Vital changes have occurred in the situation of the chemical industry throughout the world on account of the blockade of Germany. In 1912 the exports of chemical products from Germany amounted to approximately $205,000,000 while those from Great Britain were but about $105,000,000. Japan was an importer of most of the staple chemicals, her production being negli gible. The position of Germany depended partly, no doubt, upon her abundant supply of raw materials such as potash, but more upon the superiority of the Germans in applied science, upon the protection of her processes by secret patents, and upon business organization.

The chemical industries of Germany have been fairly prosperous during the war. The loss of the export trade, which amounted to one-third of the whole, had a depressing effect for a time, but later the expansion of the explosives industry and the increase of other war orders relieved the situation and fully employed the plants. With the war orders ended, however, the export market will be needed as much as ever.

The most significant thing about the chemical situation is the stimulus that the stoppage of German supplies has given to the chemical industries of other nations. The great development of the industry in the United States has already been discussed.1 Production has also been greatly increased in Great Britain. Before the war the British industry was in the hands of a number of relatively small concerns, but there has been a decided movement toward concentration in both the general chemical and the dye-making branches. The Levenstein Company was the largest of the dye companies at the outbreak of the war. The British Dyes Company was organized by a number of consumers with 1 Chapter III.

the aid of capital furnished by the Government.

These two companies have now united, with the Government exercising its regulatory control.

When imports of chemicals into Japan were shut off, the Government undertook systematically to increase the home production, with considerable success. A profit

of eight per cent. was guaranteed by the Government to producers engaging in chemical manufacture under certain conditions. A chemical research laboratory was established under official patronage. There has been a large increase in the Japanese production of sulphuric acid, caustic soda, sulphate of ammonia, chlorate of potash, glycerine, alcohol, acetic acid, and other chemicals. The high price of dyes after the outbreak of the war, together with the increasing demands of the textile manufacturers led to the development of a considerable Japanese dye industry. About 650 small companies were organized from 1914 to 1917, but there were numerous failures. Several larger interests controlling the gas and electric industries have taken up the manufac ture of dyes as a by-product with greater success. Their combined product is estimated at about 60,000 pounds monthly, but the number of available chemists is inadequate, and doubt is expressed as to the future of the industry under competitive conditions.

The German textile industries have also felt the effect of their isolation. Germany is dependent upon foreign sources for raw materials for all branches of textile manufacture. Shut off from these sources, the Germans have turned to the production of textile substitutes. The most important substitute used was nettle fibre. Substantial sums of money have been invested in nettlefibre concerns. Good fabrics are said to be made from it without any admixture of cotton. Wood fibre has

been used as a source of cellulose, which in turn is used in making both explosives and paper yarns. A material called textilen, composed of 90 per cent. paper and 10 per cent. cotton, has been used in making some forms of military equipment.

In spite of the utilization of substitutes the production of textile fabrics has decreased materially in Germany during the war and the supply of clothing and fabrics has become very low. Just how serious a shortage exists is illustrated by the request made by the City Union of Hotel Keepers at the time of the Leipzig Fair in 1918 that prospective guests bring their own towels and bed linen.

The enforced closing of the mills and their adaptation to substitute materials which apparently have little permanent, competitive value have crippled the German textile industry. Furthermore, the market for the sort of goods that the Germans exported, important among which were cotton specialties such as laces, hosiery, and gloves, and woolen lightweight dress fabrics, velvets, and plushes, has passed into other hands, and all the lost ground will have to be contested for again.

The war activities of the various nations have caused many industrial readjustments. We find, for instance, many new industries in Great Britain and an active interest on the part of the Government in their mainte

Other industries long established have been forced to conform their interests to war needs. Vast war orders materially altered British industrial conditions. Sir Albert Stanley, President of the Board of Trade, stated that although the nature of the output was very different, the aggregate output of industry during the war was not materially less than before the

war. Many industries, he said, had completely changed their products and processes, and more than one-half of all people employed had been engaged on work on Government account. These facts signify that the greater part of British industry was on a war footing, and that the readjustment to a peace basis is no small task.

The submarine interfered with shipping. Ships were needed for the immediate services of war, and restrictions were frequently placed on British export industries in order that the entire industrial energy of the nation might be more effectively mobilized to serve war needs.

The textile industry in Great Britain was considerably affected by the war conditions. During a part of the period there was a shortage of raw cotton. This was particularly true during the summer of 1918, when the British ships were so exclusively engaged in the transport of American troops. This shortage, of course, will soon be relieved. The war made conspicuous the dependence of the British cotton industry on American raw cotton, and this stimulated interest in the movement, started before the war, to increase the production of cotton within the Empire. The resolutions of the Paris Economic Conference, which proposed to use raw materials for bargaining, also added to the interest in this matter. Many in Great Britain have felt that their country should not be subject to the political and economic conditions that might result from a control of an essential raw material by another country. Egypt is the chief source of raw cotton within the Empire. Its crop was commandeered by the British Government during the war.

2

2 Quoted in full in Appendix II.

The British cotton industry before the war relied very largely for its prosperity on its export trade. The war diverted a substantial part of the product from its prewar destinations to the supplying of the immediate military needs. The best markets for British cotton fabrics are India and the Far East, these regions importing over half the entire exportation. By far the greater amount of this trade has been held during the war, yet a very considerable amount of the Indian market has been taken over by the Indian and Japanese manufacturers. The Japanese have, in a large degree, supplanted the British in the Chinese market. The British Board of Trade Committee on Textile Trades after the War in speaking of the Chinese trade says:

We regard as almost inevitable the gradual elimination of most British grey goods with the exception of the finest standard qualities, and expect more severe competition in the coarser qualities of white shirtings and "T" cloths; but to counterbalance this we look for a considerable expansion in the shipments of the finest grades of bleached goods, and a greatly increased trade in dyed, printed, and woven-fancy articles.

war.

The importance of iron and steel in the carrying on of war has stimulated these industries everywhere, and has caused important changes in the course of trade in such goods. The British steel industry has been materially affected. It was making little progress before the The industry was not closely organized, being broken up into a number of independent concerns, and it had for some time been failing to keep pace with the highly organized and growing German steel industry. Such has been the pressure of war, however, that in spite of difficulties with regard to the labor supply, the production of steel increased from about 7,700,000 tons in 1913 to between 10,000,000 and 11,000,000 tons in