The New Germany

In this autumn of 1919 the German revolution seems hunted to death. It has, however, only gone to ground.

FOOTNOTES:

CHAPTER IVToC

RUIN AND RECONSTRUCTION

The mistake we are all making about Germany over here, and a very natural one, is that we can't realise what Germany to-day is like. While we are rapidly getting back to the material and mental conditions of pre-war days, Germany is daily getting farther and farther away from us. It is difficult to express the difference. We all know the curious psychological change that comes over our lives when the doctor tells us we must "give up"; how then in a moment, as we sink into bed, we are changed from responsible personalities, ruling our own and others' lives, to helpless encumbrances ruled by doctors and nurses; and how we only recover our rights through a long convalescence. Germany has given up. It carried on until it collapsed, and now lies semi-comatose; and we, still absorbed in our quarrel, keep pestering it with solicitors and foreclosures instead of patching it up with doctors and food. Descriptions of economic conditions in Germany must therefore be read with the realisation that they are morbid symptoms. Germany may be, no doubt is, working its way through revolution to a saner, sounder condition, but at present is as abnormal and helpless as a snake changing its skin. Meantime, we, using the complete control over Europe that the war has put into our hands, have so interfered with this process as to risk making out of Germany as great a danger to the existing order in Europe as we made out of Russia.

Nor is the danger one of to-day only. In ten years' time when the Blockade will be no more than a memory, but when the surviving childhood of Germany, bodily wasted and mentally warped, comes to maturity, Europe will suffer for it. The fathers will have eaten their sour grapes by then, but the children's teeth will still be set on edge.

"I do not complain of your blockade, it ended the war," said to me a former Minister and a leader of political thought. "Yes, I've lost four stone since I left the trenches"—he was indeed only the framework of a once big and burly man with the low voice and languid bearing of the underfed. "I'm all right on what I get, it's the children—I could give you statistics, but you wouldn't believe them; I never do. Go and see them yourself."

So I went. First a tour of the cellars of the great tenement houses of Berlin—cellars closed before as unfit for habitation, but now, under stress of house shortage, lived in by the large families of the German working class. In one I find a war widow keeping five children on the bare ration: 5 lb. of potatoes, 5 lb. of bread per head a week, ½ lb. of meal and 1 lb. of jam when they can afford it and find it. The bigger children get a quart of skim-milk a week, too sour for anything but soup—the younger about two quarts of full-milk. They are having their supper—cabbage and potatoes. The younger children nibble suspiciously at gifts of chocolate. They do not know what it is and suspect a new "substitute." The younger children look better than the elder. The eldest boy has lost his job because he "can't keep his feet." The mother is emaciated. Next door is another family—the father, a painter, is in work, but is continually losing days from "stomach-trouble." They have lost one child from decline.

And so on, always the same stories of struggle against decline from want of fats or sugar, for the sugar supply failed when the Poles occupied Posen—against dirt from want of soap—against dark and cold, for the gas and coal are getting daily shorter.

Then I went to a public soup kitchen where a long queue of every class was waiting for its plate of potato-soup, just potatoes, absolutely nothing else, and they too deducted from the week's ration. "Splendid, splendid soup," says an enthusiastic little man, a small shopkeeper, perhaps, "not a rotten potato in the whole plateful."

Thence to the crèches and children's hospitals of the organisation started by the Empress Frederick and run for many years by English ladies. In these big, bright rooms there was the same ominous quiet as in the dark cellars. "We can keep them alive when we get them in time, but we can't do more. We can fill them, but we can't feed them with this," said the sister, ladling out potatoes and cabbage to the older children and oatmeal gruel to the younger. Everywhere swollen bellies and shrunken limbs—children of three that had nothing actually wrong with them but couldn't yet stand—children with "English sickness" as rickets is called—children of school age that couldn't be sent to school because they were so mentally and physically backward. Here and there a sturdy infant that owed a better start to some stronger mother, but the most of them lying silent or wailing feebly. "We could save even that one," says the sister, unwrapping a baby so shrivelled it looked scarcely human, "but we can get nothing, though they give us here whatever there is. They know it's the children that matter most now."

