The Detroit times., 1916-05-03
~ J. LAURENCE LAoHLiN
(lead az the DepsPtmeat 81 Political
EcOnomy In the uatveFslty Of

CBlCo8osD
three articles by Professor Laughlin
~ The Duration OF the European
Having in the first paper OF this
series made q survey OF the basis OF
economic exhaustion. It is now pos
sihle TO study the staying power OF
country like Germany. more or
less cut OF from foreign trade. and
OF countries like Great Britain and
France, with ports open to their
own shipping or that OF other ma
tons.
Money and forms Of credit serve
In the exchange Of goods: they do
not, however, increase the quantity
of goods, which feed men and sup
port industry. Fundamentally. In a
case like that OF Germany. the mat
ter Of supreme moment Is her Ca
pacity In producing actual goods to
supply both the civil and military
population. Money and methods OF
finance are, as distinct from actual
goods, mere bookkeeping.
The situation In Germany--and
Austria. Hungary-may be illustrated
by the accompanying diagram. The
total output arising from Its capital.
labor. and resources furnishes the
products X and Y for the total con-
sumption OF Germany's civil and
military population OF about $1,000
900. In times or peace part OF
these products are exported. and by
foreign trade the square at the up
per left hand corner Is added to the
total sum OF products. II this nor
NAL situation be contracted with the
changes produced by the dislocation
of industry due TO the present war.
We shall be able TO see at once how
the war is eating out the vitals OF
possible industry and staying power.
The Changes Made by War
The obvious change appears in the
disproportionate increase in the
quantity OF products now produced
for war purposes, Y. as contrasted
with X. Perhaps the total output at
The start may have been as large as
before. except that foreign trade
and shipping were soon wiped out.
Soon. however. a large part Of the
labor force was Withdrawn from In
dustry and sent into the field. SO
that the total output. X plus Y. was
reduced at least so per cent, IL not
more--with the possible exception
OF foodstuffs. The imperative need
of large Y must inevitably reduce
y. the possible consumption OF the
= 100000 civilians. In Germany
alone nearly 100000 men land In
AustriaHungary 5.00O,000) must
have been put into the field, thus
taking away a very large percentage
OF the labor force.
Moreover. in the year to Aug /,
1915. the losses In MEN to Germany
were estimated at 100000 land
about the same to Austria. Hungary
permanent subtraction from the
labor factor In production. To the
present time. the additional German
losses must have been at least 600s
900 more in the actions since Aug
ust. 1915, in France, Poland. Galicia,
and Serbia. On the othed hand, II
must be stated that a million or
more OF prisoners captured from the
enemy could have been used as an
Offset TO laborers withdrawn from In.
dustry. In addition, as shown pre-.
viously. the factor OF objective cap
ital goods has been enormously re-
duced, with little opportunity for re-
placement. AS regards materials
10 be used In products for both X
end Y there must have been great
reduction. Hence Pill the three fac
tors of production In Germany must
have been very largely crippled;
consequently the total X plus Y OF
products was also diminished; and
yet 1t has been necessary to in
crease Y at the expense Of x.
Conditions In Britain and France
Applying the same method to
Great Britain and France, we find
marked difference due to the fact
that their ports are open to foreign
trade. British and French capital
has been destroyed as well a. that OF
Germany; but. by drawing on other
countries and by forms of credit, the
actual destruction of objective capt.
tai goods has been and can be, re.
placed az long as the allies have
credit and purchasing power In neu.
trail countries like the United States.
In Great Britain some 100000 men
were withdrawn from industry;
while the losses in men to August,
1915. were about 100000; now, about
$4,000. In France the Withdrawals
of men to the front amounted TO
about 100000 and the losses In
men have been estimated at 1,400,'
600 TO August. 1915. BY this time
there must be 100000 more.
As regards materials for industry
CT for making of munitions there is
30 scarcity because Of open ports.
rhus Great Britain and France can
maintain their products for civilian
and military and naval needs to any
amount, limited only by some scar
city of labor; but any such limita-
ton of production can be filled up
by importation. With them. then,