Copyright
T. Mikkelsen & Co.

Financial Denmark and the war online

. (page 2 of 5)
Online LibraryT. Mikkelsen & CoFinancial Denmark and the war → online text (page 2 of 5)
Font size
QR-code for this ebook


it is quite impossible that they should all or even a
great number of them fail at the same time. Banks



22



and merchants compete in granting credit to the agri-
cultural organizations.

The importance of co-operation may be measured
by the fact that, according to the latest statistics,
the turn-over of Danish co-operatives in 1916 — 1917
amounted to 1157 million Danish Kroner (64 million
Pounds Sterling) . In the last year before the war the
turnover was 745 million Danish Kroner; the last
three years then show an increase of more than 50
percent. This increase would have been much greater
in the last year but for the fact that the import of
many kinds of goods met with difficulties and in many
cases was stopped. The co-operative purchasing soci-
eties have suffered a decrease in turnover of 47 mil-
lion Kroner, but on the other hand the producing and
exporting societies have increased their turnover by
92 million Kroner — to a great extent, however, as
a consequence of the higher prices. Out of the total
of 1157 million Kroner the dairies and packing-houses
count for 743 million Kroner outside of 35 million
Kroner for export of cattle. Of the purchases, 72
million Kroner go to co-operative purchases of food-
stuffs and fertilizers and 150 million to purchases of
household articles etc.

Through the development here described Danish
agriculture has been transformed in the last fifty years
to such an extent that only the man who has lived
through this space of time with the opportunity of
watching the progress can fully appreciate the mira-
culous difference between Danish agriculture of 1864
and 1914.



23



But is was not only towards agricultural improve-
ment that Denmark directed her energy after the
disaster of 1864. Shipping, manufacturing and com-
merce made considerable progress.

Many steamers were constructed or purchased from
abroad and the expansion continued up to the eve of
the World War.

Industrial establishments which before 1864 were
quite insignificant grew by and by to a moderate size,
even though agriculture must always be the prepon-
derant industry in a country which possesses neither
coal nor iron.

Commerce found new and profitable connections
in Europe as well as in other parts of the world.

Of course, the progress was not so marked during
each of the fifty years. In Denmark, as elsewhere,
difficulties — internal as well as external — inter-
rupted and at times retarded progress, but the move-
ment was always forward.



The object in beginning this report with the pre-
ceding remarks is not only to draw attention at once
to the solidity of the basis of Denmark's present for-
tunate economic position, but also to make plain why
the attitude of Denmark in the world war was bound
to be as it has been, regardless of sympathies which
might have tempted us to take chances in our foreign
policy. It seems fit to begin with a statement of these
underlying facts, the more so as the attitude of Den-
mark during the war has from many sides - kind



24



and sympathetic but not sufficiently instructed
been thoroughly misunderstood.



The Politi- To show how the economic progress of Denmark

cal Precur- was influenced, if only to a small degree, by outside

sors Of The events, we need only mention the political troubles of

World War. 1909 when Germany upset the whole of Europe

through the difficulties in Morocco by taking the

field for the private firm of Mannesmann Brothers,

the Agadir or Panther affair, the Turco-Italian war

and above all the two Balkan wars.

During these years, — they are so recent that their
events are in all minds, — Europe was never at rest.
One trouble was scarcely eliminated and the economic
progress of Europe continued when the next trouble
arose and always with a dramatic climax which caused
greater and greater anxiety in view of the steadily
approaching danger of war between the Powers; —
the war which after all ought rather to have occurred
in consequence of the first of these crises, as it is now
understood it was inevitable, and that if war was avoided
for a time it was perhaps not so much because all the
Powers desired it as because some of them preferred
to see war postponed until they should be more ad-
vanced in their preparations.

