INLESS worse is in store, European business and finance will be heartily glad to see the last of 1938—the most feverish and alarming twelve-months since the Great War. was a year dominated by the material, political and psychological preparation for a war which nobody wants and everybody dreads.
Hence all-round rearmament, combined with the successive shocks arising from the unresisted expansion of the German Reich, has gripped the economy of apparently every country on the Continent, both large and small.
So far as has been reported, no well-known European economist has ventured to question the estimate made by the Foreign policy Association of New York that 1938 saw Russia spending 40 per cent. of her national income in preparing for war; Japan 37 per cent.; Germany 20 per cent.; France 9.1 per cent.; Italy 8.3 per cent., and the United Kingdom 6.5 per cent.
Indeed, everything indicates that tue 1937 forecast made by the German institute for Economic Research that world. trade in war material alone in 1838 would exceed the tol Jot all commerce of all Europe in 1936—has almost certainly been fulfied. In this world trade in arms fand armaments the European nations have had their full share; it is prob-Jable that European imports and ex-Jperts of war materials the past year have been at least 35 per cent. greater than in 1929; In 1937 they were 27 percent. greater.
But. Europe's total commerce has shrunk the. past year, 30 that the "[larger proportion devoted to wasteful, non-productive war materials re= presents an economic distortion for which the price will presumably have to be met.
Text read from the printed page and cleaned; old type leaves the occasional error.