New Challenges in International Trade: 1914 - 1929
When we look at the size of the various economies up to the eve of the First World War, we see a change in the ranking of European economies from 1870 to 1914. We see that the United Kingdom began the period 1870 with overwhelming domination following its success in the first industrial revolution giving it the strongest economy in the world. The second wave of industrialization allowed Germany to increase the size of its economy and overtake the United Kingdom in absolute size.
Some specialists speak of a British decline even if it must be said that it is a relative decline. The British economy continues to grow, but compared to the growth rate of the German economy, there is a relative decline compared to the Germans.
One of the worrying aspects of this economic growth of Germany for the British is that with regard to certain sectors considered strategic as the steel industry, we see that the German success is particularly striking.
This graph shows steel production in thousands of tonnes. We see that the United Kingdom remains dominant as an iron and steel producer. We see a take-off on the part of Germany following the beginning of the second wave of industrialisation which offers the possibility of producing steel in mass which is a very important product in the second phase of industrialisation.
In the early 1890s, Germany surpassed Great Britain in its productive capacity. Steel is used in railway construction, in the construction of buildings, but also in the manufacture of armaments. There is a real obsession on the part of the British who are watching the development of the steel industry in Germany with great fear. On the eve of the First World War, the British were already very worried about this change in economic rankings.
Germany shows its capacity to develop its economy by confronting all the principles which are dear to the British during the 19th century. The high German customs tariffs opposing the free trade of the British and in terms of competition within the economy, German cartels oppose the free competition of the British.
Germany is an economy that is developing very quickly, faster than the British economy and on the basis of principles completely different from the principles that are dear to the British. Germany is becoming an ideological competitor, an economic competitor and a political competitor.
Consequences of war for international trade
The term First World War indicates the geographical coverage of the countries involved in this conflict. This enormous and unprecedented geographical coverage, involving 35 countries on 5 continents. This reflects a battle of empires that involves colonies and dominions. When we look at the sizes of the different armies, we see that Britain's Indian army is larger than Britain's own army. It's also an imperial war. In French we speak of the "Grande Guerre" and in English of the "Great War". We are talking about 60 million combatants, mobilizing important military and economic networks, this is a war that is leading to enormous destruction.
The mobilization for war is leading to major efforts to increase the level of agricultural and industrial production in all the belligerent countries. There is an important economic mobilization for all the countries involved in this war. We need armaments, steel, increasing transport capacity, we need new rails, replacing existing rails, wagons, we need a lot of things to make the war economy work.
Even if increasing production is the objective of all the belligerents, namely industrial production and agricultural production in order to feed the population, the army and the industrial workforce, despite these objectives shared by everyone, there are obstacles to increasing production such as the extent of the labour shortage. There are bottlenecks in the economy because there is a shortage of labour needed to increase production.
There are shortages in terms of primary materials and therefore especially for economies that depend heavily on the outside. By analysing the evolution of international trade up to the eve of the First World War, trade in primary materials represents up to 60% of international trade on the eve of the First World War involving an economic dependence towards the outside for their primary materials. With a war, this dependence creates a significant risk for foreign dependent economies like Britain for wheat and Germany which is increasingly dependent on imports to feed its population.
There are difficulties, moreover, in countries like France where fighting is going on, there is major material destruction, destruction of infrastructure making it difficult to make the economy work. It can be said that the objective of the belligerent countries is to increase production.
If we look at steel production, which is a very good example because steel is important not only for the manufacture of armaments, but also for the manufacture of railway networks and motor vehicles.
A lot depends on steel giving a good idea of the capacity of these countries to develop their production. In the case of Great Britain, there is much success in increasing steel production, but this is a difficult challenge. For France, this is not possible because of the destruction, the shortage of coal making it difficult to manufacture enough steel to manufacture weapons and run the economy. For Germany, this is in between the two with less success than the British and more than the French.
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We can see a decrease in German production, an increase in British production. Even in 1918, we see that the British were not capable of producing at the same level as the Germans.
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Far from the battlefield, it is possible for the United States to significantly increase its steel production and to use and export it.
In terms of merchandise balances, we see the surplus in the United States. Until 1913, it was a country that exported a lot. If we add the consequences of the First World War, the impact on the US economy is unprecedented.
This complexity explains why when we ask ourselves about the economic consequences of the First World War for the belligerents, the answer depends on which country we are talking about.
In the context of France, this is a bad thing. The real raw country falls. Compared to 1913, in 1918, there was a decrease in the size of the French economy meaning that the war weighed on the French economy. In contrast, there is the United States and the United Kingdom where war makes work, moreover there is no destruction related to war. In 1918, war was seen as something rather good for these economies. However, this situation will not be that good in the post-war period.
