they received the degree of preference they were entitled to, having in mind the end in common, and that their course was made as smooth for them as possible. Beyond those friendly limitations they were free agents and made or marred their own records. Yet the fact that the Inter-Allied Purchasing Commission regulated the flow of credits from the Treasury gave the War Industries Board a general power of direction and manipulation that it did not have over the purchasing agencies of our Government. It had more authority at the source, at least in the way of advice that would command respect. In a very true sense it was the disburser of the ten billions of dollars that the Allies received from the United States.

The men who measured the flow of this golden flood had had large experience in big business, but Mr. Legge, for example, was amazed at the colossal buying powers for war. One of the first orders he had to deal with was one for the British Government for $52,000,000 worth of six-inch gun shells. Fifty-two million dollars in one order for one item! When we consider that this approximated one third of the normal annual net earnings of the world's greatest corporation and more than the entire cost of the Revolutionary War, we begin to understand what fifteen billions (including private credits), so placed that it reversed the old international position of credits and debits, meant. The largest national debt in the world before the World War was that of France, which was about $6,000,000,000, virtually all held at home. A single national bond issue of a billion dollars was never known before the recent war, and such an international credit between governments as ten billions would have been considered preposterous in sensational fiction. Is it any wonder that the outpouring of American wealth into the scale pans of the Allies disturbed the balance of the world more than the armed weight of two million soldiers?

Yet the War Industries Board, in supervising for the Allies the expenditure of the cost of twenty-five Panama Canals, was attending to only about one third of the total of its work as measured in dollars. All the costs of the Federal Government since the Revolutionary War were not equal to the amount spent and loaned by the Government of the United

and to tighten the embargoes against trade with Germany. In the case of Chile, the shifting of its source of supply of manufactured goods and financing from Europe to the United States made it possible for the United States to secure control of the Chilean nitrates without which the war could not have continued.

Thus the United States in reality played a triple economic part in the war. It had to meet its own civil and military needs, an indispensable proportion of those of the Allies, and such part of the requirements of the neutrals as would make them economically contributory to the Allies. In a very large way the United States was the cohesive force which kept the whole economic structure of the world from falling into ruin. In the final analysis the major part of this tremendous task fell to the War Industries Board. When at last the chairman of the Board became the arbiter of priority that is to say, the allocator of the products of American industry — he automatically tended to become the central, though undesignated, distributing authority of the internationally derived commodities of the entire world outside of the Teutonic alliance.

The growth of this international power and its efficient application necessitated that the War Industries Board should be ably and authoritatively represented in Europe in close touch with the Inter-Allied Munitions Council and with those British agencies which thitherto had dominated the control of certain materials that were obtainable chiefly within the British Empire or were British-owned. Another consideration that demanded the projection of the War Industries Board into Europe was the need of far more economical use of shipping in the interest of the common cause. A third was the need of seeing to it that American materials, often supplied to the Allies at the cost of much deprivation and hardship to American industry of a non-war nature, were husbanded and faithfully used by the Allies for war and not for private trade purposes. A fourth need of representation abroad was the conviction that the American Expeditionary Forces were calling for or were receiving certain kinds of supplies far in excess of current or reasonably anticipated requirements. Finally, the A.E.F. had need of

CHAPTER XIV

AMERICA AND WORLD WAR ECONOMICS: THE FOREIGN MISSION AND INTERNATIONAL EXECUTIVES

Buttressing the world's economic structure - Baruch demands reciprocity from the British - The Foreign Mission lays its plans - The British Government meets Summers-Austen Chamberlain and Winston Churchill coöperate Seventy-five million dollars saved - Summers takes charge of a meeting Conserving steel for war -The story of two million shoes.

So commanding was the economic strategic position of the United States in the Allied coalition that it was inevitable that the American economic control should tend to become that of the whole alliance. Considered as an agricultural, mining, lumber, and manufacturing unit, the United States approached more nearly to self-containment than any other nation. In no other country, available as a base of supplies for the Allies, was it possible for them to satisfy so large a proportion of their needs.

