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The loss of her Colonies has had not only direct but also indirect consequences. What threatens to aggravate

. the monetary position in Germany and the slump in her overseas trade is her inability to sell her own securities anywhere, since neutral markets will regard them with misgiving and her bourses remain closed. London, once the dumping-ground of Europe, occupies that position of maid-of-all-work no longer. In view of the regulations in force to prevent German, Austrian or Turkish selling, even of international securities, on the London Stock Exchange, those countries will have to find some other and more accommodating market, or, as is not improbable, will have to do without any market at all.

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If this restriction be taken in conjunction with the severe limitations of German trade, the conclusion presents itself that Germany has virtually to depend, until the end of the war, almost entirely upon her internal resources. Her export trade is killed by the compulsory inactivity of her mercantile fleet; her manufactures are seriously prejudiced by the limitation of imported raw materials; her food supply will probably, by and by, be insufficient for the wants of her population. In a word, the economic pressure will, from now onward, become more and more relentless and effective.

In order to see clearly what commercial consequences are looming ahead, and the extent to which Germany is likely to be affected, it is necessary to consider the trade figures that are available. Germany's budget for 1914 provided for an expenditure, ordinary and extraordinary, of close upon 175,000,0001. This was the sum, therefore, that had to be provided in time of peace; and this Imperial revenue had to be raised from posts, telegraphs, customs and excise duties, taxes, the Imperial railways in Alsace-Lorraine, and the matricular contributions of the several component States. The revenue for the previous year was about 184,800,0001., a good deal of which was due to non-recurring expenditure in connexion with the Army changes of 1912. Yet, in spite of her rapidly-increasing national indebtedness, and the steady growth of her annual expenditure, Germany was, up to the outbreak of war, a prosperous nation; and her prosperity would have continued to grow if she had

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but been content to live at peace with her neighbours and had not cherished a monomania to control the whole world. But her attitude has always been one of aggression and suspicion. As the thief sees in every bush an officer, so Germany suspected in every precautionary move against her own threatening policy an insidious attempt to take her by surprise. The Wehrbeitrag,'or levy on property enacted to obtain the money for hurrying up the new Army law, was nominally a defensive but actually an offensive measure.

This graduated tax, both on property and income, falls heavily on the owners of big fortunes and on the richer limited liability companies. It was passed some little time before the war, but, burdensome though it is, it will go but a little way towards meeting the tremendous expenditure necessary in financing the war. For there is the interest on the new War Loans to be provided. The German Imperial debt, funded and unfunded, amounted to 269,844,3901. two years ago; and since then a loan of 250,000,0001. has been issued and a further loan of unlimited amount authorised. The new debt, if it amounts to 500,000,0001., will mean an extra charge, in interest alone, of 25,000,0001. a year--a serious item considering the falling incomes of many of the big trading concerns and the blow already inflicted on the revenues.

With the collapse of foreign trade comes the necessity for heavier taxation. While the manufacturer is earning very much less, he is called upon to pay very much more; and, while scarcity of employment in many trades is making cheap food a necessity, interference with the importation of food-stuffs is making it an impossibility. Great as are the agricultural resources of Germanyfrom eight to ten millions of her people are in normal times engaged in agriculture—they cannot be available to anything like their full strength now that so many of the peasant class have been called to the colours. Work on the land is done to a considerable extent by German women; but no amount of female labour can

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* The Imperial Budget for the coming year places the ordinary revenue and expenditure at 166,154,0761. The revenue in the extraordinary budget is estimated at 4,024,9651, and the expenditure at 502,112,1001., of which 498,092,1391. will be covered by loan,

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compensate for the loss of strong and lusty men in agricultural work. This interest will therefore suffer, though not, at the outset, so much as the manufacturing interest. Both will be called upon to make good by taxes the deficiency in customs dues and in profits on exported goods, and the increase of interest on the rapidly-swelling national debt. To a smaller extent we at home are affected in a similar way. We have to raise new taxes at a time when trade, except in war requirements, is sluggish and in some cases stagnant. But there is this vital difference-our mercantile marine is pursuing its normal course, and will continue to do so in spite of submarines or other menaces. A few ships have been captured or sunk, and a few cargoes confiscated ; but, with these trivial exceptions, our import and export trade with all countries, save those directly affected by the war, is going on just the same as usual. We have lost our trade with Germany, Austria and Turkey, and to a great extent that with France, Belgium, Russia, Italy and Switzerland has been crippled, but Germany's disaster is world-wide.

