash and to
make a breach, as it were, in the practical monopoly which Germany held before
or during the war.
France's ability to deliver her potash at prices lower than those of the Stassfurt
salts must also be noted. The potash salts in Alsace lend themselves to a much
simpler treatment than is the case with the Stassfurt salts, which involve long and
expensive processes ; further, the conditions themselves for the extraction of potash
are better in Alsace than at Stassfurt, where the potash deposits are not as even
as those in Alsace '.
Alsatian potash was in great request in 1920, not only in France, but also in
England and in the United States, which gave large orders to France.
But the world-wide economic crisis since the beginning of 1921 has to a great
extent prevented the rapid fulfilment of these contracts, and as a consequence the
production of potash in Alsace has decreased.
In any case, although Germany remains the largest potash producer, thanks
to its deposits at Stassfurt, and although the "Kalisyndicat" is still very powerful,
the production of Alsatian potash can certainly be regarded as a serious factor in
competition with German potash.
Germany had always fostered her potash industry, and did not cease after
the war to encourage an industry which, before the war, had brought her such large
profits.
Tbe Reichsanzeiger of December 2nd, 1919, pubhshed a decree of November
28th of the same year on the composition of the Imperial Council on Potash and the
Potash Boards, in accordance with the law of July 18th, 1919, on the nationalisation
of the potash industry. The Imperial Council on potash (Reichskalirat) includes
delegates of the employers and workers, representatives of the Federal States and
of the Directors of the "Deutscher Kalisyndicat", etc. The principal Boards are:
the Board of Control, in the Potash Industry, the Board of Appeal in potash ques-
tions and the Technical Agricultural Board on Potash.
It is therefore clear what a complex organisation was created for the protection
of the potash industry in Germany. It must not be thought, however, that the
potash industry in Germany is a State industry; the German State does not produce,
but controls the production.
Nitrates, Phosphates, Potash, by R. T)E Bonarp, Paris, 1920.
— 244 —
The prodiiotioii is in the hands of a Syndicate called "The German Potash
Syndicate, Limited Liability Company". The governing and administrative
Councils of this Syndicate are composed of delegates chosen from the lists drawn
up by the Imperial Council on Potash.
Production considerably decreased immediately after the war. This was due,
to a great extent, to the chaos caused by the fatal termination of the war and by
the Revolution '. The decrease in the production of potash has influenced the
consumption of this manure in Germany. In 1918, Germany used 918,000 tons of
potash, of which 821,600 tons were used for agricultural purposes; in 1919, she only
used about 609,000 tons in agriculture. The diminution in German territory, as a
consequence of the loss of Alsace-Lorraine, must, it is true, be taken into considera-
tion; but, even so, the decrease is still notable. In 1920, consumption was rather
higher — 636,000 metric tons.
The world supply in 191.3 amounted, according to the Kalisyndicat, to 1,110,000
tons in round figures, and in 1919 to 812,000 tons. A considerable decrease took
place in the United States (nearly 250,000 tons in 1913 and 70,000 tons in 1919)
and also in Austria-Hungary (28,000 tons and 2,000 tons) and in the United King-
dom (29,000 tons and 10,000 tons). The decrease of consumption in the Nether-
lands is relatively small (43,000 tons and 30,000 tons), and the consumption in coun-
tries such as Denmark and Norway has even considerably increased, as these
countries were able to import potash more or less easily both during and after
the war.
We must note that France, which before the war consumed very little potash
(about 40,000 tons), consumed 250,000 tons after the war (probably in the year
1919-20) -.
The potash deposits workfed in Catalonia (Spain) should also be noticed. The
discovery of potash in this district dates only from 1913-14. Concessions granted
by the Government are held mainly by Germans. The French and Spanish also
control a few concessions.
The deposits in Catalonia have apparently a great future. They are very
regular and near the surface. The port of Barcelona, which is close at hand, and the
railways which connect these deposits with the most highly cultivated districts
of the West of Spain and the South of France afford excellent outlets for the potash
salts of Catalonia. Catalonian potash will thus also be able to compete with German
potash.
Finally, we must note that the Spanish Government, by a decree dated July 1st,
1914, subjected to State control the production and sale of salts obtained from any
concessions which may subsequently be granted.