But notwithstanding this it is evident that the con-
sequences of all these precursors of the world war
can likewise be traced in Denmark where they made
themselves felt in finance and all kinds of trade, —
shipping perhaps excepted. Their effects, however,
were not so noticeable in Denmark as in most other



25



countries, and notwithstanding their influence Den-
mark came through them so well that the years 1912
and 1913 might justly be described as record years,
and the year of 1914, which was so unhappy for all,
opened under the best auspices.
The live stock amounted to:

Full-grown horses Full-grown cattle



in


1866


297.017


927.454


-


1876


295.897


1012.469


-


1888


320.386


1023.539


-


1898


322292


1179.647


-


1909


403.386


1413.232


-


1914 (July)


430.733


1474.308




Denmark's stock o

in 1866


r pigs
382.000




- 1876




504.000




- 1888




771.000




- 1898




1168.000




- 1909




1468.000




- 1914 (July)


2497.000


Denmark's export of butter

1863 about 2.400.000 kg.


of bacon

about 700.000 1


1873


„ 15.400.000 -


6.000.000


1883


„ 17.200.000 -


„ 12.000.000


1893


„ 49.000.000 -


„ 51.000.000


1903


„ 80.000.000 -


„ 80.700.000


1913


„ 91.000.000 -


„ 126.300.000




Denmark's steamships - ne

at the end of 1884


register tons

90.711







- 1894


141.511




»


- 1904


317.532




Deposits

1863


- 1914 476.250 (including
motorships)

in Danish Savings Banks

Kr. 71.000.000




1873


174.000.000




1883


350.000.000




1893


535.000.000




1903


733.000.000




1913


838.000.000



Summaries
Of Den-
mark's Pro-



gress
1864-



1914.



kg



26



Deposits in ordinary bank?

1893 Kr. 192.000.000
1903 478.000.000
1913 906.000.000

Fire insurance on buildings

1874 Kr. 1.335.000.000

1880 1.705.000.000

1890 2.163.000.000

1900 2.825.000.000

1905 3.815.000.000

1910 4.512.000.000

1913 4.981.000.000



During the first six months of 1914 most countries
— especially the great ones — were the prey of un-
certain fears and were swerving to and fro in many
instances so marked and in such a way that now,
afterwards, one is tempted to think that some people
from the beginning of the year were acquainted with
the fact that this year was to see the final and irrevo-
cable opening of the third Balkan war, now because
of its dimensions styled the World War.

In this connection one must remember how the
Dresdener Bank warned its customers against enga-
gements in foreign investments and advised them to
reduce their holdings of such securities. It is also
worth remembering the steady decrease of Germany's
credit abroad, illustrated by the steady increase in
Sterling which seems more comprehensible than it
was then. The quotation of Marks in London (short
term) in the months before the war was as follows:



May 1st 1914 20,47


May 15


1914 20,4974


, 8 „ 20,48V*


99

„ cc.


20,507s



27



May 29


1914


20,49Vi


July 3


1914 20,4974


June 5


D


20,50V*


. 10


20,50Vi


. 12


»


20,50


. 17


20,497*


■ 19


i)


20,49


. 24


20,51


. 26


»


20,50 x / 2







The feelings of unrest influenced also economic
matters in Denmark to some extent, but her situation
was on the whole sound and flourishing when the
thunder-bolt came and the invasion of Belgium set
nearly all Europe aflame.



And then the World War broke out. The Begin-

The preceding events are still too much in the ningOfThe
minds of all to be mentioned here. We need only WorldWar.
recall the feeling of uneasiness which pervaded Eu-
rope shortly after the murder in Serajevo, at first
uncertain but steadily increasing up to the time of
the panic which, in the last days of July, caused the
closing of nearly all the leading exchanges notwith-
standing the fact that different forces worked, and
not without hope, to escape the war between the
Powers and to localize the conflict, until Germany
declared war on Russia, and so, destroying all hope,
disclosed the inevitable fact in all its horror.

In Denmark it was fully understood from the be-
ginning that there was only one thing to do, namely to
keep out of the war by all means and to do this by a
declaration of neutrality and by a strict observance
of neutrality against both parties without being in-
fluenced by feelings of sympathy, however strong



28



they might be. Everyone knew that if this neutrality
was not maintained we should at once be caught in
the whirlpool of war and whirled to the bottom to
be ruined for ever.

By reason of her geographical position the non-
observance of Denmark's neutrality would have made
her a bone of contention to the belligerents, especially
to Great Britain and Germany. If Denmark should
side against Germany the people well knew, even
without the example of Belgium and later on Servia,
Montenegro and Roumania, that Germany, so close
to Denmark and much better prepared for war in
every respect than any other Power, would overrun
the whole country a long time before any of her
adversaries. It was also clearly seen that this geo-
graphical coherence with Germany and the complete
supremacy of Germany at the moment would make
it impossible for other Powers to come to the rescue
until too late. If Denmark should have sided with
Germany the sea would have been barred and her
ports closed, thus causing complete ruin in another
way.

There was only one thing to be done. The King
issued a Proclamation to the people which met with
a sympathetic reception, and the government at once
declared its neutrality and took the necessary steps,
military and otherwise, to secure and maintain this
neutrality and to enable the country, notwithstanding
the war, to continue its existence and to procure the
necessities of life and the continuation of work —
all in such a way that no one could find a pretext
to violate or even to doubt this neutrality or the
sincerity of it, a doubt which, at a time when might



29

would have temporarily, at least, overcome right, was
bound to have the most dangerous consequences.

The military measures consisted in the establish-
ment of armed military and naval forces, very consi-
derable in proportion to the size of the country and
very costly, for the purpose of repelling all attacks
as long as possible and warding off all casual viola-
tions of our neutrality. Further, mines were laid in
the Storebelt, which separates Sealand from Fyen,
in order to secure the communication between the
different parts of the country and in the waters near
Copenhagen in order to protect the capital against
sudden attacks.

The Goverment asked the Rigsdag for and obtained Prohibition
authorizations to issue export prohibitions and thus Of Export,
prevent on the one hand any of the belligerent parties
receiving goods from this country, the export of
which was contrary to the maintenance of neutrality,
and on the other hand to prevent the country being
drained of goods which were indispensable for the
welfare of the population.

Since then exports of many kinds of goods have
been prohibited, not all at once, but gradually as time
and the war made it necessary.



At once, and as in all other countries, belligerent
or neutral, the export of gold was prohibited and the
National Bank was released from its obligation to
exchange its notes for gold. Further, export of arms
and ammunition was prohibited to all belligerents,
as well as of all goods which might be used directly



30



for warlike purposes including such food as grain,
groats, breadstuffs and potatoes. In this connection it
might be mentioned that the United States of America,
during the whole of the war and until that country
itself entered the ranks of the belligerents, did not
issue any of these export prohibitions, and that Den-
mark consequently had to shift without the support
which a corresponding attitude on the part of the
greatest of all neutral powers might have given.
Export Of As to the export of agricultural products it was
Agricul- evident from the beginning that only in case of strict
tural necessity would it be possible to prohibit the export
Products, of those commodities whose production so far had
been the dominant industry in the country and had
yielded the greatest income, viz. butter, cattle, —
live or killed, bacon, eggs, etc. A prohibition here
would have stopped at once the whole economic life
of the country by creating an artificial abundance of
all these articles and thus bringing on the ruin of agri-
culture, in this way depriving the country not only
of the material means for the conservation of neu-
trality, but also of the means for barter abroad to
procure the necessary raw materials which it did
not possess. Only in the case that continued export
or decrease in production should create a danger for
the home supply, might it be reasonable to prohibit
export partly or wholly.

In this way the neutrality of the country was pro-
vided for, but even so great anxiety for the future
has prevailed in Denmark since the beginning of the
war.

1 JAN.lbZt



^StoALAjg&



&r^±




31



The greatest difficulty was to keep up communica-
tion to the westward. The coal supply was to be
drawn from England as heretofore, though it was
possible to substitute German coal to some degree,
and likewise we were anxious to continue, to the
same extent, the catering to England, which country
had been the greatest consumer of Danish butter,
bacon and eggs, etc. And the reason for this concern
was not the want of a market! On the contrary,
Germany offered at once and without interruption
to buy all the goods which so far had been exported
to England, and if only the pecuniary side had been
taken into consideration, — it must be admitted that
these offers were very tempting, — the prices offered
would have been much higher than those offered in
England. But the Danish farmer and the Danish
merchant fully agreed that the former export to Eng-
land should be continued as far as possible even
though they had to stand the loss.

But while we wished to continue the westward
communication it met with many and serious diffi-
culties in the way of mines (from both sides) and
of submarines, which of course caused much trouble
both to sailors and owners and made the voyages not
only dangerous but also more uncertain and sporadic
than the perishable character of the goods permitted.
And many are the Danish vessels which have been
sent to the bottom of the North Sea during the war,
as will readily be seen from the statistics on shipping
given later on. But the courage of the Danish sailors
and the public-spiritedness of the owners overcame
all difficulties.

We venture to say that the results have been



32



Butter Ex-
port From
Denmark
To England



Danish
Commerce
With Rus-
sian Butter.



gratifying and have until lately corresponded to the
desire on the part of the Danes to provide food
for the countries to the West to the same extent as
before the war.

As a proof we may state that the export of butter
from Denmark to England amounted to:

1.618.000 cwt in 1912
1.706.700 „ - 1913
1.749.000 „ - 1914

and consequently in the last year (the first of the
war) to considerably more than in the preceding two
years of peace.

In the following year — 1915 — the export of
butter from Denmark to England went down to
1.327.000 cwt., and this might at first sight appear
to be a departure from the former system, but in
reality it is not. It must be remembered that in time of
peace Denmark imports enormous quantities of Rus-
sian (Siberian) butter. Part of this butter is consumed
in Denmark, thus making Danish butter free for ex-
port, but the greater part of it is re-exported to Eng-
land and thus in times of peace swells the Danish
export figures. During the war only insignificant
quantities of Siberian butter came to Denmark, the
bulk of it being sent to England by other routes,
principally by way of Archangel. While England in
1914 imported 616.400 cwt. of Siberian butter from
Russia, in 1915 the import amounted to not less than
1.017.500 cwt. The Danish merchant had his great
share in the import to England of all this butter.

At a very early date the industrious Danish mer-
chant took an interest in the production and export
of Siberian butter, bought the butter in large quan-



33



tities, took care of the improvement in quality, in-
structed and invited the population to construct
dairies in Siberia and then exported the butter to
Denmark, from which place it was re-exported to Eng-
land. During the war, conditions in the Baltic and the
German blockade of the Russian ports have put a stop
to this trade, and the Danish merchant has consequently
forwarded his Russian butter via Archangel. And it
is worth noting that more than one-half of the import
to England in 1915 of Russian (Siberian) butter —
1.017.000 cwt., according to trustworthy information,
originates with Danish merchants. In other words the
diminution of the import of Danish butter is simply
explained by the fact that 500.000 cwt. Siberian butter
which, if Russia had not been at war, would have
passed from Russian ports on the Baltic to Denmark
and thence to England, thus swelling the import from
Denmark from 1.327. 000 cwt., to more than 1.827.000
cwt., — have been sent to England by way of Archan-
gel by the same Danish merchants who would other-
wise have sent this butter by way of the Baltic.
Consequently the British consumer received more
Danish butter in 1915 than any previous year.

The statement made above has been emphasized
as much as possible because in England many people
believe that during the war large quantities of Danish
butter have been exported to Germany. Nothing can
be more erroneous. It is true that during the war
more Danish butter has been exported to Germany
than before, but the reason for this is to be found in
the German customs law, which imposed a high duty
on butter, cream passing free, and in this way caused
a great export of Danish cream to Germany to be



34

churned to butter there. But this import of cream has
been without interest during the war, as the law in
question has been provisionally repealed and the
duty abolished, and consequently cream is no longer
exported in a raw condition but is churned to butter
in Denmark and then exported to Germany, thus
increasing the export to some extent.

In 1916 the import of Russian butter to England
declined to 34.542 cwt. (against 1.017.000 cwt. in
1915) or practically stopped, while the import of
Danish butter to England still remained at 1.134.801
cwt.

While the cause of the decline in the export of
butter from Russia in 1916 is plainly to be found in
the chaotic state of communication and production
there, which began that year, the reason for the
decline in the production of Danish butter is that in
1916 Denmark had a taste, — though small in com-
parison with later experiences, — of the restraint
by the Western Powers on the supplies of necessary
foodstuffs. In this connection it may be stated that
nearly all attempts to get soya-beans or soya-cake
from England failed and that France absolutely re-
fused permission for export to Denmark of groundnut
cakes of which a considerable stock was lying in
Marseille.
Butter Ex- The statistics for 1917 are not yet at hand, but
port In it may be supposed that Denmark has not been able
1917. to keep level with former years in the export of but-
ter. During 1917 the weather was very bad for the
farmers. The greater part of the summer was dry and
sunny and the grass was almost burned away, and
with the decreased supply of foodstuffs the production



35



of milk and consequently of butter was much below
the average all over the country. Later on the scarcity
of food caused by the poor harvest forced the far-
mers to reduce their stocks of cattle so that the pro-
duction of butter was very small during the autumn
and winter.

As a striking proof of the extent of the decline we
give the following figures:

Production of grain in millions of hectokilogram

1909-13 1914 1915 1916 1917

Average

Wheat 1.48 1.58 2.17 1.64 1.17

Rye 4.48 2.83 3.38 2.74 2.25

Barley 5.43 4.96 6.17 5.33 3.89

Barley and Oats mixed 3.63 3.22 3.60 3.47 2.75

Oats 7.75 6.85 7.60 7.50 5.47

Peas 0.09 0.06 0.06 0.08 0.06

Buckwheat 0.02 0.02 0.02 0.02 0.02

Total 22.88 19.52 23.00 20.78 15.61

Production in tons (000 omitted)

1909—13 1914 1915 1916 1917
Average

Hay 1801 1620 1149 2131 1166

Straw 3518 2696 2878 3521 1632

The first table shows 'hat the production of grain
in 1917 was about 16 million hectokilogram, or about
5 million less than in 1916, which again was below
the average.

The second table shows that both hay and straw
were produced in extraordinarily small quantities in
1917. While the production of hay in 1916 was large
and the production of straw about normal, the pro-
s'



36

duction of straw in 1917 was not half the average and
that of hay was only about two-thirds the normal.
Lack Of In time of peace the Danish farmer would have
Imported made up for the decrease by a larger import of food-
Foodstuffs, stuffs and cakes, but in 1917 this was quite impossible;
it was not even possible to procure the normal supplies,
as England, as well as the United States, placed even
more stringent restrictions on this point than in 1916,
based on the belief that Germany would profit if the
export of food supplies to Denmark were permitted.
Later on, it will be shown that the result of this pro-
cedure benefited only the Central Powers. In Den-
mark, however, the desire to supply agricultural pro-
ducts to England was as earnest in 1916 and 1917 as
in former years.
Enormous The reduced quantity of milk, due to the conditions
Decrease stated above, has resulted in such a decline in the
In Pro- production of butter in Denmark that there is now
duction not enough for home consumption. While the dis-
Of Butter, appearance of margarine had tended to increase the
consumption of butter, the very high prices have
reduced it still more. Even so, however, there is not
enough butter, and a strict rationing has been the
result, only allowing quite insufficient weekly ra-
tions for each person, so much more insufficient as
the import of raw materials for the manufacturing
of margarine has been cut off long ago. The same
applies to other fats.

The final result was that the Danish Government,
in November 1917, was compelled to prohibit the
export of all agricultural products. This action does
not mean, however, that export to England has
decreased, or that export to Germany has increased. It



37



is only intended to control exports and to use thew
for reciprocal concessions, obtaining necessary sup-
plies in return for export licenses. A considerably
weekly quantity of butter was still destined for expon
to England, but of course this export must automat-
ically end when England, as in January 1918, places
a maximum price on butter which only covers half
the cost of production in Denmark. Besides a certain
quantity of butter must also be reserved for our bro-
ther countries, Norway and Sweden, who are in still
greater need of the necessities of life than we are.

A rather detailed account of the export of Danish
butter has been given here because this at the same
time gives a general view of the situation of Denmark
during the war in nearly every respect. The products
of farming form by far the greatest part of the pro-
duction of Denmark; and of the farm products, butter
is predominant, both for home consumption and for
export. Before the war, in 1913, the total value of
all exports from Denmark amounted to Kr.
637,000,000, while the value of agricultural products
exported was Kr. 549,000,000; and of this last figure,
butter accounted for Kr. 223,000,000.

The development of the butter export gives first
and foremost a picture of the effects of maritime war-
fare and the perils of the sea, which, beginning with
the first year of the war, have continued on an ever-
increasing scale. To these difficulties have been added


2 4 5

Online LibraryT. Mikkelsen & CoFinancial Denmark and the war → online text (page 2 of 5)