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But all this assumes that another world war would be like the last and of that there is no guarantee whatever. The first effect of World War I in every neutral country was confusion and economic setback. The next world war might be short instead of long—there might be no time for profit.
In the next war, U. S. commerce may be circumscribed by a neutrality act. If U. S. ships could not hire themselves out to carry supplies to belligerents, they might have little profit. Part—but only part—of a typical war boom will be absent if the steel industry cannot export weapons, the chemical industry cannot export explosives, the aircraft industry cannot export planes. The Government may deliberately suppress the boom by high taxes. Factories and unemployed alike may make a trek to Canada.
Today, as a creditor nation, the U. S. has less to fear from the dumping of securities, particularly because foreigners have large quantities of earmarked gold in the U. S. which they could use until they had time for orderly liquidation. Foreign governments will doubtless try to conscript the U. S. resources of their nationals and dispose of them gradually. So securities exchanges may not have to close.
But foreign governments today have relatively much less gold than they had in 1914. Under present laws they will be unable to float war loans in the U. S. After they have traded their Holdings for war supplies they may be unable to buy more—as in 1917 the Dutch and Danes found their German war market dry up.
In 1914-17 cotton took a beating. In those days the U. S. exported eight to nine million bales of cotton a year. Today it exports about five million. King Cotton's loss of market would not be as great as in 1914.
Modern war is mechanized. It rolls on rubber and is driven by oil. The U. S. also uses six times as much rubber as it did in 1914. The U. S. will have to bid for rubber against desperate belligerents. Driving an automobile may become a luxury—an outcome that would not hurt the railroad business. With heavy war freight movements, U. S. railroads might have a renaissance.
If Japan is a belligerent, supplies of rubber from the East Indies may be greatly reduced, also supplies of silk. With prices for both materials at new highs, the U. S. may turn to substitutes. Both exist now in experimental form. During the last World War the U. S. developed its chemical industry and a full grown automobile industry. From the next world war it might get a synthetic rubber and a synthetic silk industry. To create them may well require several billion dollars of the idle capital for which use is now desperately sought.
What may happen to the U. S. may be far less striking than what may happen to Latin America. South America may become a creditor continent. Another world war may bring the industrial revolution to that continent, may thus work a permanent change in world trade.
Paying the Piper. In every economic overturn a few lucky, greedy or farsighted men have an opportunity to make fortunes. But it does not follow that a community profits by such an overturn. Most of the big economic events produced by war are on the debit side even in the ledgers of neutrals: