The sea and the economic slump, 1919–1939

Summary

ABSTRACT.Before the First World War most of the advanced economies were at last partly committed to free trade and free exchange. After the war protectionism, tariffs and financial controls threw international trade into disarray, and some countries subsidized shipping for strategic reasons. Ships and ship-owners were both victims and instruments of economic nationalism, but international trade fell as a proportion of economic activity.

RÉSUMÉ.Avant la première guerre mondiale, la plupart des économies avancées étaient au moins en partie attachées au libre-échange et au commerce libre. Avec le protectionnisme découlant de la guerre, les droits de douane et les contrôles financiers ont jeté le commerce international dans le chaos et certains pays ont dû, pour raisons stratégiques, subventionner la navigation. Les navires et leurs propriétaires se retrouvèrent à la fois les victimes et les instruments du nationalisme économique mais le commerce international ne devint plus qu'un pourcentage de l'activité économique.

In 1919, John Maynard Keynes reflected, with a sense of nostalgia for a lost era, on the world economy as it existed in the last days of peace:

The inhabitant of London could order by telephone, sipping his morning tea in bed, the various products of the whole earth, in such quantity as he might see fit, and reasonably expect their early delivery upon his doorstep; he could at the same moment and by the same means adventure his wealth in the natural resources and new enterprises of any quarter of the world, and share, without exertion or even trouble in their prospective fruits and advantages.

It was a time of free movement of labour – a world in which the wealthy inhabitant of London could take a Cunard liner from Liverpool to New York, or a poor immigrant from southern Italy could travel steerage to Ellis Island for a new life. It was a world economy in which most prosperous areas accepted the gold standard, so reducing the uncertainties of trade and capital investment.

Tensions were already appearing before the war, for the obverse of an open, cosmopolitan economy was the difficulty of adopting domestic economic policies to protect industries from foreign competition, to maintain wage rates from being undercut by cheap migrant labour or to pursue an activist monetary policy. By 1914, American workers were demanding controls on immigration from southern Europe.