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sloth, neglect, intrigue, and dissension. A keen sense of danger, on the other hand, is the most powerful unifying factor known to history. The hostility of Austria united Switzerland, Hungary, and Italy and is uniting the Southern Slavs. The hostility of France united Germany. The hostility of England united the quarrelling American Colonies and creaeed the United States. The hostility of Germany is welding the British Empire into an indissoluble whole.

Wars, though disastrous to individuals, often prove a blessing to nations. They unite and toughen men. They prepare them for the struggle of life both in the military and in the economic sphere.

Success in trade and industry, as in war, depends after all not so much on the possession of dead resources as on the intelligence, ability, energy, and industry of men. Most men are born idlers. They prefer ease and comfort to physical and mental exertion. Hence they dislike and oppose change and progress. Necessity is the mother not only of ingenuity and of invention but of labour and of thrift, and therefore of economic progress and of wealth. Herein lies the reason that the countries most blessed by Nature are often the poorest and the least progressive. Great Britain's former industrial predominance was founded not in peace but in war. It was created, as I have shown in the previous chapter, during the period 1775–1815. Of these forty years thirty were spent in colossal wars, the war with the American Colonies and their European allies, and the gigantic war with Republican and Napoleonic France. These wars gave to Great Britain her late preeminence in commerce and industry. Necessity, especially the enormous increase in taxation, made vastly increased production indispensable. It led to the introduction of the steam engine, of modern industry, of modern commerce, of modern agriculture, of modern transport, and of modern capitalism. It brought about the industrial revolution.

Peace and ease have almost unnoticed deprived Great Britain of the foremost industrial position which she had obtained during the Great War, and which now is possessed by the United States. The present War should not only unite the British Empire but should once more give to the British people the foremost position in the economic world, provided they make wise and energetic use of their opportunities. On the other hand, the United States, far from enriching themselves at the cost of the fighting nations, far from coining the sweat and blood of the Allies into dollars, may, through peace and ease, fall a prey to that fatal self-complacency and stagnation from which political and industrial Britain has suffered for decades and from which she has been saved by the War. Before long the Great Republic may begin to stagnate and decline and become a victim of her undisturbed material prosperity. It seems not impossible that, owing to the War, the United States will henceforth decline, not only politically but economically as well, while Great Britain will once more become economically the leading Anglo-Saxon nation.

Let us now consider the economic effects of the War upon Great Britain and upon the Empire as a whole.

In the chapter on ' Britain's War Finance and Economic Future,' I showed by means of irrefutable figures, which have attracted the attention of the principal technical papers and of many eminent industrialists, that the American workers in factories, mines, &c., produce per head from two to three times as much as their British colleagues engaged in the same callings; that the vastly greater output of the American workers is due to the employment of far more powerful and far more efficient machinery, better organisation, a greater desire for progress on the part of the manufacturers, and a comparative absence of a deliberate limitation of output on the part of the workers. I showed that Great Britain could double and treble her income and wealth by doubling and trebling her enginepower upon the American plan and by improving her organisation. I showed that she could easily pay, and more than pay, for the War by Americanising her industries. Since the time when those words were printed 1 the Americanisation of British industry has begun. The pressure of necessity has brought about many of the necessary changes. The British employers have been awakened to the need of progress and reform, and the British Trade Unions have abandoned in part their fatal policy of restricting output and antagonising improved machinery.

Before the War the United Kingdom had, in round numbers, 18,000,000 male and female workers employed in agriculture, industry, commerce, domestic service, &c. Since then about 6,000,000 men have joined the Army and Navy, while, according to Mr. Montagu's statement made in the House of Commons on August 15, 1916, 2,250,000 men and women are engaged in making munitions under the Ministry of Munitions. If we estimate that, in addition to these, 750,000 men and women not under the Ministry of Munitions are engaged on war work, it appears that the War has reduced the number of British workers by exactly one-half. However, the loss in man-power is probably not 50 per cent. but about 60 per cent., because the youngest, the strongest, and the most efficient workers are either in the Army and Navy or engaged on war work. The consumption of the country is about as great as it was in peace time, for, while private demand for goods is smaller here and there, the reduction effected by the economy of some is probably counter-balanced by the increased spending on the part of the workers, and especially by the enormous demands for ordinary goods for the use of the Army and Navy. The British exports for the first seven months of 1916 were, but for £10,000,000, as large as those during the corresponding seven peace months of 1914, although, allowing for the rise in prices, they were considerably smaller.

It therefore appears that with only one-half of her workers Great Britain produces now approximately as large a quantity of ordinary goods as she did with all her workers before the War. In other words, the output per worker has approximately doubled. Necessity has led to more intensive and more scientific production, to better organisation, to the introduction of the most modern methods and of the most perfect machinery, not only in the manufacture of munitions of war, but in ordinary manufacturing as well. It has been stated that during the War the United Kingdom has imported £200,000,000 worth of American machinery. The vast advance made in manufacturing will no doubt be of permanent benefit to the nation. The new and efficient processes will not be abandoned for the old and wasteful ones. Mr. Montagu stated in the House of Commons on August 15, when describing the activity of the Ministry of Munitions, according to the verbatim report :

1 September, 1915.

Old-fashioned machinery and slip-shod methods are disappearing rapidly under the stress of war, and whatever there may have been of contempt for science in this country, it does not exist now. There is a new spirit in every department of industry which I feel certain is not destined to disappear when we are at liberty to divert it from its present supreme purpose of beating the Central Powers. When that is done, can we not apply to peaceful uses, the form of organisation represented by the Ministry of Munitions ? I am not thinking so much of the great buildings which constitute new centres of industry, planned with the utmost ingenuity so as to economise effort, filled with machines of incredible efficiency and exactitude. I wish rather to emphasise the extent to which all concerned—and each section is vital to our objects—are co-operating to obtain the best results from the material in our hands. We have the leaders of all the essential industries now working for us or co-operating with us in the Ministry. The great unions render us constant assistance in the discussion and solution of difficulties, whether with our officers or within their own body. On technical questions of the most varied character we have the advantage of the best expert advice in the country.

We have in being, now that British industry is organised for war, the general staff of British industry. I am sure that we should sacrifice much if we did not avail ourselves of that staff to consider how far all this moral and material energy can be turned to peaceful account.

Sir W. Essex, a great industrialist, said at the same sitting :

I think the products of this Armageddon are going to be real and substantial. I know the price we shall pay for it will be enormous, but we shall not begrudge it, or a tithe or a hundredth of it, but a great by-product will be that our mechanical industry and our chemical industry, and all the industries which are touched-and hardly an industry is not touched more or less intimately—will have been revivified, modernised, and invigorated to an incredible degree, and that must of necessity react on the whole industrial work of our Empire, and will not only maintain, but enormously enhance all the advantages which as a manufacturing nation we have hitherto enjoyed.

These men (the leaders of industry who are co-operating with the Ministry of Munitions are going up and down, week in and week out, month in and month out, energising the thousands of factories which are under the control of the Ministry of Munitions, bringing them up to date in their workshop methods, making them acquainted in many cases I know with tools, the like of which they had no previous knowledge of save by hearsay, bringing them up also to new methods, new systems, and organisation until—this is the common testimony of many of the proprietors of these factories—'We did not know our business until we got linked up with the Minister of Munitions.' You are able by this aggregation of the manufacturing industries of the country here employed to level up the whole, and that, I take it, would be a by-product of incalculable value to the industry of this country, and must enormously affect it for good and make for our advantage in the future competition with other races of the world.

The necessity of war has not only vastly increased the

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