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Germany's naval policy instead of improving her military position has made it still more precarious and will give Austria-Hungary additional reasons for reconsidering her position. The net results of Germany's naval policy are as follows: Germany has built a fleet which is, and will remain, unable to meet the British fleet, and which therefore is militarily almost useless, and she has created that fleet at the cost of her political position. By her naval policy she has weakened her army, destroyed the Triple Alliance, and raised a powerful combination against herself. Nobody can doubt that owing to her military and naval policy Germany's loss in power and prestige has been greater than her gain in naval strength, and every well-wisher of Germany must fear that her naval policy will in the end involve her in disaster.
Not only politically and militarily but economically also has Germany lost ground, especially during the last few years. The maxim of all the German spending departments seems to be 'Money is no object.' During the last few years German Imperial, national, and local expenditure has increased at an unheard-of rate, and the expenditure has been provided for partly out of taxes and partly out of loans. The following figures are significant :
In 1888, when William the Second came to the throne, the Imperial debt stood at the insignificant sum of 36,050,000. During twenty-two years of the Emperor's reign more than 208,000,000l. have been added to that debt in peace time, and of that enormous sum not less than 130,000,000l. have been added since 1900, the year when Germany's naval expansion began in earnest. We may say that the navy has added more than 100,000,000l. to Germany's Imperial debt. Of course, the loans raised were largely for 'other objects,' but these other objects would have been paid for out of the Empire's current income had not so much of the current income been spent on the navy.
Germany owes her industrial success very largely to her ability to produce cheaply, and the cheapness of her production was formerly largely due to the lowness of German wages. But wages are no longer low in Germany. Owing to a simultaneous great increase in German wages and in taxation, the cost of production has risen so much that many industries which produce goods that require much labour have begun to suffer. The finer productions require much, the coarser little, labour. How national
extravagance and higher wages are affecting Germany's manufacturing industries may be gauged from the following figures :
Germany's exports have risen very greatly between 1905 and 1910. Apart from machinery the increases have been particularly great in coarser manufactures, such as raw iron, coarse ironware, steel rails, &c., in which the labour cost is proportionally small. On the other hand, there have been during the same time very considerable decreases in the exports of cotton and woollen goods, clothing, fine ironware, gold and silverware, books, colour prints, porcelain, &c., in all of which the cost of labour is proportionately great. Through the increase in the cost of labour, which is largely due to the indirect effect of high taxation, and owing to the direct taxation put upon the manufacturers, many German industries have been, and are being, transferred to Austria-Hungary, Holland, Belgium, Great Britain, &c., where wages or taxation, or both, are lower. The report of the Berlin Chamber of Commerce of 1909 complained that the ready-made clothes trade was leaving Berlin for London 'because wages are lower in London than in Berlin.' The reports of the British Consul in Frankfurt of 1908 and 1909 pointed out that German industries were being transferred to Great Britain in order to profit from the lower wages in this country.
During the last twenty years the German system of State insurance has been so often and so very greatly extended that its yearly cash cost exceeds at present 50,000,000l. per year, a sum almost as large as that expended on the German Army and Navy combined. That gigantic yearly expenditure acts as a severe tax upon industry. According to Steller's Erhöhung der Gestehungs
kosten der Deutschen Industrien durch die sozialen Lasten the burden of State insurance per worker has increased in the case of the Köln-Nippes Cable Works from M.24.50 per head in 1900 to M.40.45 per head in 1910. In the Westphälische Drahtindustrie, Hamm, it has increased from M.23.72 per head in 1900 to M.44.87 per head in 1910. In the mine Gutehoffnung, Oberhausen, it has increased from M.41.75 per head in 1898 to M.91.89 per head in 1910. Germany's social policy is apparently beginning to have a restricting effect upon industry, and complaints about its burden are becoming loud and general.
The fact that German industry is no longer progressing as rapidly as it used to, and that it is apparently approaching the point where stagnation begins, is particularly noticeable in the shipbuilding and shipping industries. Here we find the following: Iron and Steel Shipping Built in Germany
Between 1890 and 1900 the German shipbuilding industry expanded very greatly. Since 1900 it has expanded very little, and the shipbuilders are complaining loudly. If we now look at Germany's Merchant Marine we find that it has progressed as follows:
Here we find again that the rapid progress of former years is no longer maintained, but has been replaced by a state resembling stagnation.
