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DEBTS BEFORE THE WAR The public debts of the belligerent nations just before the war, expressed in United States money, were as follows: Austria-Hungary......

......... $3,709,534,000 Belgium and Congo......

795,785,000
Bulgaria.

135,300,000
France and Colonies................ 6,469,894,000
Germany, States and Colonies..... 4,945,314,000
Great Britain, India and Colonies.... 8,307,442,000
Italy ................

2,669,748,000
Japan.....

1,271,745,000 Portugal.......

968,324,000 Roumania.

294,061,000 Russia and Finland ...

4,639,305,000 Serbia.

128,078,000 Turkey....

554,441,000 United States..

1,027,575,000

In this table Austria-Hungary is charged with the joint debt of the two countries and with the separate debt of each; Germany is charged with the imperial debt, the various state debts, and the colonial debt; Great Britain alone bore much less than half the debt charged to her with India and the colonies; the United States is charged with only the national debt and not with any of the state debts.

GREAT LOANS QUICKLY TAKEN The principal European belligerents promptly voted enormous credits for carrying on the war, to which the people responded with a readiness far beyond normal anticipation. Loans were generally far over-subscribed, though they amounted to billions each. Down to the beginning of 1917 the cost of the war to the various nations was estimated in round numbers as follows:

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Total to all the Allies.................$41,144,000,000

Germany.........
Austria-Hungary.
Turkey .......
Bulgaria.............

.... $14,600,000,000

5,000,000,000
650,000,000
375,000,000

Total to Central Powers.............. $20,625,000,000

Grand total to all belligerents ...... $61,769,000,000

This total was calculated to be nearly three times as much as the aggregate cost of all the wars of the world since the American and French Revolutions, including the Napoleonic wars, our War of 1812, Civil War and war with Spain, the Crimean War, the Austro-Italian and Austro-Prussian wars, the Franco-German War, the Russo-Turkish War, the Boer-British War, the Balkan wars, and the Russo-Japanese War. At the beginning of 1917 the daily cost of the war to the allies was $70,000,000 and to the Central Powers $35,000,000, a total of $105,000,000 a day.

It can readily be understood, then, what it meant to the allies to have the United States join them and vote at once an initial credit of $7,000,000,000, the largest sum ever voted at once by any government in the history of the world; of which at least $2,000,000,000 was to be loaned forthwith to the European allies.

LOANS AND TAXES . These enormous war expenditures have been chiefly met with borrowed money, but they have been in part met directly with increased revenue from taxation, and in a much larger part than had been supposed possible. Thus from August 1, 1914, to March 15, 1917, the British Government borrowed $15,328,000,000, while at the same time it raised $5,205,000,000 through taxation. Thus it met more than twenty-five per cent of the war expenses through taxation, without borrowing or increasing its indebtedness, an extraordinarily large proportion. In France the war will have cost, on June 30, 1917, the sum of $16,580,000,000, of which $2,420,000,000 will have come from taxation, or about 14.5 per cent.

Germany, on the other hand, until lately made no increase in taxation, but depended exclusively upon loans. The theory of this system was, that Germany would conquer the allies and compel them to pay indemnities sufficient to redeem all her war loans. All that was necessary therefore was to borrow money until the end of the war, and then make the conquered nations pay the debts. Germany also extorted—in plain English, stole-enormous sums from Belgium, which she added to her war chest. She also had the advantage of keeping all her money at home. The blockade of her coasts prevented her from purchasing supplies abroad, and so no money was sent out of the empire, save comparatively small amounts to Denmark, Holland and Turkey. By the spring of 1917, however, Germany had incurred indebtedness the interest upon

which was $747,000,000 a year. Now the entire revenue of the empire before the war was only $634,000,000 from taxation and $260,000,000 from railroads, posts and telegraphs; wherefore a considerable increase in taxation was necessitated, to meet the interest charges on the debt.

AMERICAN SUPPLIES FOR THE ALLIES The allied powers have from the first been looking to the United States for a great part of their supplies, both of munitions of war and of foodstuffs. The result has been an enormous increase in the foreign trade of the nation. Our exports had ranged from $2,170,000,000 in the fiscal year ending June 30, 1912, to $2,716,000,000 in that ending June 30, 1915; but in the next year, the first full fiscal year of the war, ending June 30, 1916, they increased to $4,272,000,000; an increase of 57 per cent in one year.

Still more significant was the destination of this trade. Our exports to the Central Powers of Europe practically ceased, while those to the allies enormously increased. Thus before the war we had sold $335,000,000 worth yearly to Germany, but in 1916 that amount shrunk to only $288,851. On the other hand, our exports to France rose from $146,000,000 in 1913 to $630,000,000 in 1916; those to Italy from $76,000,000 to $270,000,000; to Russia from $26,000,000 to $313,000,000; and to Great Britain from $597,000,000 to $1,518,000,000. There was also a great increase, for a time, to certain neutral countries: To Denmark from $18,000,000 to $55,000,000; to Norway from $8,000,000 to $53,000,000; and to Sweden from $12,000,000 to $51,000,000. It was quite obvious that this increase could not be required to supply the needs of those countries, but, as they were in close commercial intercourse with Germany, that the enormous surplus above their own requirements was being transshipped to the latter country. It was on that perfectly logical and just ground that the allies interfered with that trade and prevented unlimited imports into neutral lands having trade relations with Germany.

EXPORTS OF MUNITIONS OF WAR Significant, too, was the character of our trade. Thus animals, chiefly horses and mules, rose from $7,000,000 in 1913 to $99,000,000 in 1916; brass and brass ware from $8,000,000 to $164,000,000; vehicles from $54,000,000 to $167,000,000; chemicals from $26,000,000 to $124,000,000; explosives from $5,000,000 to $467,000,000; iron and steel from $304,000,000 to $621,000,000; leather from $63,000,000 to $146,000,000; woolen goods from $4,000,000 to $53,000,000; and zinc from $406,000 to $48,000,000. These changes could have only one possible meaning. The United States was supplying the allied powers with a large proportion of their munitions of war. .

There was also a large increase in our exports of foodstuffs of various kinds, though this was not so marked as the increase of munitions because the surplus above our own needs was limited. But so much was sent abroad as to cause an enormous rise in the domestic prices of food. Never before in our history did prices rise so high as in the spring of 1917. The gold prices of wheat and potatoes then were considerably higher than they had been in depreciated paper currency during the Civil War. The highest price of wheat in depreciated paper scrip in the Civil War was about $2.85 a bushel; in April, 1917, it rose to $3.10 in gold.

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