LETTERS TO THE EDITOR.
ECONOMIZING.
LTo THZ EDITOR or THY "SnEcTrron.-1 SIB,—With a view to understand the need, and suggest the direction, of economizing at the present crisis, I propose to examine how this war affects the living of the nation.
(1) Some few industries will not suffer at all, namely, those whose demand continues and increases during a war:—the builders of warships and the innumerable trades which equip them ; gun, small-arms, and ammunition factories ; those which regularly supply the stores and commissariat of the two Services. The payment for all these comes from us, the tax- payers ; and the more capital and labour are employed in these industries, the less we have to live on. But these industries work full time, and, one may add, soldiers and sailors, of course, get their wages.
(2) Certain industries which provide entirely for the home market, and get their raw material at home, may not be affected. But these must be fewer than one thinks, for their customers will not be able to buy as freely as they did. The landed interests will suffer least; but even the honest farmer will experience a diminished demand when we all begin to tighten our belts, and consider how little meat, vegetables, bread and butter, we can live on.
(3) Certain home industries, which used to divide the home market with foreign competitors sending in similar goods, will get an increased demand. For instance, if communication with America is interrupted, American boots and shoes cannot get in, and our shoemakers will have the field to themselves; even they, however, may suffer to the extent that the country for the time does with fewer boots and shoes.
But, probably, these three categories exhaust the list of industries which will be unaffected or but little affected. All the others will suffer loss, either directly by the war or from the- necessary economizing. Till a great dislocation between nations occurs, we scarcely realize bow many of our greatest industries depend on material from abroad. With the countries which provide it we may not be at war, but, if communication is interrupted, the mills close and the source of wages and profits is shut down all the same. Nor do we realize how- much of our output is for sale abroad. Many of our industries have no home custom at all, and if, as is probable, the goods made—like- cotton umbrellas, for instance—are unsuitable-for home use, these industries come to a standstill so far as communication is stopped. And seeing that a considerable- proportion of the product of all our industries depends on foreign sale, either directly or through merchants here, and as it is not likely that the stoppage of the foreign demand will be compensated by a diversion to home trade, all industries will suffer to that extent. The export trade in coal, for instance, will be sadly curtailed; so will the use for shipping bunkers, at the same time as the people at home do with fewer fires and the furnaces are damped down.
To the extent that these industries are affected, all the trades which buy and sell and carry dieir products will be curtailed or stopped. That is to say, the great distributive industry of the country will share in the common loss. Even the home railway will suffer in diminished goods traffic, at the same time as fewer passengers travel for pleasure purposes. Shipping will suffer in the same way. So will banks—and it should be remembered that banking stands at the very heart of all credit, and that, unless the banks realize how great is the national responsibility thrown on them to give, so far as possible, the old facilities, they might cause a cataclysm com- pared with which everything else would be trifling.
Personal services also will be limited. Taking the profes- sions as type, their activities, so far as they depend on fees, will be regulated by the dispensability or non-dispensability of their services, and by the ability of their clients to pay; so far as they depend on endowments, by the dividends accruing from those endowments—if endowment funds, for instance, are sunk in house property, the salaries of univer- sities, churches, hospitals, and the like will have to suffer or be paid by pledging their future.
This hasty and incomplete survey brings out two things. One is that the- nation, although it is not, like the unhappy Continent, devastated by a "business" which stops everything else, is going to suffer grievously by this most unrighteous war, quite apart from the loss of Dreadnoughts and human life, and that no man can afford to stand aside and say: "This does not concern me." We shall have the most active motive to sympathy, common suffering, and the most active motive to execrate those who have caused it. There are three things for which those who brought it about will have to answer to God and man—and I say it with reverence, and with more confidence than armed men of the big battalions appeal to the Almighty as their mascot. One is that they are sending up in smoke and flame the rich accumulated heritage of the past, leaving the world poorer for many things that can never be replaced. The second is that they are sowing bad blood and bitter hatred between nations, making men worse as spiritual beings, making it an imperative duty on millions of peaceable-people, who have no earthly quarrel, to let the life out of one another. Third, and not least, they have stopped the ordinary happy work of the present world, by which, we hope, man gets- the education and preparation for a better, and have turned for the time all his energies into keeping alive. There is no scholar or teacher who believes in his subject but thinks that the German. Emperor's work is not so valuable as his own. He would rather, shake hands with the crippled cobbler than with the one who ran his sword through him.
Why should our "progress to heaven" by quiet work be interrupted to save the "honour" of a man who has made a mistake and is not big enough to apologize and go back ?
We must remember that we live on our income, not on our capital, and that this income will be indefinitely cut down. When a people in old times was driven to war to defend itself, it lived for the time on its capital, and it did not feel the pinch till its flocks and herds and harvest crops gave out. But we feel the pinch from the first day of the war, because our national income—the total of all our incomes—is a great flowing stream of wealth from organized industry, and many of the sources of that stream are suddenly shut off. (No one, I hope, thinks that the money income is anything but the calculation form of the real income of goods and services produced during the year for the living of the people.) True, a great deal of our natural resources and of our concrete capital will be in themselves unaffected. The mineral deposits are beyond the waste of war. So is the abundant treasure-house of the sea which supplies us, in normal times, with many millions' worth of food. So long as the country is uninvaded, the factories and machinery are only in the same position for months as they are every night and every holiday. And this reminds us, happily, of the strong position of those who own capital or securities repre- senting such capitaL The price of these may go down, but the holders have only to " sit tight" and not sell, and the price will come back to its old level whenever the war 18 over But the income will be lost. Capital will be paralysed ; labour will be unemployed ; the great stream which feeds us from day to day will have dried up.
Now this latter suggests the immense difficulty of the problem with which we are faced—not a week or a month hence, but to-day. Every one of us makes an income by meeting the wants of other people ; and we all, working together, get an income by giving an income—living, as the old saying has it, by " taking in one another's washing." Every income-making that is stopped means the stoppage of an income-spending, and every income-spending that is stopped means the stoppage of an income-making. But many of us have been making an income by supplying wants that may very well go unsatisfied in times of national stress; others economize on this ; there is no demand for us and our income stops ; we have nothing to spend; and some other income, which was made for us to buy, stops also. Every one of ns feels the conviction that he must " economize," but to be sure on what he may economize with the least harm will require thoughtful and responsible consideration if our well- meant economies are not to cause greater hardship to others than to ourselves. And the heart-breaking result is that, at a time when wealth accumulated from the past is being annihilated, and when it would seem every man's duty to work harder to make up the loss, many of us—perhaps most— find that there is no demand for the only kind of wealth which we can supply. If there is no demand for anything but rifles and food, what can a University Professor do to fill up the gap which the German Emperor has made P—I am, Sir, dtc.,
WILLIAM SMART.
[Professor Smart, as the majority of our readers no doubt know, is one of the soundest and ablest of British economists, and any communication from his pen will always be welcome in the Spectator. We venture to think, however, that he is unnecessarily, we will not say pessimistic, but gloomy. Is he not forgetting that the real, the essential, source of wealth is human energy ? But human energy is often quickened by war. If we all work harder owing to the war, and most of us mean to, we shall soon catch up the waste even of battles like that which is raging in Belgium as we write.—En. Spectator.]
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