1. A New World Power

Youngest among the great nations, the United States holds a position of immense world power.  Measured in years and compared with her sister nations in Europe and Asia, she is a babe.  Measured in economic strength she is a burly giant.  Young America is, but mighty with a vast economic strength.

An inexorable destiny seems to be forcing the United States into a position of international importance.  Up to the time of the Spanish War, she played only a minor part in the affairs of the world.  The Spanish War was the turning point the United States as a borrowing nation gave way then, to the United States as an investing nation.  Economic forces compelled the masters of economic life to look outside of the country for some of their business opportunities.

Since the Civil War the United States has been preparing herself for her part in world affairs.  During the thirty years that elapsed between 1870 and 1900 she emerged from a position of comparative economic inferiority to take a position of notable economic importance.  Between the years 1870 and 1900 the population of the United States increased 97 per cent.  During the same period the annual production of wheat increased from 236 million bushels to 522 million bushels; the annual production of corn from 1,094 to 2,105 million bushels; the annual production of cotton from 4,352 to 10,102 thousand bales; the annual production of coal from 29 to 241 million tons; the annual production of petroleum from 221 to 2,672 million gallons; the annual production of pig iron from 1,665 to 13,789 thousand tons; the annual production of steel from 68 to 10,188 thousand tons; the annual production of copper from 12 to 271 thousand tons, and the production of cement (there is no record for 1870) rose from two million barrels in 1880 to 17 million barrels in 1900.  Thus while the production of food more than kept pace with the increase of population, the production of those commodities upon which the new industry depends coal, petroleum, iron, steel, copper and cement increased many times more rapidly than the population.  During one brief generation the United States, with almost unbelievable rapidity, forged ahead in the essentials for supremacy in the new world of industry.

By the time of the Spanish War (1898) American industries had found their stride.  During the next fourteen years they were overtaking their European competitors in seven league boots.  Between 1900 and 1914 while the population of the United States increased by 30 per cent,

     Wheat production increased 70 per cent
     Corn production increased 27 " "
     Cotton production increased 58 " "
     Coal production increased 90 " "
     Petroleum production increased 317 " "
     Pig Iron production increased 69 " "
     Steel production increased 131 " "
     Copper production increased 89 " "
     Cement production increased 406 " "

The United States was rushing toward a position of economic world power before the catastrophe of 1914 hurled her to the front, first as a producer (at immense profits) for the Allies, and later as the financier of the final stages of the War.

The economic position that is now held by the United States among the great competing nations of the world can be in some measure suggested it cannot be adequately stated by a comparison of the economic position of the United States and some of the other leading world empires.

Neither the geographical area of the United States nor the numerical importance of its people justifies its present world position.  The country, with 8 per cent of the area and 6 per cent of the population of the world, looms large in the world’s economic affairs, how large will appear from an examination of certain features that are considered essential to economic success, such as resources, capital, products, shipping, and national wealth and income.

2. The Resources of the United States

The most important resource of any country is the fertile, agricultural land.  Figures given in the Department of Agriculture Year Book for 1918 (Table 319) show the amount of productive land, including, beside cultivated land, natural meadows, pastures, forests, woodlots, etc., of the various countries according to pre-war boundary lines.  The total of such productive land for the 36 leading countries of the world was 4,591.7 million acres.  Russia, including Siberia, had almost a third of this total (1,414.7 million acres).  The United States came second with 878.8 million acres, or 19 per cent of the total available productive land.  Third in the list was Argentine with 537.8 million acres.  British India came fourth with 465.7 million acres.  Then there followed in order Austria-Hungary, Germany, France, Australia, Spain and Japan.  Austria-Hungary, Germany and France combined had almost exactly four hundred million acres of productive land or less than half the productive area of the United States.