Outside Europe, the United States are the most important consumers of potash,
being second only to Germany. In the beginning of 1919, the United States passed
through a critical period as regards the potash industry. During the war, this
industry was able to develop, thanks to the difficulty of importing from Germany and
the high price of potash. But after the war — as early as November 1918 — the
price fell so low that the possibility of bringing cheap potash from Alsace and Ger-
many was contemplated, and in 1919 production decreased.
American producers asked Congress to pass laws protecting the national
potash industry, but no law of this nature has yet been iiitrdduced.
The following table shows the production of pure potash in the United States
in 1919 compared with the war years '*:
(In thousands ot metric tons)
1915 0.9
1916 8.8
1917 29.0
1918 49.7
1919 27.9
' Die Erndhrung iler P/Ianzc, |iiil)lislicii by llip Kalisyndicat, February and March, iy21.
' Rapport general, sur I'induslrie fran(aisr, olc.
' l'ola<:li in l'.)10. WaslnnRloii, 1920.
— 245 —
During the war, and especially from 1916, the import of potash to the United
States came almost completely to a standstill, and since before the war the United
States imported almost 291,000 metric tons from Germany in 1913-14, the amount
produced was evidently not sufficient to cover the deficit in supply due to the
cessation of imports.
In 1919, the amount of potash imported for use in agriculture was rather more
than 115,000 metric tons. It is to be noted that potash was imported into the United
States in 1919 not only from Germany, as was the case before the war, but also
from France, Belgium and the Netherlands. (In the case of these last countries
it was probably a case of re-export.)
In 1919, the United States did not receive the amount of potash which they
had expected to obtain from Alsace and from Germany on account of the difiiculties
connected with transport and the unfavourable conditions for working the deposits
in Alsace, etc.
France, which before the war exported no potash for agriculture, has begun
exporting this fertiliser from Alsace and holds the second place in the list of countries
from which the United States obtained potash.
At present, the United States is endeavouring, in spite of European competition,
to intensify her potash production. The production of potash is greatest in
Nebraska, which could produce more than 200,000 tons of earth per year (50,000
tons of pure potash). It is thought, however (U. S. Geological Survey, No. 347),
that the reserves in this region are not considerable. Larger reserves are found
in California.
In other districts, as, for example, in Georgia and New Jersey, rich reserves of
potash exist in a condition of potential development. In any case it may be pres-
umed that the reserves in Nebraska, California, Wyoming, Georgia, etc., could
satisfy the requirements of the countries for centuries to come. The minutes of
the Ways and Means Committee of 1919 show clearly how great is America's desire
to escape from dependence on Germany — her principal source of potash supply.
In order to protect the national potash industry, a producers syndicate — the
United States Potash Corporation — was formed in November 1919.
29. As has been shown, the two most important producers of phosphates are,
in the first place, the United States and, in the second place, Tunis.
The United States have been able, since the war, to increase their production
of phosphates. It is true that in 1919 there was a decrease in production as compared
with the preceding year, but in 1920 there was a sudden rise, which increased the
production by one million tons as compared with the year 1913.
A table of the production of phosphates in 1919 and 1920, as compared with
that of 1913 to 1918, is given below:
1913
(In thousands of metric tons)
3,161.1
1918.
2,530.7
1919. .
2,275.6
1920. .
4,169.7
In spite of the extraordinary increase in the production of phosphates, the
export of this product, though greater than during the war, has not reached the 1913
level.
(In tliousands of metric tons)
^ , ,. „ . Ratio of export
Production Export ^^ production
1913 3,161.1 1,388.4 44%
1918 2,530.7 146.2 6%
1919 2,275.6 384.8 17%
1920 4,169.7 1,087.1 26%
In 1918, the United States began to export hyperphosphate, and this export
increased considerably in the following years. As compared with 7,000 tons in 1918,
— 246 —
the United States in 1919 exported more than 88,000 metric tons; in 1920, there was
a slight falling off to a little over 82,000 tons.
The Ignited States have thus become exporters of this ])rodiict. It is true that
the quantity exported is small in comparison with the pre-war exports of European
countries, such as Belgium, the Netherlands (which probably re-exported) and
Germany, but among the countries which exported hyperphosphate in 1919 and
1920, the United States come first. A table of the exports of hyperphosphate from
the principal producing countries is given below ' :
(In thousands of metric tons)
Countries 1913 1918 1919 1920
United Kingdom 64.5 2.5 4.0 11.8
Australia 11.9 35.0 17. .3 ?
France 145.2 2.9 ? ?