Children have always meant much to the Germans, and in those days of growing disgust with the past and of growing despair as to the future they meant so much that nothing else seemed ever to matter to the women at any rate. I heard a woman prominent in politics say she was glad to hear that the Allies were going to occupy Essen, Düsseldorf and the industrial district, because then they must see what was happening to the children there, owing to the blockade and to the barring off of the milk supply from across the Rhine.

I soon saw enough to be satisfied that though food could still be got at a price in the eating houses of Berlin, private households of the whole working class and lower middle class were so straitened for food that some members of each family were being starved; either because they were too sickly to digest such food as could be got or because they were giving it to the children. The same conclusion was come to by the numerous Commissions sent out to report, even though these were generally composed of young officers; instead, as they should have been, of experienced medical men and food experts. These Commissions were given every facility for estimating how far under-nourishment had deteriorated the working power of the poor and was deterring them from work. Also how far the low development and high death-rate of the children was due to this. And their reports show what a terrible responsibility we assumed when we maintained the blockade after the armistice, as a means of political pressure and a method of penal procedure. These reports are easily accessible to English readers, so I will only give here, for what they are worth, the conclusions come to by one representative neutral and one native authority. A Copenhagen association for studying the economic results of the war, estimated that the German population, which at the beginning of the war was about 67.8 millions, would, but for the war, have risen by now to about 70 millions and had sunk to about 65 millions. Of this decrease 3.5 millions was due to diminished birth-rate and 2.1 millions to increased mortality. In the last years of war the birth-rate fell to one-half. Of the increased deaths, 700,000 were ascribable to insufficient nourishment, mainly in the last two years of war. In 1918 the death-rate for both sexes over 60 increased by half and doubled for children between 4 and 14. My observations also suggest that it was children of this age that suffered most from the blockade. The loss of about two millions of men in the prime of life, the decreased vitality of the women and children who suffered especially from the blockade, and the general economic conditions of the country, make any early re-establishment of previous productivity impossible.

Again, in the Deutsche Medizinische Wochenschrift one, Geheimrat Rübner, compares losses by war and blockade as follows:—

According to this estimate the blockade by the third year was causing almost as heavy losses as the war itself; and a calculation on this basis suggests that the continuance of the blockade after the armistice for six months, must have cost Germany at least 100,000 lives.

Presumably we intended the pressure of our blockade to ensure prompt acceptance of our peace conditions. If this was our policy, it was a dangerous mistake. A people, as docile and disciplined as the Germans, would have accepted any terms dictated them while still under the impression of their military defeat and of the moral derailment caused by the revolution. They would have welcomed our armies as allies in spite of the efforts to rally them made by Chauvinist or Bolshevist extremists. And nothing that a foreign State could have done was better calculated to make such efforts successful than the blockade and the boycott. Neither in Germany nor in Russia have we learnt that it is better to feed an idealist than to fight him. It is only those who fast who see visions.

The food scarcity from which Germany was suffering during the six months I spent there, was something between the food shortage from which we were then emerging and the famine we were imposing on Russia. Germans were not dropping dead in the streets as they were in Russia; but, on the other hand, Germans were not merely being restricted to a sufficient ration of simple food as were we in England. The German rations were insufficient both in quantity and quality. This was especially the case in the essential elements of nourishment; in bread-stuffs, fats, and sugar. Bread was particularly bad; and I realised as I never had before that if one cannot live by bread alone, bread alone is what one cannot live without. So rotten bad was the blockade bread that the staff of life became little better than a stab in the vitals. This punishment of the Prussian Prometheus should not be overlooked when we cast up the reckoning. But how can we realise it? I remember, the day after I got back from Germany, seeing a girl in a Berkshire village come out from a baker's shop with a large piece of white bread and give it to her donkey. Three days before I would have pulled her and her cart all round the town for that bread.

During my first weeks in Berlin I found that I was being continually reminded of the lines of the American poet:—

And after wondering why for some time I asked a doctor friend. "Oh," said he, "that's only the war bread. It will last some two months or so, and then you'll be all right again. If it goes on longer I'll give you a medical certificate for invalids' bread." But I could not face those two months. I used to bring bread back from Weimar, where it was better in quality, and after it went mouldy, boil it up into puddings. Travelling, I lived mainly off imported tins of oatmeal cooked in a stove of my own invention, for portable fuel such as petrol, spirits of wine, etc., was unprocurable. Here is the patent, which tourists on the Continent may find useful pending the permanent peace promised us by Paris. You take a small oblong biscuit tin and cut out one end. You stand your pot or a pan on the tin, roll up a newspaper, light it and shove the lighted end into the tin, stopping it from burning too fast with the tin lid. You can boil a kettle with a number of the Tag-Blatt, and the morning paper heats your porridge instead of, as usual, cooling it. I say nothing of the mental and moral advantages.