The United States, in the area of productive land, is second only to Russia.  In the area of land actually under cultivation, however, it stands first, with Russia a close second and British India a close third, the amounts of cultivated land in each of these countries being 293.8 million acres, 279.6 million acres, and 264.9 million acres respectively.  These three countries together contain 64 per cent of the 1,313.8 million acres of cultivated land of the world.  The United States alone contains 22 per cent of the total cultivated land.

The total forest acreage available for commercial purposes is greatest in Russia (728.4 million acres).  The United States stands second with 400 million acres and Canada third with 341 million acres.  The Chief of Forest Investigations of the United States Department of Agriculture (Letter of Oc, 1919) places the total forest acreage of both Brazil and Canada ahead of the United States.  In the case of Brazil no figures are available showing what portion of the 988 million acres of total area is commercially available.  Canada with a total forest acreage of 800 million acres has less timber commercially available than the United States with a total forest area of 500 million acres.

The iron ore reserves of the world are estimated at 91,000 million tons ("Iron Ores,” Edwin C. Eckel.  McGraw Hill Book Co., 1914, pp. 392-3).  Of this amount 51,000 millions are placed in Asia and Africa; 12,000 million tons in Europe, and 14,800 million tons in North America.  The United States alone is credited with 4,260 million tons or about 5 per cent of the world’s supply.  The United States Geological Survey (Bulletin 666v) estimates the supply of the United States at 7,550 million tons; the supply in Newfoundland, Mexico and Cuba as 7,000 million tons, and that in South America as 8,000 million tons as against 12,000 million tons for Europe.  This estimate would give the United States alone 8 per cent of the iron ore of the world.  It would give North America 15 per cent and the Western Hemisphere 25 per cent, as against 15 per cent for Europe.

Iron ore furnishes the material out of which industrial civilization is constructed.  Until recently the source of industrial power has been coal.  Even to-day petroleum and water play a relatively unimportant rôle.  Coal still holds the field.

The United States alone contains 3,838,657 million tons more than half of the total coal reserves of the world. ("Coal Resources of the World.”  Compiled by the Executive Committee, International Geological Congress, 1913, Vol.  I, p.  XVIII ff.) North America is credited with 5,073,431 million tons or over two-thirds of the world’s total coal reserves (7,397,553 millions of tons).  The coal reserve of Europe is 784,190 million tons or about one-fifth of the coal reserves of the United States alone.

Figures showing the amount of productive land and of timber may be verified.  Those dealing with iron ore and coal in the ground are mere estimates and should be treated as such.  At the same time they give a rough idea of the economic situation.  Of all the essential resources, land, timber, iron, copper, coal, petroleum and water-power, the United States has large supplies.  As compared with Europe, her supply of most of them is enormous.  No other single country (the British Empire is not a single country) that is now competing for the supremacy of the world can compare with the United States in this regard, and if North America be taken as the unit of discussion, its preponderance is enormous.

3. The Capital of the United States

The United States apparently enjoys a large superiority over any single country in its reserves of some of the most essential resources.  The same thing is true of productive machinery.

Figures showing the actual quantities of capital are available in only a small number of cases.  Estimates of capital value in terms of money are useless.  It is only the figures which show numbers of machines that really give a basis for judging actual differences.

Live stock on farms, the chief form of agricultural capital, is reported for the various countries in the Year Book of the United States Department of Agriculture.  The United States (1916) heads the list with 61.9 million cattle; 67.8 million hogs; 48.6 million sheep and goats, and 25.8 million horses and mules, 204 million farm animals in all.  The Russian Empire (including Russia in Asia) is second (1914) with 52.0 million cattle; 15.0 hogs; 72.0 million sheep and goats, and 34.9 horses and mules, 174 million farm animals in all.  British India (1914) reports more cattle than any other country (140.5 million); she is also second in the number of sheep and goats with 64.7 millions, but she has no hogs and 1.9 million horses.  Argentina (1914) reports 29.5 million cattle; 2.9 million sheep and goats; and 8.9 million horses and mules.  The number of animals on European farms outside of Russia is comparatively small.  Germany (1914), United Kingdom (1916), Austria-Hungary (1913), and France (1916) reported 61.8 million cattle, 46.6 million hogs, 60.8 million sheep and goats, and 11.5 million horses and mules, making a total of 180.7 million farm animals.  These four countries with a population of about 206 million persons, had less live stock than the United States with its population (1916) of about 100 millions.