Sweden 36.0 ? 11.0 42.4
Algiers 7.9 13.2 14.4 ?
Tunis 1.3 0.02 ? ?
United States ? 7.0 88.2 82.3
Japan 18.7 6.7 ?. ?
30. The phosphate industry in Tunis has not returned to pre-war conditions.
The production, as well as the export, is lower than in 1913, but higher than in 1918.
Data with regard to the export of phosphates from Tunis are given below:
(In thousands of metric tons)
1913 1,985
1918 938
1919 1,130
1920 1,480
It would be interesting to make a comparison between the years 1919 and 1920
and the year 1913 %vith regard to the countries to which Tunisian phosphate was
exported.
Of 1,985 thousands of tons which were exported in 1913, France and Italy
received the largest share: France 690,000 tons and Italy 458,000 tons. Great
Britain received only 181,000 tons and Germany 185,000; the other countries
together, 467,000.
The table of exports for the years 1919 and 1920 supplied by the Central
Chamber of Agriculture and Commerce of the Protectorate is as follows:
(Thousands of tons in round figures)
1919 1920
France 484 792
Italy 335 368
England 242 143
Spain 37 25
Portugal 18 26
Austria — 5
Czecho-Slovakia — 10
Poland — ' 12
Total (including other countries). . . 1,130 1,480
In 1913, France received nearly 35 % of lhi> lotal Tunisian export. In 1919,
the quantity imported was nearly 43 % of Ihe total Tunisian export, and in 1920
nearly 54 %. It will be soon, iluu-ofore, that the sliare of France in the consumption
of the Tunisian phosphate maniu-cs is constanliy increasing.
' Imperial Mineral Resources Bureau, London, 1921. For some countries, the figures given are
dilTcrent from lliuse siiovvn in the Inlemalional Year Book of Agricultural Statiittics.
— 247 —
The French Government has drawn up each year a place for the distribution
of the Tunisian phosphate export, determining at the same time the amount to be
exported to France.
Italy's share has recently been increased on condition that Italy shall send
workmen to Tunis to assist in production.
With regard to phosphates, it should be noted that the United Kingdom,
Australia and New Zealand have recently signed a convention to work the phos-
phates in the Island of Nauru; mandated territory (formerly a German colony).
Under this Convention phosphates from this Island will in tiie first place be
sent to the three signatory countries; any surplus may be exported, but at a price
higher than the home price '.
31. Nitrates, as we have already said, are used not only as manure, but also
for the manufacture of nitric acid and explosives. This exjilains the scarcity of
this product in certain countries during the war.
It is true that nitrate obtained by synthetic processes was competing more and
more with Chilian nitrate.
Before the war, Germany was the greatest producer of synthetic nitrate.
We have no complete information with regard to the production of synthetic
nitrates, but it can be said that it is insufficient to compete with Chilian nitrates. We
can only add that the intensive production in Germany during the w-ar was due
to the fact that that country had to meet the deficiency caused by the impossibi-
lity of importing nitrate from Chile.
32. Besides Chile, mention must be made of some other countries which pro-
duce nitrate of soda, and of India, which produces nitrate of potash. But their
production cannot be compared with that of Chile, whose known reserves are esti-
mated, according to the "Chile Nitrate Committee's Report" at more than 245
million tons.
During the war, Chile's nitrate production was, except in 1914 and 1915,
greater than that of 1913. In 1919, we note a very great reduction, but already in
1920 a large increase can be observed, although production was less than in 1913 '.
(Thousands of metric Ions)
1913 2,773
1918 2,876
1919. 1,672
1920^ 2,509
The decrease in the production for 1919 is due, according to the report of the
president of the "Producers of Nitrates Association", not only to the disorgani-
sation of the world's trade arising from sudden cessation of the war, but also to the
absorption of the large stocks which were held by the belligerent countries.
The export of nitrate from Chile has fluctuated with its production, the lowest
being in 1919. In 1920, the export was greater than production, greater even than
in 1913 \
(Thousands of metric tons)
1913 2,740.0
1918 2,930.7
1919 933.4
1920 2,790.7
' International Chamijer of Commerce, First Congress, London, 1921: Matieres premieres
Brochure No. 7, Paris.
'•^ The figures for 1910 and 1920 are taken from tlie Imperial Mineral Resources Bureau;
The Mineral Industry of the British Empire and Foreign Countries, London, 1921.
