Page:The Economics of Unemployment.djvu/29

The large loans from America, together with the sales of foreign securities held in this country, are not, however, rightly taken to explain our high consumption at a time when so many workers were taken out of production. For our loans to our Allies and Dominions more than offset the advances thus secured from America. Indeed, official computations support the view that the aggregate civilian productivity was not reduced to the extent of more than 10 per cent., after full mobilisation took place. Now, considering the hasty processes of improvisation, the inevitable mistakes in organisation and control, the shortages of certain foods and materials, and all the other difficulties of the war situation, this is a very remarkable result.

After due allowance is made for the excessive pace and hours, and all the other incidents of a forcing process which the extreme emergency evoked, there remains a very striking testimony to the amount of the 'slack' or waste productivity which lay in our industrial system. How was this immense expansion of productive activity evoked? By the knowledge that there was a profitable market for all that was produced, as fast as it could be produced. The demand of the government on behalf of the fighting forces, and the enlarged demand of the fully working and higher-paid civilian population, took out of the productive machine all its practicable output. Even when the war was over, and this artificially inflated governmental demand collapsed, the pent-up demand of the prospering neutral peoples, a by-product of the war-economy, replaced the war demands and