When we talk about the Napoleonic wars and the blockade, we are talking about technologies that are all different. During the First World War, the blockade was almost total for some countries. The aim is to block international trade, the supply of economies, but also the possibility of selling products on international markets. There are technological instruments to do this, but we also see that there are other measures that prevent normal merchant marine operations, making international trade much more difficult. There are significant obstacles to the normal functioning of international trade.
We can see the consequences of these obstacles. There has been a decrease in the arrival of merchant vessels reflecting the blockade and other uses of vessels. There is no doubt when we talk about a difficult environment for international trade.
However, it is possible to see differences between countries. When we look at the exports of the belligerent countries except the United States, if we take Great Britain and measure the importance of exports as a percentage of GDP, we see a decrease in the importance of exports from 20% to 12%. For France the same can be observed with a fall in exports from 14% to 9% of GDP. For Germany, it is estimated that there is also a decrease.
However, as far as Allied imports are concerned, they remain very high despite the blockade. The Allies were more successful than the Germans in keeping international trade routes open to supply their economies. There is relative success on their part in terms of their access to imports. For Germany, the situation is much more different, because practically nothing happens in Germany with international trade almost completely blocked.
If we look at German food imports, Germany is more and more dependent on the outside world to feed its population until the First World War. As Great Britain we see a trend towards an increasing external dependence on imports, especially wheat, from Germany.
The consequences of the blockade on imports are apparent. There was a very significant drop in imports in 1916 and until 1918.
The challenge of feeding its population pushed Germany to launch the submarine battle. It was in this situation that the Germans showed themselves ready to provoke a new battle in 1917 despite the fact that there was a fear that this action would provoke the entry of the United States into the war and that was indeed what was going to happen. The German elites are in an increasingly desperate position because the blockade makes it very difficult to feed the population.
There is a very difficult situation, but a more effective blockade for some than for others.
The French managed to import more in 1917 than in 1913, showing the success of the allies by keeping the trade routes open. If we look at the sources and origins of these imports, we see the increasingly important role not only of Great Britain but also of the United States. At the end of the war, 1/3 of French imports came from the United States.
This case shows that there is a difference between the Allies and Germany in their access to international trade during the war. There are various trends.
The United States is a special case, first a neutral country and then a belligerent country. The United States played both roles during the war. The war is rather favourable in terms of consequences for its merchandise balance reflecting the fact that the United States is very rich in natural resources, and it is a very important industrialized country.
For some neutral countries like Canada, there is a strong increase in exports, for Japan there is also a strong increase in exports. For Brazil, for example, which produces coffee that is not necessarily necessary to wage war, Brazil does not take advantage of the outbreak of war in Europe to increase its exports. The situation is different for Chile, which exports grains, meat and copper. Depending on the export structure of the various countries, we can predict what we will find if we look at the impact of the war on their international trade.
The growth in demand that war stimulates and leads to various changes. During the war, there was strong technological development in the aeronautics field and the possibility of applying the technology to new uses was found. After the war, a new dynamic settles down in the aeronautical field creating at the end of the 1920s more and more commercial transports based on the plane.
Other consequences are different for former industries such as the steel industry. War causes an increase in the level of production, but once the war ends, demand changes. In industry, a problem of overcapacity is emerging which is a challenge to be filled in developed countries such as Great Britain and the United States. There are other cases with the arms industry where there is a problem of overcapacity.
Such an analysis must be balanced with an analysis of material destruction. In France, we do not see the same one because there is not the problem of steel overcapacity because quite simply some factories are destroyed during the war. We must not only understand the dynamics of each industry, but also see what balance the country must find.
To summarize the economic consequences of the war for the First World War, when we look at the situation of manufacturing production shares at the global level. Between 1913 and 1929, there was a fairly significant change in Europe's role in global manufacturing output. We see a decrease in the importance of Europe and an increase in the importance of other countries. The war reinforced the industrial dominance of the United States already existing before the First World War. Europe is giving way. There is a very important change for the Japanese economy in full development at the time.
The importance of the United States as a new world hegemon must be emphasized, and we will see that its attitude towards Great Britain will have an important influence on its trade policy during the 1920s.
As far as world agriculture is concerned, we see that farmers outside Europe are also taking advantage of the war to increase their capacity. We are talking about the United States, which is both a major agricultural producer and a major industrial producer. We can also add Argentina, Australia and Canada, which benefit greatly from the war as an agricultural country. Immediately after the war there is a restructuring crisis, because with an increase in agricultural capacity during the war there is the risk of overproduction. After the war there is a crisis of restriction characterized by a very strong fall of the countries which is also found in other sectors of primary materials. In the United States, the price of wheat per tonne was $36 before the war, rising to $95.5 after the war, and then the price fell by half to $53.7 during the restructuring crisis.