And if the bread was deleterious, the showy-looking biscuits and cakes that flaunted shamelessly in the shop windows were positively deadly. What they were made of German "substitute" experts alone know, but mainly, I should think, saccharine and sawdust.

While this state of affairs was mostly due to the blockade, statistics of German home cereal production before the war suggest that, with anything like the increase of home production that we brought about in England, there should have been enough to provide the population with wholesome bread. And Germany, both from its superior administrative organisation and from its far larger proportion of home-grown food, seemed likely to have done better than we did. But, both in total production and in production per acre there was a heavy fall, amounting to as much as about 50 per cent. in such important crops as rye and potatoes; while the slight recovery recorded in 1918 was due to a very favourable season.

And the reason for this collapse was loss of labour power in men and animals and of fertilisers, natural and artificial. Women in Germany do not play the large part in field work that many of us supposed. The greater proportion of the heavy work of cereal production was done by immigrant labour, and for that the prisoner labour seems to have been a very inadequate substitute. When this disappeared the effort to induce unemployed to go on the land was as complete a failure as might have been expected from our experience. To this loss of labour must be added the loss of agricultural land in the province of Posen, now occupied by the Poles, from which Berlin and the Saxon industrial districts drew their grain and potatoes. Thereafter the potato ration in Leipzig was for some time reduced from 5 lb. to 2 lb. weekly.

The importation of flour from America made at first little difference. It cost far too much and came to far too little. Meat was nearly always procurable at a price, and, if one knew where to go, was good enough. And for a hundred marks or so, equivalent to five pounds at the pre-war rate of money, quite a decent dinner could be got in select restaurants.[3]

The organisation of food supply was distinctly good. The conditions in Germany were indeed far more difficult than in England. Instead of having merely to control the importation at the main ports in Germany the supply had to be controlled before it left the hands of the individual farmer. This could, of course, only be done on broad lines. The system followed was to divide the country up into administrative areas corresponding to the local governments and roughly to apportion the supply of food products to the population. This resulted in certain areas becoming surplus and others deficit regions; and the surplus regions were then compelled to supply a certain proportion of their abundance to their less fortunate neighbours. But, of course, no control, however meticulous, could prevent rural districts from feeding full before anything went to the industrial districts, or could stop illicit trading between the well-to-do and the farmers. This "schleich-handel" or sneak trade kept the profiteer well supplied throughout the war with farm produce. After the revolution this profiteers' sneak trade was supplemented by a proletariat sneak trade, in which plundered stores were hawked through the poor quarters by broken soldiers and miscellaneous brigands. In Berlin, round the Alexanderplatz, there was perpetual skirmishing between these "wild traders" and the patrols of the Frei-Corps. The efforts to suppress the sneak trade of the well-to-do classes supporting the Government were not so drastic. Butter could generally be bought through the hotel waiters at forty marks a pound.

There was noticeable in all this a marked deficiency of public spirit in respect to private life. The German has for so long been drilled and dragooned in his public life that his civic conscience is little developed. Whereas in England one had the impression that the government and authorities, and especially the army, were the worst offenders against national economy and the mass of the middle class the most conscientious, in Germany it seemed quite the other way. Undoubtedly one of the irritants that excited the revolution was the failure of the rationing system to secure an equitable distribution—or anything more than a minimum of certain staple foods.

This food shortage is, of course, a cause as well as a consequence of the economic collapse of Germany. German economic life, swept away for years on the tide of war effort, now revolves round and round in a vicious circle like a dead carcase in an eddy after a flood. Famine and fighting have made the people too weak and too weary to work; but until they work they cannot get food from abroad or grow it at home. That is the economic vicious circle. The boycott and blockade have made the people too restless and revolutionary to reconstruct and remodel their constitutional institutions; and until they do so they are to be boycotted and embargoed. That is the political vicious circle in foreign affairs. In all regions of economic life one finds this endless chain of cause and effect revolving round Paris and fettering such energies as are left to Germany.