In some commodities, such as steel and copper, the American sources were virtually the only ones available to the Allies outside their inadequate domestic productions. In other commodities, such as foodstuffs, that were available in large surplusages in distant British dominions and in South America, the extreme shortage of shipping made it necessary to put a tremendous strain on North American supplies, for owing to the shorter route the limited transport facilities could render greater service. Under these artificial conditions the United States, which had almost ceased to be an exporter of meats and wheat and its products, became for a time again an exporter of them in unprece dented volume.

The United States was also the one member of the antiTeutonic coalition that was in a position to impel the economic assistance of the politically neutral nations. In the case of the Scandinavian countries, for example, the United States was in a position, as the price of that modicum of supply that was necessary to their existence, to assist in the diversion of such exportable goods as they had, to the Allies,

and to tighten the embargoes against trade with Germany. In the case of Chile, the shifting of its source of supply of manufactured goods and financing from Europe to the United States made it possible for the United States to secure control of the Chilean nitrates without which the war could not have continued.

Thus the United States in reality played a triple economic part in the war. It had to meet its own civil and military needs, an indispensable proportion of those of the Allies, and such part of the requirements of the neutrals as would make them economically contributory to the Allies. In a very large way the United States was the cohesive force which kept the whole economic structure of the world from falling into ruin. In the final analysis the major part of this tremendous task fell to the War Industries Board. When at last the chairman of the Board became the arbiter of priority that is to say, the allocator of the products of American industry-he automatically tended to become the central, though undesignated, distributing authority of the internationally derived commodities of the entire world outside of the Teutonic alliance.

The growth of this international power and its efficient application necessitated that the War Industries Board should be ably and authoritatively represented in Europe in close touch with the Inter-Allied Munitions Council and with those British agencies which thitherto had dominated the control of certain materials that were obtainable chiefly within the British Empire or were British-owned. Another consideration that demanded the projection of the War Industries Board into Europe was the need of far more economical use of shipping in the interest of the common cause. A third was the need of seeing to it that American materials, often supplied to the Allies at the cost of much deprivation and hardship to American industry of a non-war nature, were husbanded and faithfully used by the Allies for war and not for private trade purposes. A fourth need of representation abroad was the conviction that the American Expeditionary Forces were calling for or were receiving certain kinds of supplies far in excess of current or reasonably anticipated requirements. Finally, the A.E.F. had need of

business advice and judgment in its extensive purchases in Europe, which could hardly be expected to be available to it without outside assistance.

It is difficult for Americans to understand that in the fourth year of the World War, and even after the United States had been a party to it for upwards of a year, the British control of production, distribution, and prices was far weaker and much less extensive than like control in the United States. It is something of a shock, too, to find that throughout our first year in the war our Government in its foreign requirements was treated by the British Government precisely as if it were a British civilian in the matter of prices. In such commodities as the British Government had put under price-control there was one price for the Government and another for civilians and private industry. The United States Government had paid the civilian's price, though from the first the United States had made it an invariable rule that all prices established for governmental buying should also prevail for civilians and for the Allies.

The prime purpose of the Foreign Mission was to put an end to this inequality. This purpose was frankly disclosed to Lord Reading, the British Ambassador at Washington. He opined that the Mission was a very disturbing factor in international relations. Mr. Baruch informed him, with the directness of a business man, that the United States could no longer tolerate the continuation of such an inequity as that we should lend the Allies immense sums with which to purchase goods at a restricted and controlled price, whereas we were denied equal price treatment by them. This meant that unless reciprocity were effected American financial support would be withdrawn from the Allies.

A further step was the insistence that the British should take under price-control certain important commodities that they were still permitting to run wild. These proposals were unpleasant to the British Government, for the coalition war machinery of England was highly responsive to the power and demands of its commercial interests; and the economic side of the war was considered from a materialistic angle undreamed of in America. It was this fact that accounted for the anomaly of no price-regulation at all