This crisis did not move on a definitive solution to the problem of agricultural overproduction in the world economy and throughout the 1920s, agricultural overproduction weighed heavily on the price of wheat and other agricultural and primary commodities. This is becoming a sensitive point in the global economy. When there is a recovery in agricultural production in Europe, it adds to the problem because we are overproducing in 1920 following the increase in capacity in neutral countries. This increases the problem in the United States with the resumption of production in Europe once war-related destruction is resolved. This becomes a very important problem. We must remember that when we talk about agricultural and primary products, we are talking about 60% of international trade. It is a problem that weighs heavily on trade policies and on all trade policies around these debates.
Un après-guerre hétérogène pour la politique commerciale
Il y a des débats acharnés autour des politiques commerciales pendant les années 1920. Tout de suite après la guerre, il y a un grand intérêt dans l’établissement d’un régime libre-échangiste et en particulier par des organisations internationales comme la Société de Nations. Il y a une volonté de mettre en place un régime libre-échangiste. Les tarifs douaniers entre les différents pays étant une source de conflit, on crée un régime libre-échangiste. Pourtant, on voit une tendance de plus en plus marquée pour les tarifs douaniers dans les années 1920.
Si on regarde la situation pour l’Europe, la situation est assez fluctuante et variée. Jusqu’au milieu des années 1920, on voit qu’il y a une diversité considérable dans l’après-guerre, mais dès 1925 il y a une tendance haussière qui devient de plus en plus claire. C’est-à-dire qu’on voit une tendance avant même la grande dépression. C’est surtout à cause de la perception d’une crise dans le secteur primaire et surtout le milieu agricole qu’on voit une pression sur les hommes politiques afin d’augmenter les tarifs douaniers.
Il faut comprendre le cas des États-Unis qui est l’hégémon du monde après la Première guerre mondiale. C’est un pays intéressant parce que c’est un pays protectionniste depuis très longtemps. On a beaucoup parlé de la tendance étasunienne. Suite à la guerre de Sécession, on voit qu’il y a une volonté d’avoir des tarifs douaniers aux États-Unis élevés pour protéger le marché intérieur des concurrents étrangers.
Lorsqu’on regarde les tendances en termes de politique commerciale internationale des États-Unis et qu’on se demande pourquoi les États-Unis sont tellement protectionnistes aussi longtemps, la réponse est intéressante. Les partisans des tarifs douaniers élevés viennent pour la plupart du nord où on trouve l’industrie manufacturière naissante au XIXème siècle. Ils sont convaincus par l’idéologie par Alexander Hamilton qui propose quelque chose qui ressemble beaucoup à l’idée de protectionnisme éducateur de Friedrich List. C’est l’idée qu’il faut protéger le marché intérieur des concurrents étrangers et surtout des concurrents britanniques qui sont trop forts. Il faut créer de la place pour favoriser le développement des entreprises nationales.
Cette idée est très convaincante pour les industriels aux États-Unis qui se trouvent surtout au Nord. Au Sud, l’opinion est beaucoup plus libre-échangiste parce que c’est une région qui dépend beaucoup plus des exportations notamment du coton et du tabac. La guerre de Sécession est très importante faisant que les intérêts du Nord l’emportent sur les intérêts du Sud, mais aussi par rapport à la politique commerciale internationale. Si on cherche le parti politique qui représente les intérêts du Nord, c’est surtout le parti républicain qui est la voix des intérêts protectionniste et par contraste, le parti démocrate représente les intérêts du Sud.
Lorsqu’on pose la question de savoir pourquoi les États-Unis sont un pays tellement protectionniste, le pays est pour la plupart un pays républicain à partir des années 1980. Si on regarde qui contrôle le système gouvernemental aux États-Unis, la réponse est pour la plupart les républicains. On voit que chaque fois que les républicains arrivent au pouvoir, ils font augmenter les tarifs douaniers et chaque fois que les démocrates arrivent au pouvoir, ils font diminuer les tarifs, mais comme ils ne sont pas là très longtemps, ils n’ont pas la possibilité de faire beaucoup en termes d’engagement au libre-échangisme.