This is not the place for an estimate of the material sacrifices we have made and are making, so as to coerce Germany into accepting the peace conditions of Paris and into suppressing its own revolutionary movements. I would only point out that a brisk trade between France and Germany was proceeding all through these months of blockade. For example, an acquaintance in Switzerland who wanted in February a certain well-known make of French tyre was told by his garage that they could get them cheaper than in France if he did not mind where they came from. They came via Germany. And no sooner was the Treaty signed than a swarm of American agents descended on Berlin, buying up businesses right and left, as also such stocks as were left. Small wonder, with the mark at one-quarter its pre-war value. As to objets d'art and paintings, the ruin of the plutocracy and the low rate of exchange threaten to strip Germany far more effectively than any German raiders could strip the villas of France and Belgium. But in this legitimate indemnity we English have not benefited. We are too much afraid of "dumping," no doubt.

There are still probably many in England who fear that German competition will begin immediately with the raising of the blockade. Apart from the political and social conditions that make impossible an early convalescence of German industry from its complete collapse, the following official data taken from the preface to new regulations for the textile industry, show the conditions to which this industry was reduced before the revolution. This document it may be noted, is not one prepared for foreign consumption.

At the outbreak of war German industry had a stock of 300,000 bales of cotton on hand, and as much more was held by the Bremen merchants. And as much more again was imported up to the breach with Italy in May, 1915. The stock then was 600,000 bales. During the war 200,000 bales were seized in Belgium and Poland. This supply allowed the German mills an output of 4 per cent. to 5 per cent. of their annual peace output of about a million tons. The annual local wool production during the war was 7,000 tons, flax 20,000 tons, hemp 11,000 tons, artificial wool 25,000 tons, and artificial cotton from rags, etc., 33,000 tons.

Attempts to grow cotton substitutes were a failure. Nettle fibre in 1916 amounted to 200 tons, turf fibre 2,000 tons, reed fibre 1,000 tons. Artificial fabrics (stapel-fasser), on the other hand, rose to an annual amount of 10,000 tons, and seem to have a future. Paper thread rose to 150,000 tons annually, but is only a war expedient. The home production of fibre was about 2 per cent. of the previous importation.

These official figures show that the arrears now required are such that if they could be supplied they could not be paid for. A value of about five milliards is required as compared with a value of 1-½ milliards imported before the war, and 5 milliards is about the total value of all raw material imported annually before the war. The only prospect of supply otherwise is from home-made artificial fibres, and that only if they are protected against foreign cotton, which is absurd.

All the proposals now under discussion for improving methods of production by co-ordinating and controlling the factories even if feasible and effective will not, in the opinion of competent persons here, make up for any material proportion of the loss of productive power due to present conditions both of capital and labour. They wish to get this and other industries restarted, not with any prospect of profit, but to provide clothing and work for the industrial population.

Of course, if the economic policy of the Treaty is ever realised and we artificially stimulate the production of Germany and strangle its consumption, we shall, if the country recovers, and is resigned to work under such conditions, run a real danger of a dumping of a most dangerous character. The semi-servile employment of the Germans could under such conditions be used to fight the efforts of our workmen for economic freedom; just as the semi-servile enlistment of Hessians and Hanoverians was used to fight the efforts of our American colonies for political freedom. But this policy, if policy it is, depends on whether and when Germany is sufficiently recovered to work again.

When we measure the exhaustion of Germany on the one side against the enormity of its burdens on the other, it is difficult to believe that it can ever recover in the near future. German economic life has had to endure three crushing blows—the war, the revolution, and the peace. It was financially ruined by the war, industrially ruined by the revolution, and economically ruined by the peace terms. Little need be said as to the financial ruin caused by the war. In its general lines it is the same as that suffered by all belligerent peoples; in its details it would require a book to itself. War losses reduced the industrial, agricultural, and mental producing power of the male population by about a fifth, which may well be doubled to cover the reduced productivity of the remainder due to physical anæmia and political agitation. The productivity of the soil was reduced by over a quarter, owing to want of labour and fertilisers. Livestock was reduced by two-thirds. Deadstock, including industrial plant, railway rolling stock, shipping, buildings, etc., was all much more reduced in value than with us, owing to the greater material concentration of Germany on its war effort. The State was bankrupt even in the opinion of the most optimistic. But all this was remediable, even rapidly remediable, as soon as the people recovered their vitality. And then came the armistice which for nine months blockaded and bled the patient. If one were to enquire which of the particular bleedings most contributed to his relapse into his present condition of coma one would choose the taking away of the 5,000 locomotives. The tie up of internal transportation that followed did more than anything else to injure the economic vitality of the country.

German unity was economic rather than political in its origin and dates from the Zollverein and the railway system. Germany was made a nation economically by railway construction in the '`forties'; though, unfortunately, the attempt to realise this unity politically on a liberal basis, in 1848, failed. Even in the present Constitution, we can recognise the degree to which the railways are relied on for binding the country together across the mediæval barriers of provincial frontiers. It was to some extent realisation of its political importance that made the German railway system the pride of the country; and it was the manner in which this system met the extraordinary demands of modern warfare that enabled Germany to exploit strategically to the full its internal position and fight a war on four fronts. And now the condition of the railways is a striking illustration of the economic and political conditions of the country.

Here is an account of a journey from Berlin to Munich undertaken last Easter.

In peace time, if you wanted to go to Munich from Berlin there were half a dozen trains daily which did the journey in seven or eight hours, and provided reading cars, eating cars, and sleeping cars at a rate no more than an English third-class fare. Even after the war one train daily only took eighteen hours, and the second-class carriages, though very crowded, were comfortable enough. So, when I was warned that if I wanted to see the Russian Communist régime in Munich at work I must lose no time, it seemed worth spending Easter week examining whether Russian Bolshevism can take root in Germany. As a matter of fact, I got just twenty-four hours in Munich, the rest of the week going in travelling.

The first difficulty was a strike of bank clerks, so that I had to leave short of money. The next was that owing to the coal strike all passenger trains in Saxony had stopped running, and the only route open was round by Frankfort. The Spa night express was, of course, running; a long train of sleepers for the Allied officers and official or officious personages, and a few ordinary carriages. Thanks to some British Tommies, for whom a first-class carriage was reserved, failing to turn up, I got a seat, and so comfortably enough to Cassel about dawn. There I found that the suspension of passenger traffic had been extended, and that a hundred miles of dead country lay between me and Würtemberg, where trains still ran. Fortunately, a party of prisoners from England were being sent south on a goods train, and I got leave from the Red Guard to join them. The station officials objected strongly, but the prisoners, some of whom had been reading The Daily News, overruled them.

And so, bumping slowly along on a wooden bench all day, discussing, cooking and card-playing with the prisoners, past stations with names reminiscent of pre-war high living. Leaving the goods yard at Frankfort about ten that night, I was lucky enough to run across a motor-bus just starting for Darmstadt, in Würtemberg, and got there about one in the morning with a jolly party of South Germans. Three hours on a waiting-room bench, and then at dawn on Easter Monday a train south into Baden, and then from Heidelberg east through Würtemberg.

All this country seemed to have suffered little from the war and to be wonderfully happy and prosperous. The change came again in the afternoon after crossing the Bavarian frontier and climbing slowly up on to the Swabian plateau. Down in Baden it was full spring, with fruit trees in bloom and warm sunshine. Here was winter, a bitter east wind and snow flurries, bare uplands and dark pine woods.

After passing Ulm were the first signs of the winter of discontent, some telegraph poles sawn through. And finally, just when a bed at Augsburg after two nights up seemed assured, we were all turned out about eleven at night at a miserable Swabian village called Dinckelscherben. There was fighting in Augsburg and all access to the town was barred by the Würtemberg troops there.

It was freezing hard, with a bitter wind, and I joined a forlorn party of some score travellers who wandered about knocking vainly at the doors of the big farms that made up the village—no Swabian farmer opens to a stranger at midnight these days. The only beerhouse was packed two deep with travellers from an earlier train, but took in the women on our threatening to storm it. The rest started off to tramp the rails to Augsburg, seventeen miles away; but as this meant abandoning my provisions I broke into a hayloft and bested the rude Swabian boor. The bauer by daylight was somewhat less of a Swab and gave me milk for my porridge, the first I had had for three months. He also produced at a price a queer little shay, with a half-broken Ukrainian, swerving erratically about beside a long pole, in which I drove over the plateau to Augsburg, getting there about noon.