* Provisional data.
' The figures for 1919 and 1920 are taken from The Mineral Industry of the British Empire
and Foreign Countries, London, 1921.
— 248 —
111 the liscal year 1919-1920, the United States imjjorteLl 921 thousands of
metric tons of nitrate — a total less than in tlie preceding year, but, even so,
greater than in 1913, when the United States imported only 636,000 metric tons.
France also consumed a large amount of nitrate of soda, but she also reduced
her imports in 1919 and 1920. In 1919, she only imported 166,000 tons — halt of
the amount which she imported in 1913; in 1920, the imjiort was greater — rather
more than 260,000 tons.
The United Kingdom imported nearly 150,000 metric tons, thus exceeding
her 1913 import, which amounted to 143,200 metric tons.
Among European countries, the United Kingdom — with the exception of
the Netherlands — is the only country which has been able not only to import the
same quantity of nitrate of soda as in 1913, but even to exceed it.
33. The year 1921 was marked by a new crisis of nitrate. At the beginning
of the year, the Association of Nitrate Producers recommended a limitation of
output in Chile, owing to tlie decrease in the demand. This crisis continued
throughout the year.
The stoppage of exportation has resulted in new labour troubles as well as in
a crisis in the exchange.
This latter crisis is easily understood in view of the fact that the nitrate industry
is the only exporting industry in this country.
IV.
SUMMARY AND CONCLUSIONS
Before the war, nitrate of soda or Chilian nitrate was one of the most important
manures. In view of the ever-growing success of this fertiliser, its production
increased enormously during the fifty years preceding the war. Chile supplied
the whole world and this industry constituted her ]>rincipal _source of revenue, the
government levying an export duty. Almost the total production was exported,
chiefly to Germany and the United States.
Sulphate of ammonia, which is also classed under nitrogenous manures, is
produced in countries where the mining and metal industries are develojied, as the
waste products of these industries supply the raw material for the manufacture
of sulphate of ammonia.
Before the war, Germany occupied the first place in the production of sulphate
of ammonia, the second place being held by the United Kingdom. Germany,
however, exported loss on account of her greater consumption.
Cyanamide of calciuin was not inncli us(>(l before the war as a manure, although
its world production was considerable. Germany ociiipied the first, and Norway
the second, place as European producers. Outside Europe, the United Stales were
the greatest producers, and they were also the greatest importers.
Nitrate of lime is the last important nitrogenous ju-oduct, and its production
centres in Norway. Its use in agriculture spread more and more and thus stimul-
ated it, which greatly increased in the years immediately ju'cceding the war. A
Norwegian association with agents in all parts of the w(H'1(I ciinlrolled the sale of
nitrate of lime. Most of it was absorbed by the North {''.uropeaii cduntrii^s antl by
Gei'niany.
249
II.
Phosphate manures are extremely vahiable in agriculture. The United
States and Tunis producetl the greater part of tiie world's phosphate, and exported
large quantities to all parts of the world.
France and Belgium were responsible for almost the whole European production
of phosphate, but they also imported; France, in particular, imported from Tunis,
owing to the inferior quality of French phosphate. Mention should also be made
of Algeria and some of the Pacific Islands, particularly the Nauru Islands.
The greatest reserves are in the United States; the Federal Government grants
concessions for the exploitation of phosphates. It appears that Morocco also has
large phosphate reserves.
Hyperphosphates of lime and basic slag are the last two important phosphate
manures. Before the war, many countries produced hyperphosphates. Up to
1913, the principal producers were France, Germany, Italy and the United Kingdom;
but in 1913, the United States became the greatest producers.
Basic slag was produced in greatest quantity in Germany, which owned the
Lorraine Basin, where the iron ore is remarkable for the great uniformity of its
phosphate content.
III.
Potash manured were manufactured exclusively by Germany, whose salts of
potash at Stassfurt are so well known. Alsace owns rich deposits, but before the
war Alsace was responsible for only an insignificant part of Germany's production.
The production of potash in Germany was in the hands of a cartel supervised
and protected by the State.
Being almost the sole producer of potash manures, Germany was practically
the only exporter of this product, reserving about 50 % to 60 % of her production
for her own consumption. The largest amount was sent to the United States, the
greatest consumers.
IV.
The war has very considerably altered the position as regards production as
well as the flow of import and export of manures. The United States, Japan and
Chile have, generally speaking, increased their production, as have also certain
neutral countries in Europe; but on the whole, world production, and even more so
European stocks, appear diminished.
