of wealth, but by the utilisation for immediate consumption
of wealth which would have been used as new capital,
and by the withdrawal of probably close upon fifteen
million men from production during the period of the
war. Even if we assume that the world has lost
the production of only twelve million men, the
loss is enormous. If each man were capable of
producing, on the average, wealth to the value of L100
per year, the loss of production per year during the
continuance of the war would be about L1,200,000,000.
The effect of these factors will be heightened by
the fact that the millions of men whose needs during
the war have been satisfied by their non-combatant
fellow-countrymen will be thrown upon their own resources.
And though Europe will still need to be fed and clad
and housed, the effectual demand of the population
for the goods and services it needs, a demand which
it is able to satisfy because of its possession of
exchangeable wealth, will be smaller than before the
war. The demand will be more or less stifled
until the credit system is re-established and mutual
confidence restored, and until industry and commerce
have adjusted themselves to the new situation.
The volume of employment in this country during the
war will have been swollen by temporary demands for
war supplies which will cease when the war ends; foreign
trade will be uncertain; a larger number of soldiers
will be thrown on the labour market than ever before.
It would seem, therefore, that in the absence of special
steps, the volume of unemployment at the close of
the war will be a good deal greater than during the
progress of the war.
[Footnote 1: The number must be larger than this,
as the mobilisation of the armies of neutral states
should be taken into account.]
[Footnote 2: It is thought by some that the war
will be followed by a short boom, when Europe will
make good the necessities of industry and civilised
life, but it is at least doubtful whether there will
be a rapid reproduction of these commodities, owing
to the conditions, already described, which will obtain
at the close of the war. In any case, however,
it will be merely a flash in the pan, and there will
follow the gloom of a deep depression, unless there
is clear-sighted State action.]
It is just conceivable, though one hopes not probable,
that the economic effects of the war will be complicated
by the imposition of war indemnities. The indemnity
is really a means of obtaining booty from a vanquished
State, and has been looked upon as a justifiable means
of further humiliating an already beaten enemy.
It has been pointed out, however, that the advantages
derived from an indemnity are not an unmixed gain.
The indemnity recoils on the heads of those who impose
it. It is unnecessary here to enter into a consideration
of the detailed effects of huge payments by defeated
nations; though it may be remarked that the ramifications
of such payments are so intricate and often so incapable