In Bismarck's time the German tariffs were simple, and they were made in accordance with national needs. They were just to all classes. Now they are made to suit the Government's parliamentary requirements, and they are largely, shaped by party pressure. Moreover, the new German tariff is far too elaborate for practical purposes. Germany's industrial prosperity, which was created by Bismarck's wise fostering care, and especially by his tariff policy, is in danger of being destroyed by unintelligent Government action. Already great harm has been done to the national industries. In Germany's economic policy the absence of a guiding hand is as noticeable as it is in her foreign policy and in her military policy.
The absence of statesmanship and of common foresight into economic matters is particularly noticeable in the case of the
German Savings Banks. In these the enormous sum of 900,000,000l. is deposited, an amount four times as large as that in the British Post Office and Trustee Savings Banks combined; and these gigantic deposits are growing at the rate of 50,000,0001. per year, whilst the British Savings Banks deposits grow only by 5,500,000l. per year. The German Savings Banks are purely local institutions. Of their funds only about 10 per cent. are invested in the securities of the Empire and of the various States, 15 per cent. are invested in loans and Stock Exchange securities, which are not easily realisable, and no less than 75 per cent. are invested in urban and rural mortgages. The German Savings Banks deposits are repayable at short notice. Yet nearly the whole of their funds is tied up. Behind the British Savings Banks stands the Government. Their funds are invested exclusively in Government Stock. Therefore the British Savings Banks deposits can easily, and unconditionally, be guaranteed by the State, and the depositors can, in case of need, be paid in Consols. But as the German Savings Banks are run by the local authorities, towns, villages, &c., the State cannot very easily guarantee their solvency, and as they have no common financial reservoir from which they can replenish their funds in time of pressure, a great war might, and probably would, lead to the failure, or to the stoppage, of all, or nearly all, the German Savings Banks. Owing to the insecure position of the Savings Banks a war might cause in Germany by far the greatest financial catastrophe which the world has seen. Yet the Government has done nothing to provide against such a contingency.
German taxation, like the German tariff, suffers from overelaboration in all its branches. In the desire to treat everyone with absolute justice and to prevent fraud, the various taxes are so finely graduated and differentiated, and so many hairsplitting regulations and safeguards have been devised, that their collection requires an enormous army of officials, and the cost of collection. stands out of all proportion to the money produced, to the harm of the taxpayers. The fundamental principal of taxation, that the cost of collection should be small in proportion to the produce of the tax, has been forgotten. Here, as in other provinces of Government, the absence of statesmanship and the prominence of the underling are painfully apparent.
Germany, which used to be the best governed, is now merely the most governed, country in the world, and the defects of the Government in all its branches have created general dissatisfaction. Of that dissatisfaction the rapid growth of the Social Democratic party is the most noteworthy symptom. William the Second came to the throne in 1888. There was a General Election
in 1887, and since then the Social Democratic party has grown as follows:
Social Democratic Votes Polled at General Elections
During the Emperor's reign the Social Democratic party has grown in the most extraordinary manner. In 1887 there were eleven Social Democratic members in the Reichstag. Now there are 110 members out of a total of 397.
More than a full third of all the German electors voted in 1912 for Social Democratic candidates. As the Social Democratic party had in 1911 only 837,000 members, of whom 108,000 were women, only 729,000 of the Social Democratic voters were avowed Socialists. The remaining 3,500,000 voters consisted very largely not only of independent working-men, but of men of all classes of society-bankers, merchants, shopkeepers, professional men, and especially Government servants, such as postmen, railwaymen, &c.; and these voted Socialist in order to register a protest against the Government. The 4,250,919 Social Demoratic votes recorded in 1912 do not show that Socialism is widespread in Germany but that dissatisfaction with the Government is widespread. The people are dissatisfied, not because they are poor-a nation whose workers place every year 50,000,000l. in the Savings Banks is not poor-but because they have become impatient with the failure and mismanagement which have become characteristic of the German Government in all its activities. Governmental absolutism is tolerable only as long as it is successful.
The German people have scarcely any influence over the national legislation and administration because the officials are not responsible to Parliament. Although Germany possesses the most democratic franchise in the world, manhood franchise, and although plural voting is illegal, Parliament is powerless. The German people are tired of being governed from above' by an army of officials. They are tired of being tricked with the semblance of democratic institutions and of a democratic franchise. They wish to govern themselves. A conflict is bound to arise earlier or later between the German bureaucracy and the German democracy. It may arise very soon, and the result will show whether the people are fit for self-government.
The characteristic of Bismarckian Germany was efficiency coupled with frugality. William the First hated pomp and osten