It would be interesting to compare the amount of farm machinery and farm equipment of the United States with that of other countries.  Unfortunately no such figures are available.

The figures showing transportation capital are fairly complete. (Statistical Abstr. 1918, pp. 844-5.) The total railroad mileage of the world is 729,845.  More than one-third of this mileage (266,381 miles) is in the United States.  Russia (1916) comes second with 48,950 miles; Germany (1914) third, with 38,600 miles and Canada (1916) fourth with 37,437 miles.

The world’s total mileage of telegraph wire (Ibid.) is 5,816,219, of which the United States has more than a fourth (1,627,342 miles).  Russia (1916) is second with 537,208 miles; Germany (1914) is third with 475,551 miles; and France fourth with 452,192 miles.

The Bureau of Railway Economics has published a compilation on “Comparative Railway Statistics” (Bulletin 100, Washington, 1916) from which it appears that the United States is far ahead of any other country in its railroad equipment.  The total number of locomotives in the United States was 64,760; in Germany 29,520; in United Kingdom 24,718; in Russia (1910) 19,984; and in France 13,828.  No other country in the world had as many as ten thousand locomotives.  If these figures also showed the locomotive tonnage as well as the number, the lead of the United States would be even more decided as the European locomotives are generally smaller than those used in the United States.  This fact is clearly brought out by the figures from the same bulletin showing freight car tonnage (total carrying capacity of all cars).  For the United States the tonnage was (1913) 86,978,145.  The tonnage of Germany was 10.7 millions; of France 5.0 millions; of Austria-Hungary 3.8 millions.  The figures for the United Kingdom were not available.

The United States also takes the lead in postal equipment. (Stat.  Abstr., 1918, pp. 844-5.) There are 324,869 post offices in the world; 54,257 or one-sixth in the United States.  The postal routes of the world cover 2,513,997 miles, of which 450,954 miles are in the United States.  The total miles of mail service for the world is 2,061 millions.  Of this number the United States has 601.3 millions.

The most extreme contrast between transportation capital in the United States and foreign countries is furnished by the number of automobiles. Facts and Figures, the official organ of the National Automobile Chamber of Commerce (April, 1919) estimates the total number of cars in use on January 1, 1917 as 4,219,246.  Of this number almost six-sevenths (3,500,000) were in use in the United States.  The total number of cars in Europe as estimated by the Fiat Press Bureau, Italy, was 437,558, or less than one-seventh of the number in use in the United States.  Automobile distribution is of peculiar significance because the industry has developed almost entirely since the Spanish-American War and therefore since the time when the United States first began to develop into a world power.

The world’s cotton spindleage in 1919 is estimated at 149.4 million spindles. (Letter from T. H. Price 10/6/19.) Of this total Great Britain has 57.0 millions; the United States 33.7 millions; Germany 11.0 millions; Russia 8.0 millions, and France and India each 7.0 millions.

No effort has been made to cite figures showing the estimated value of various forms of capital, because of the necessary variations in value standards.  Enough material showing actual quantities of capital has been presented to prove that in agriculture, in transportation, in certain lines of manufacturing the United States is either at the head of the list, or else stands in second place.  In transportation capital (particularly automobiles) the lead of the United States is very great.

If figures were available to show the relative amounts of capital used in mining, in merchandising, and in financial transactions they would probably show an equally great advantage in favor of the United States.  In this connection it might not be irrelevant to note that in 1915 the total stock of gold money in the world was 8,258 millions of dollars.  More than a quarter (2,299 millions) was in the United States.  The total stock of silver money was 2,441 millions of dollars of which 756 millions (nearly a third) was in the United States. (Stat.  Abstr., 1918, pp. 840-1.)