Although it is probable that a good deal of merchandise, food-stuffs particularly, are finding their way into Germany through neutral countries, it is certain that this can only be done by a relaxation of the customs dues, so that whether the import trade is wholly or partially suspended owing to the war, the loss to the revenue is pretty nearly the same. The value of the imports for 1913 was 534,750,0001., the customs duties on which amounted probably to between thirty and forty millions. It may be safely assumed that not more than

. a third of this sum will be collected during the twelve months beginning Aug. 1, 1914. The case with regard to the exports is infinitely worse. Practically no merchandise is going out of Germany by way of the sea. Her mercantile shipping, which in point of tonnage is the second in the world, is lying idle in port; her great passenger liners are equally inactive; and the exports, which in 1913 amounted to a value of 495,630,0001., are reduced to practically nil. Before the war, these consisted of iron and iron goods, groceries and food products, drugs and chemicals, wool and woollen goods, cotton and cotton goods, anthracite coal and coke,

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instruments, clocks, machines and vehicles, earths, ores, hardware, art objects, fancy goods, clothing and silk goods. The loss of nearly 500,000,0001, sterling in export trade is one that must very seriously affect industrial interests and restrict employment. Germany's trade with the United Kingdom has, of course, come to an end altogether. This amounted in 1913 to 130,000,0001., of which 80,500,0001, were exports, consisting principally of sugar, cotton, iron and steel, woollen and silk goods and grain. The chief commodities imported from the United Kingdom were cotton yarn, coal and coke, worsted yarn, machinery, etc., most of which may be looked upon in the light of raw material, and the lack of which will as seriously interfere with German manufacturers as with British exporters. The exceptional activity of the trades concerned in the manufacture of war munitions and military equipment will doubtless alleviate the industrial paralysis in Germany as well as here; but there is all the difference in the world between doing a trade with your own countrymen and doing a trade with the foreigner. The money that Germany is spending in this way is going out at a rapid pace, and there is next to nothing coming in. She is paying huge sums in unproductive work, whereas her productive enterprise is arrested ; and big markets, which she has taken so much pains to acquire, are temporarily closed to her.

It is interesting to recall what was said by Herr Possehl a year or two ago (as reported in the Daily Express ') in an address to the Deutscher Werkverein, wherein he frankly predicted the economic effects of a war and a blockade of German ports. In dealing with the iron and steel industry, he pointed out that it employs 400,000 men, not counting the 700,000 miners. To carry on this trade, more than 12,000,000 tons of ore have to be imported from Sweden, Spain, France and the Mediterranean, as well as from Russia. As Germany could not possibly supply the deficiency caused by the stoppage of these external supplies, the blast furnaces would have to close down, and trade in the interior of the country would be suspended.

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The situation, continued Herr Possehl, 'applies equally to the great hardware industries of Rhenish Westphalia and of Silesia ; the raw materials will fail, and the works will have to shut down. The cutting-off of our exports of manufactured goods, of which Rhenish Westphalia produces half, operates in the same way in the event of a blockade. Then comes the great textile industry, with 16,000 mills employing 900,000 men and women, which imports enormous quantities of cotton, wool, raw silk, and so on from overseas, and exports them as finished goods. The total imports and exports reach about 150,000,0001. a year.

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Here no new source of raw materials is possible. The machinery trade, which employs 900,000 workers in 20,000 shops, accounts for exports worth 25,000,0001. The chemical industry, the iron-working trade, the supply of foods and drinks, the rubber industry, hides, paper, wood-working and other trades employ hundreds of thousands of workers and contribute enormously to the wealth of the German people.

'I am persuaded,' he declared, that a long war, with a blockade of the coast, would mean that one-third of our industrial workers would be without bread; even if agriculture could temporarily employ a great number of the town workers and various branches of industry were busier than they normally are on war materials, still there would remain about a million workers without a stroke of work to do.'

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Germany's maritime trade and shipping are dead in the event of war,' he concluded. Of Germany's exports and imports to the total value of 900,000,0001., more than two-thirds, he points out, come and go by sea, and are consequently at the mercy of the sea power of England.' All the prophecies put forth with such striking candour in this speech have not yet been fulfilled, but they are probably on the way to fulfilment. Economic pressure is not a thing of a day or a week or a month; it takes time to act, and the longer it takes the more deadly is its action,

The question of foodstuffs, already briefly referred to, is one which has already caused anxiety to the Imperial Government. In order to put the matter without any bias, we will simply quote a few figures from an authoritative German source. Wheat consumption in Germany amounted in 1910-11 to 29,000,000 tons, not counting seed-corn. Of this total, 6,000,000 tons, or nearly 16 per cent., was imported. Population and consumption of

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