Coming in to Oberhausen, the workmen's quarter, there were all the usual signs of trouble—deserted streets, bullet-starred walls, and broken windows. The street was blocked by a crowd that was being addressed by a speaker, from a window. The shay was surrounded by men armed with rifles and bombs; and half-starved Bavarian workmen, without sleep for days and fighting against odds, made an ugly looking crowd. They were not at first satisfied with my papers; said they, "If you are an English genosse make us a speech and if it's all right we'll let you through, if not—" It was a severer viva voce than I'd had for the Diplomatic Service, but I passed, and some of the elder men escorted the shay through the lines for fear of accidents. They promised not to draw fire from the Government machine-guns until we were across and the Würtemberg outpost was safely reached.

That afternoon was spent in Augsburg, the base of the Würtemberg Expeditionary Force, and the next stage was the fifty miles of road to Munich. No motor would go for fear of being confiscated by the Communists, and in all Augsburg there was only one fly with a pair of horses that could do it. It asked £20 for the round trip, about four times what I had with me. However, having bought an option on the fly, I had a monopoly of the transport to Munich, and had only to float a company. A merchant, an officer in mufti, probably a spy, and a charming lady in the dress of the Red Cross took the other three seats at £5 each, and I had still the seats for the return journey. These eventually brought a handsome profit that I divided between the Anti-Bolshevist League and the Communist Party.

These negotiations, and finding out what was happening in Augsburg, took the afternoon, and at dawn next morning we started over the rolling uplands for Munich. Outside Bruck we came on a score or so of Red Guards bivouacking in a barn, and nearer Munich passed through several pickets which searched for weapons, but gave no trouble. And so about two in the afternoon of Wednesday into Munich, having left Berlin Saturday evening.

The return journey was better. I had intended to leave Munich by the carriage for Augsburg on Friday, but on Thursday afternoon I heard the two parties had agreed to let a special train run for Munich merchants exhibiting at the Leipzig Fair. Having done nearly all that I came for, this chance was not to be missed. So I paid Levien, the Communist Commissioner, a farewell visit, and got a special permit from him to go by the Leipzig train. Leaving Munich about four with a train load of Munich merchants and their assistants, we went very slowly round by Landshut to Nuremberg, with nothing more sensational than searches for arms first by Red then by White Guards. The special arrived at Nuremberg about dawn, and was to wait six hours there; so finding a train was leaving for Bamberg, the seat of the Hoffmann Government, I went on there, and spent the morning in the picturesque old town, then the "Weimar" of Bavaria. Like Weimar, the station was barricaded, and a pass was required to enter the town. Like Weimar, the town was worth entering, for food was plentiful.

Having seen the Premier, I got back to pick up the Leipzig special. But the railway officials had other views, and there was no Red Guard to overrule them. My Communist permit was useless, and there was no time to get one from the Bamberg Government. So I had to see the special steam out. This might have meant a day's delay, as Bavarian passenger traffic was by now also suspended, the Bohemian coal having been cut off. I was lucky in getting on in a wooden box hitched on to a regular dachshund of a goods train, it was so long and slow. It crawled gasping up into the Thuringer Wald, and there after dark ten miles from anywhere lay down with no sign of life but an occasional sigh. After some hours a Prussian engine came down, and pulled it over the ridge, and we got clear of Bavaria at Probstcella about midnight.

Here there was a great row between the Prussian and Bavarian railwaymen. The Prussians complaining the Bavarians kept them up to all hours by being always late and the Bavarians saying it was the bad coal the Prussians sent them. Our small party, headed by some Bavarian officers, profited, because we backed the Bavarians, who in return insisted on our being taken on with the train. Behind the Prussian engine we developed a surprising turn of speed, and rattled along expecting at every station to be turned out or shunted until we got into the main line at Halle. A judicious change at a way station into a passenger train that overtook us, and three hours' standing up in a carriage with fourteen people, a large dog, two goats, and a baby, brought me to Berlin about two on Saturday afternoon.

Nor was this a unique experience. On my last journey home the locomotive broke down and had to be changed three times before we got to Hanover.

