and 142 ways, 70 per cent. of which were used for the construction of naval vessels. By November, 1918, the number of yards had about trebled, and there were 398 ways. During the same time the number of yards for building wooden ships was quadrupled and the number of ways grew from 73 to 418. Four immense fabricating yards have been created for the construction of ships, the standardized parts of which are made elsewhere. Five Government-owned yards are producing concrete vessels.

The year 1917 was one of preparation, but the Emergency Fleet Corporation was turning out vessels rapidly by the end of 1918. In 1916, the best shipbuilding year before our entrance into the war, less than 300,000 deadweight tons of shipping, steel and wood, was produced. During the year ending August 31, 1918, 1,800,000 deadweight tons of steel ships was completed, and 9,113,880 deadweight tons was contracted for. On November 1, 1918, 493 steel vessels of 3,374,616 deadweight tons were actually under construction. During the last five months of 1918 one wooden ship a day was being turned out.12

Perhaps no war-time industrial change presents so many problems as does that of our mercantile marine. What will be the effect of peace upon the building programme? Apparently there is no thought that all the new yards will be kept going at the present rate. They are emergency creations and many of them have been constructed with the idea of but temporary use. It is probable, however, that a considerable part of the shipbuilding industry will be maintained.

Several factors enter into this consideration.

One is

12 The foregoing figures are taken from the second Annual Report of the United States Shipping Board, December 1, 1918.

the relative cost of building ships here and abroad. The large-scale production here, especially the building of the fabricated ship, has prepared the way for a lowering of the construction costs, when normal conditions. return, to a point that will probably permit competition with foreign-built vessels. But it is a question whether there will be a demand for such large-scale production after the war.

This introduces the problem of operating costs of shipping. The demand for tonnage may be so great for a few years that no problem will arise, but eventually ordinary competitive conditions will be restored. It is not now apparent that that time will find American shipping more favorably situated than before the war, when American shipping was largely driven from the high seas. But political as well as economic factors must be reckoned with. There is a possibility that the restrictive legislation that has hampered American shipping may be modified. On the other hand, something like the American requirements may be accepted as an international regulation, although this is extremely unlikely. Such a step would tend to equalize operating costs. A more likely solution of the problem is the granting of a Government subsidy paid by general taxation on the theory that it is desirable from a national standpoint for America to have a strong merchant marine. A further possibility not to be overlooked is that of the continued Government operation of the ships. In the latter case the industry may be maintained even at a loss.

A large American merchant marine is such a powerful weapon for the furtherance of both commercial and political aims that the fate of the American shipping and shipbuilding industry is of vital importance.

The organization of American industry for the purpose of equipping, transporting, and supplying the armies in the field and in the training camps effected changes of a permanent and significant character. Production has been more diversified; unusual calls have been made on the resourcefulness of American manufacturers; stability and security have come to some branches of industry which had not hitherto possessed them. Unquestionably, America is now stronger industrially than she was before the war. The effect of the war changes has been, on the whole, constructive. justments will no doubt be necessary. It is not to be expected that all the added capacity will be continually employed. The haste of war production has left some inefficiency and wastefulness in labor and materials which competition will have to eliminate. But America's position is strong. She occupies a more influential place among the nations because of her economic power. This makes the commercial policy of America of great significance. She may use her power in the interests of narrow nationalism and exploitation and become a bulwark to the influences of world imperialism. Or, as we hope, she may use her strength to support a diplomatic policy that will establish in the world the true ideals of democratic control and government.

CHAPTER VI

EFFECT OF THE WAR ON INDUSTRY ABROAD

Industrial effect of the devastation of Belgium and FranceGerman chemical and textile industries as illustrating the war's effect on Germany's industrial life-War demand in Great Britain and her textile and steel industries - Problems of her export markets-Japan's industrial expansion during the war- Her steel industry Her shipbuilding - Her cotton industry- Increased effectiveness of Japanese competition Scientific research, business organization, and labor.

There is scarcely a business undertaking in the world that has not been affected by the war. The labor force, the character of the products, the markets, the sources of materials, all these have been disturbed. Many of the changes were but incidents of the war, and will cease to be effective after a brief transition period. Indeed, such will be the normal course of events. Those who have looked for a revolutionary transformation in the world of commerce will doubtless be surprised at the rapidity with which trade will fall back into something like its old channels. At certain points, however, the old course will not be resumed. There have been important commercial changes wrought by the war that will be permanent, and these changes will modify materially the competitive conditions under which American industry will operate.

The devastation wrought by the war in the industrial regions of France and Belgium will leave its impress on industry and trade for years. Mere invasion is by itself a sufficiently destructive factor, but to it was added in

the case of our unhappy allies the wanton destruction and systematic pillage of village, factory, and mine. Villages were razed to the ground. Personal belongings, tools, and materials were carried off. Machinery vas removed to Germany. Factories were stripped of netal and equipment. Mines were flooded. Railways were torn up, and the rails were twisted beyond hope of future use. And worst of all, the people were either deported or left to eke out a miserable existence on American and Allied charity or on the little they might save from German greed.

The destruction in the war zone of northern France was almost complete. Throughout a large region containing 20 principal towns and hundreds of villages in the heart of industrial France, little is left but ruins. The Belgian steel furnaces were almost totally destroyed and most of the modern textile mills were rendered incapable of use either through wanton destruction or through the removal of motors and other machinery.

Even though these areas are accorded a prior right to the raw materials and labor of the world, as they will be, the task of rehabilitation is a long one, and for several years it will consume the best energies of the Belgians and French, and will prevent them from competing with their former vigor in international trade.

More far-reaching effects on industry and trade have resulted from the isolation of Germany. The industries of that country have suffered serious loss, both absolutely and relatively. Many of them relied heavily upon foreign countries both for raw materials and for markets. The blockade was thus a double blow in that it limited the supply and rendered the market uncertain for the products of many of Germany's greatest industries.