In the years 1914 and 1915, Chile, afTected by the adverse situation, reduced
her production; in the following years, however, she increased it owing to the devel-
opment of the export trade to the United States and Japan.
Nitrate of soda was used to a very large extent during the war in the manufac-
ture of explosives.
We note a great decrease in the production of sulphate of ammonia by the great
pre-war producing countries: Germany and the United Kingdom. The United
Kingdom, which chiefly exported to Japan, has decreased its export of sulphate of
ammonia and increased its consumption.
Norway has increased her production of nitrate of lime to a very great extent,
and has, on the other hand, decreased her export. Her consumption has risen
considerably.
The United States have reduced their production of phosphates and also to
a very much greater extent their export, particularly to Europe. On the other hand,
the United States have been able to develop the export trade with Canada and Cuba.
The export to Japan has greatly diminished owing to the fact that Japan has herself
begun to intensify her production.
Both the production and the exports of Tunis and Algeria are rapidly dimin-
ishing. Accordingly, France has reserved a percentage of her colonial production
— 2nO —
for her own use, and distributed the rest among the other countries. Agreements
have been entered into with Italy.
Hyperphospliate of lime followed much the same course as natural phosphates:
a deci'easc both in production and export. The decrease in production was due not
only to the scarcity of the most important raw material — natural phosphates —
but also to the scarcity of sulphuric acid, which was used for the manufacture of
explosives.
Thanks to the development of the iron industry, basic slag has been largely
used in agriculture during the war. The United Kingdom has even increased pro-
duction.
France probably had to decrease her output on account of the occupation of
her factories in the north.
The trade in slag stopped almost completely during the war. The United
Kingdom exported only very small quantities.
Germany has not much reduced her production of potash salts. On the other
hand, export was very slight, and consignments were only sent to a few countries in
Central Europe. Germany largely increased her own consumption. The United
States, which were the largest consumers of German potash, have begun to work
their own, inferior, deposits.
One of the interesting questions concerning chemical manures in Europe after
the war is that of potash manures.
France, having recovered possession of Alsace, may largely develop the potash
industry in that region, which possesses rich reserves, and thus put an end to the
monopoly exercised by Germany.
Germany continues to devote much attention to her potash industry. In 1919,
an Imperial Council on Potash (Reichskalirat) was created, including delegates from
workmen and employers as well as delegates from the management of the" Deutsche
Kalisyndikat ".
The production as well as the consumption of potash in Germany has decreased
since the war. Nevertheless, the German consumption remains four times greater
than that of all the other countries put together.
It should he noted that there are deposits of potash in Spain (Catalonia) which,
when developed, may also compete with Germany. In 1914, the Spanish Government
put the production and sale of potash under State control.
In the United States we notice a marked tendency in favour of protecting the
national potash industry.
To protect its potash industry a syndicate (the " United States Potash Corpor-
ation ") was formed in 1919.
VI.
The United States have also been able to develop tlieir output of phosphates
since the war, but, in spite of important increases in production, the American
export, although larger than that of the years during the war, has not reached
the figure^for 1913.
The phosphate industry in Tunis has not returned to pre-war conditions, although
the production and export in 1920 w'ere larger than those in 1918.
We note the large share of Tunisian exports received by France. In 1913, export
to^France was 35 % of the total Tunisian export; in 1920 nearly 54 %.
The French Government each year draws up a list allocating the Tunisian
export of potasli. Italy's share has recently been increased on condition that she
shall send workmen to Tunis to assist in production.
It should be remarked that the United Kingdom, Australia and New Zealand
have signed a convention to work the phosphates in tiie Island of Nauru (Pacilic;
mandated territory which was formerly a German colony).
It has been settled that the phosphates from this island shall in the first place
be consigned to the above three countries, that any excess may bo exported, but at
a price higher than the home price.
— 251 —
VII.
The production of and trade in nitrate underwent a crisis after the war. In
1919, the crisis was largely due to the disorganisation of the world's commerce and
also to the existence of large stocks of nitrate in the Allied countries. In 1920, there
was an increase in the production and export of nitrate. The export in 1920 was
slightly greater than in 1913.
In 1921, we are witnessing a recurrence of the crisis, with a consequent fall in
prices and with disastrous effect? on the Chilian exchange.
i
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