4. Products of the United States

Figures showing the amounts of the principal commodities produced in the United States are far more complete than those covering the resources and capital.  They are perhaps the best index of the present economic position of the United States in relation to the other countries of the world.

The wheat crop of the world in 1916 was 3,701.3 million bushels.  Russia, including Siberia, was the leading producer with 686.3 million bushels.  The United States was second with 636.7 million bushels or 17 per cent of the world’s output.  British India, the third wheat producer, had a crop in 1916 of 323.0 million bushels.  Canada, with 262.8 million bushels, was fourth on the list.  Thus Canada and the United States combined produced almost exactly one-fourth of the world’s wheat crop.

As a producer of corn the United States is without a peer.  The world’s corn crop in 1916 was 3,642.1 million bushels.  Two-thirds of this crop (2,566.9 million bushels) was produced in the United States.

The position of the United States as a producer of corn is almost duplicated in the case of cotton.  The Statistical Abstract published by the British Government (N, London, 1914, gives the world’s cotton production as 21,659,000 bales (1912).  Of this number the United States produced 14,313,000 almost exactly two-thirds.  British India, which ranks second, reported a production of 3,203,000 bales.  Egypt was third with 1,471,000 bales.

About one-tenth of the world’s output of wool is produced in the United States.  World production for 1917 is placed at 2,790,000 pounds. (Bulletin, National Association of Wool Manufacturer, .) Australia heads the list with a production of 741.8 million pounds.  Russia, including Siberia, comes second with 380.0 million pounds.  The United States is third with 285.6 million pounds and Argentina fourth with 258.3 million pounds.

The United States leads the world in timber production.  “Last winter we estimated that the United States has been cutting about 50 per cent of the total world’s supply of lumber.” (Letter from Chief of Forest Investigation.  U. S. Forest Service.  Oc, 1919.) The same letter gives the present annual timber cut.  The United States 12.5 billion cubic feet; Russia 7.1 billion cubic feet; Canada 3.0 billion cubic feet; Austria-Hungary 2.7 billion cubic feet.

A third of the iron ore produced in the world in 1912 came from the United States.  The world’s production in that year was 154.0 million tons (British Statistical Abstract, N, .  The United States produced 56.1 million tons or 36 per cent of the whole; Germany produced 32.7 million tons; France 19.2 million tons; the United Kingdom 14.0 million tons.  No other country is reported as producing as much as ten million tons.

The position of the United States as a producer of iron and steel was greatly enhanced by the war. The Daily Consular and Trade Reports (July 9, 1919, give a comparison between the world’s steel and iron output in 1914 and 1918.  In 1914 the United States produced 23.3 million tons of pig iron; Germany produced 14.4 million tons; the United Kingdom 8.9 million tons, and France 5.2 million tons.  The United States was thus producing 45 per cent of the pig iron turned out in these four countries.  For 1918 the pig iron production of the United States was 39.1 million tons.  That of the other three countries was 22.0 million tons.  In that year the United States produced 64 per cent of the pig iron product of these four countries.  An equally great lead is shown in the case of steel production.  In 1914 the United States produced 23.5 million tons of steel.  Germany, the United Kingdom and France produced 27.6 million tons.  By 1918 the production of the United States had nearly doubled (45.1 million tons).

The total pig iron output of the world for 1917 was placed at 66.9 millions of tons.  The world’s production of steel in 1916 was placed at 83 million tons.  The United States produced considerably more than half of both commodities. ("The Mineral Industry During 1918.”  New York, McGraw Hill Book Co., 1919, pp. 379-80).