Durant les années 1920, les républicains continuent à dominer et des intérêts poussent à avoir un protectionnisme plus important venant pour la première fois du secteur agricole. On voit qu’il y a une crise pour certains agriculteurs aux États-Unis liée à la crise mondiale dans certains marchés agricoles. Il y a deux aspects de cette crise:
- le problème de la chute des prix ;
- il y a un niveau d’endettement de la part de certains agriculteurs aux États-Unis beaucoup plus important après la guerre qu’avant la guerre. Les agriculteurs aux États-Unis s’endettent pour pouvoir être capables d’augmenter leur niveau de production pendant la guerre. Pour répondre à cette incitation, ils s’endettent pour acheter des terres et des machines. Suite à la guerre, ils sont dans une situation difficile parce qu’ils font face à une chute des prix et une chute de leurs revenus tandis que leur niveau de dette ne bouge pas.
Il y a des problèmes qui continuent pour certains agriculteurs. On voit que les saisies bancaires de terres agricoles sont de 3% entre 1913 et 1920, 11% entre 1921 et 1925 et 18% entre 1926 et 1929 soit avant le déclenchement de la grande dépression. Cela montre la faiblesse de ce secteur pendant les années 1920. Ce sont donc les intérêts agricoles qui poussent à avoir un protectionnisme plus important afin d’essayer de garder les prix à un niveau suffisant pour pouvoir vivre et payer leurs dettes.
Il y a une forte augmentation des tarifs douaniers aux États-Unis tout de suite après la crise de 1920 – 1921 avec le Fordney Mac Cumber tariff Act de 1922, mais que les pressions continuent à être exercées dans la deuxième moitié des années 1920. En fait, ce sont ces pressions qui provoquent le passage du Smoot-Hawley Tariff Act en 1930. Souvent, on parle de cet acte comme étant lié à la Grande dépression et cela est vrai que cet acte joue un rôle en faisant déclencher des réactions de la part des partenaires commerciaux des États-Unis. L’origine de cet acte se trouve bien avant la Grande dépression dans les problèmes auxquels les agriculteurs américains font face pendant les années 1920.
Cela révèle quelque chose de très important par rapport au nouvel hégémon que sont les États-Unis. Pour Kindleberger, « At a minimum, the tariff sent the signal that the rising economic and military power of the United States was unwilling to be the unilateral guarantor of open markets that the United Kingdom had been before the war… The Pax Britannica was at an end, and the Americans were not yet ready to underwrite a Pax Americana »; le Smoot-Hawley Tariff Act envoie un message très important par rapport aux caractéristiques des États-Unis par contraste à la Grande-Bretagne. La Grande-Bretagne est un hégémon libre-échangiste jusqu’en 1914. Le pays et l’empire restent libre-échangistes jusqu’à l’éclatement de la Grande dépression.
Par contraste, les États-Unis ne sont pas du tout un hégémon libre-échangiste pendant les années 1920, mais c’est un hégémon qui continue à être un pays très protectionniste. Pour Kindleberger, cela change tout en termes de possibilités pour faire avancer un libre-échangisme au niveau international. La Pax Americana et complètement différent à la Pax Britannica.
Lorsqu’on regarde les discours des hommes politiques aux États-Unis, on voit l’importance du protectionnisme. Pour le sénateur William Borah, « The real fight here is between the agricultural interests and the industrial interests. We feel that we are fighting for equality; that the equality is constantly removed by the fact that duties are substantially increased upon the things we have to buy, even though they may be increased to some extent on the things we have to sell ». Cela devient aux États-Unis pendant les années 1920 une concurrence entre les intérêts industriels et les intérêts agricoles afin d’avoir un niveau de protectionnisme de plus en plus élevé. Les agriculteurs cherchent d’abord une autre solution demandant un salaire minimum pour vivre comme existant en Europe, mais cela est refusé. Donc, la seule autre possibilité pour eux est de revendiquer des tarifs douaniers plus élevés dans le secteur agricole.
Il y a un aspect idéologique de cette position. Pour Irwin, « with the Republican establishment opposed to farm subsidies and unwilling to reduce protective tariffs on manufactured goods, the only solution seemed to be higher tariffs on agricultural goods, as imperfect a solution as that might be. This lay the groundwork for what would become the Smoot-Hawley tariff ». Il y a l’idée d’un pays qui devient indépendant d’un empire, ce n’est pas aux britanniques de leur dire quoi faire, ils ont le droit d’être protectionnistes montrant la vitalité de la nation.
On voit l’importance des républicains qui dominent la situation politique aux États-Unis jusqu’à l’arrivée de Roosevelt.
Pour conclure, si on regarde la période entre 1870 et 1913, pour l’Europe et pour le Japon il y a une importance de l’augmentation du commerce international par rapport au PIB montrant une ouverture de plus en plus importante de la part des grands pays du monde. Si on regarde de 1913 à 1929, on voit une diminution de l’importance du commerce international en pourcentage du PIB pour presque tout le monde sauf le Japon. Ce n’est pas une période glorieuse pour le commerce international devenant même pire pendant les années 1930.