The two chief forms of power upon which modern industry depends are petroleum and coal.  The United States is the largest producer of both of these commodities.  The world’s production of petroleum in 1917 was 506.7 million barrels (Mineral Resources, 1917, Part II, .  Of this amount the United States produced 335.3 million barrels or 66 per cent of the total.  The second largest producer, Russia, and the third, Mexico, are credited with 69 million barrels and 55.3 million barrels respectively.

As a coal producer the United States stands far ahead of all other nations.  The United States Geological Survey (Special Report, N placed the total coal production of the world in 1913 at 1,478 million tons.  Of this amount 569.9 million tons (38.5 per cent) were produced in the United States.  The production for Great Britain was 321.7 million tons; for Germany 305.7 million tons; for Austria-Hungary 60.6 million tons.  No other country reported a production of as much as fifty million tons.  In 1915 the United States produced 40.5 per cent of the world’s coal; in 1917 44.2 per cent; in 1918 46.2 per cent.

Copper has become one of the world’s chief metals.  Two-thirds of all the copper is produced in the United States.  Copper production in 1916 totaled 3,107 million pounds (Mineral Resources in the United States, 1916, part I, .  The production for the United States was 1,927.9 million pounds (62 per cent of the whole).  The second largest producer, Japan, turned out 179.2 million pounds.

The precious metals, gold and silver, are largely produced in the United States.  The world’s gold production for 1917 was 423.6 million dollars (Mineral Resources, 1917, .  Africa produced half of this amount (214.6 million dollars).  The United States was second with a production of 83.8 million dollars (20 per cent of the whole).  The same publication gives the world’s silver production in 1917 as 164 million ounce.1 million ounces (43 per cent) were produced in the United States.  The second largest producer was Mexico, 31.2 million ounces; and the third Canada, with 22.3 million ounces.  These three North American countries produced 76 per cent of the world’s output of silver.

Judge Gary, speaking at the Annual Meeting of the Iron and Steel Institute (1920) put the situation in this summary form:

As frequently stated, notwithstanding the United States has only 6% of the world’s population and 7% of the world’s land, yet we produce: 

20% of the world’s supply of gold, 25% of the world’s supply of wheat, 40% of the world’s supply of iron and steel, 40% of the world’s supply of lead, 40% of the world’s supply of silver, 50% of the world’s supply of zinc, 52% of the world’s supply of coal, 60% of the world’s supply of aluminum, 60% of the world’s supply of copper, 60% of the world’s supply of cotton, 66% of the world’s supply of oil, 75% of the world’s supply of corn, 85% of the world’s supply of automobiles.

With the exception of rubber, practically all of the essential raw materials and food products upon which modern industrial society depends are produced largely in the United States.  With less than a sixteenth of the world’s population, the United States produced from a fifth to two-thirds of most of the world’s essential products.

5. Shipping

The rapid increase in the foreign trade of the United States created a demand for American shipping facilities.  Before the Civil War the United States held a place as a maritime nation.  Between the Civil War and the war with Spain the energies of the American people were devoted to internal improvement.  With the advent of expansion that followed the Spanish-American War, came an insistent demand that the United States develop a merchant marine adequate to carry its own foreign trade.

The United States Commissioner of Navigation in his report for 1917 gives the net gross tonnage of steam and sailing vessels in 1914 as 45 million tons in all.  The tonnage of Great Britain was 19.8 million tons; of Germany 4.9 million tons; of the United States 3.5 million tons; of Norway 2.4 million tons; of France 2.2 million tons; of Japan 1.7 million tons, and of Italy 1.6 million tons.

The war brought about great changes in the distribution of the world’s shipping.  Germany was practically eliminated as a shipping nation.  The necessity of recouping the submarine losses, and of transporting troops and supplies led the United States to adopt a ship-building program that made her the second maritime country of the world.  Lloyd’s Register of Shipping gives the steam tonnage of the United Kingdom as 18,111,000 gross tons in June, 1920.  For the same month the tonnage of the United States is given as 12,406,000 gross tons.  Japan comes next with a tonnage of 2,996,000 gross tons.  According to the same authority the United Kingdom had 41.6 per cent of the world’s tonnage in 1914 and 33.6 per cent in 1920; while the United States had 4.7 per cent of the world’s tonnage in 1914 and 24 per cent in 1920.

6. Wealth and Income

The economic advantages of the United States enumerated in this chapter inevitably are reflected in the figures of national wealth and national income.  While these figures are estimates rather than conclusive statements they are, nevertheless, indicative of a general situation.

During the war a number of attempts were made to approximate the pre-war wealth and income of the leading nations.  Perhaps the most ambitious of these efforts was contained in a paper on “Wealth and Income of the Chief Powers” read before the Royal Statistical Society. (See The London Economist, May 24, 1919, pp. 958-9.) This and other estimates were compiled by L. R. Gottlieb and printed in the Quarterly Journal of Economics for No.  Mr. Gottlieb estimates the pre-war national wealth of Great Britain, France, Italy, Japan, Russia, Belgium, Germany, Austria-Hungary, Turkey and Bulgaria at 366,100 million dollars.  At the same time the wealth of the United States was estimated at 204,400 million dollars.  Thus the wealth of the United States was equal to about 36 per cent of the total wealth of the great nations in question.

The same article contains an estimate of pre-war national incomes for these great powers.  The total is placed at 81,100 million dollars.  The income for the United States is placed at 35,300 million dollars, or more than 43 per cent of the total.

The war has made important changes in the wealth and income of the principal powers.  The wealth and income of Europe have been reduced, while the wealth and income of the United States have been greatly increased.  This increase is rendered doubly emphatic by the demoralization in foreign exchange which gives the American dollar a position of unique authority in the financial world.

The latest wealth estimates (Commerce and Finance, May 26, and July 28, 1920) in terms of dollars at their purchasing-power value, makes the wealth of the whole British Empire 230 billions of dollars; of France, 100 billions; of Russia, 60 billions; of Italy, 40 billions; of Japan, 40 billions; of Germany, 20 billions, and of the United States, 500 billions.  These figures are subject to alteration with the alteration of the exchange rates, but they indicate the immense advantage that is possessed by the business men of the United States over the business men of any or of all of the other nations of the world.

Before the war, the British were the chief lenders in the international field.  In 1913 Great Britain had about 20 billions of dollars of foreign investments, as compared with 9 billions for France and about 6 billions for Germany.  At the end of 1920, the British foreign investments had shrunk to a fraction of their former amount, while the United States, from the position of a debtor nation, had become the leading investing nation of the world, with over 9 billions of dollars loaned to the Allied governments; with notice loans estimated at over 10 billions; with foreign investments of 8 billions, and goods on consignment to the extent of 2 billions.

The United States therefore began the year 1921 with a greater financial lead, by several times over, than that which she held before the war, when she was credited with a greater wealth and a larger income than that of any other nation in the world.  The extent of the advantage enjoyed by the United States at the end of 1920 cannot be stated with any final accuracy, but its proportions are staggering.

7. The Economic Position of the United States

Economically the United States is a world power.  She occupies one of the three great geographical areas in the temperate zone.  If she were to include Canada, Mexico and Central America the territory north of the Canal Zone she would have the greatest unified body of economic advantage anywhere in the world.

The United States is rich in practically all of the important industrial resources.  She has a large, relatively homogeneous population, a great part of which is directly descended from the conquering races of the world.  Almost all of the essential raw materials are produced in the United States, and in relatively large quantities.  The period since the Spanish War has witnessed a rapid increase in wealth production.  The war of 1914 resulted in an even greater increase in shipping.  The investable surplus is greater in the United States than in any other nation, and in amount as well as in percent the national debt is less than that in any other important nation except Japan.  Economically the position of the United States is unique.  The masters of her industries hold a position of great advantage in the capitalist world.