A German train with its immense but impotent engine, its ponderous but dilapidated carriages, its officials once resplendent and arrogant, now servile and seedy, its groaning crawl from one breakdown to another, is a painful picture of the German State.

And the financial position of the State railways is illustrative of the condition of State finances. Before the war the Prussian State Railways contributed to the budget a surplus of 600 million marks—now they show a deficit of 2,000 millions.

In the intervals between the crisis of its internal convulsions Germany worries feebly about its finances, much as a merchant in mortal illness may worry about his bankruptcy. But, of course, nothing has been done or could be done because the business was still closed and the chief creditor had not yet filed his claim. Now we know what Paris expects Germany to pay, and we also know something of the financial position from the statements of the Finance Ministers, Schiffer, Dernburg, and Erzberger.

The German debt before the war was an annual charge of 230 million marks, the peace expenditure excluding the army 200 millions. The war debt in December, 1918, was 146 milliards, increased in January by 3.5 milliards, in February by 2.7 milliards, in March by 2 milliards and estimated to increase further by 1-½ milliards per month on an average for the coming financial year. To this must be added ½ milliard for cost of expropriations, 4-½ milliards for reconstruction of ravaged territories in Prussia, 1-½ milliards for compensation of German shipowners, separation allowance subsidies to the German States, etc., in all 185 milliards about, with an annual charge of 10 milliards. Reduction of this item by total or partial repudiation of this debt, though advocated by the Opposition, is impossible without causing economic ruin and political revolution. The new army is estimated to require 2 milliards; about the same as before the war, because of the enormously exaggerated expense of this small volunteer force compared with the old conscript army. If, to the great political advantage of Germany, a Swiss militia were substituted for the Frei-Corps, this item could be halved easily. The estimate of 4-½ milliards for pensions is the same as that of France and will probably be exceeded, though as yet less than half that is being paid. This makes up a total annual estimated expenditure of 17,429 million marks, the mark at pre-war exchange being equal to a shilling.

As Herr Erzberger's speech on the Budget showed, he is faced by a financial position unparalleled in the history of national bankruptcies. The interest which he has to find on the Imperial debt amounts by itself to Mk. 10 milliard; and his total annual requirements, exclusive of the Allies' demands under the Peace Treaty, are estimated at Mk. 25 milliard. Before the war the revenue from Imperial taxation was under Mk. 2 milliard. Additional taxation imposed during the war yields about Mk. 4 milliard. To-day therefore Germany is faced with an annual expenditure of Mk. 25 milliard and an annual revenue of Mk. 6 milliard—i.e., an annual deficit of Mk. 19 milliard, nearly ten times greater than the whole revenue of 1913. The new taxes actually proposed are estimated to bring in about Mk. 2 milliard. But the main sources upon which the Finance Minister is going to rely are two: a levy on capital and a tax on sales. The levy establishes a graded tax on all property, starting at 10 per cent. and reaching a maximum of 63.9 per cent. Payment may be made by instalments spread over 30 years, and it is estimated that the tax will bring in about Mk. 4 milliard annually. The tax on sales is still more drastic. It really consists of three different taxes: (1) a general tax of 1 per cent. on all sales, (2) a tax of 5 per cent. on retail trade, (3) a tax on the producer of luxuries of 10 per cent., and on retail trade in luxuries of 15 per cent. This tax is estimated to bring in about Mk. 3 milliard. But even after this raid on the owners of property and upon capital, the unfortunate Minister of Finance is faced with a deficit of Mk. 10 milliard. He proposes to get Mk. 2-½ milliard out of beer, petroleum, stamps, flour and meat, and the remainder, Mk. 7-½ milliard out of a uniform income tax for the whole country and an excess profits tax.

The magnitude of these sums can be estimated when it is remembered that the total incomes of all Prussians earning more than a pound a week only amounts to 19 milliards, and that Helfferich's estimate of the pre-war income of all Germany was 315 milliards. But that was a very different Germany from the present. Germany has lost a greater part of its mineral wealth, the coal of the Saar, the potash of Alsace, the ores of Luxembourg. She has lost her colonies with their great potential wealth. She has also lost her fleet and a great part of her railway material. Over a million and a-half, or 16 per cent. of the male working population are dead. Industry has neither the capital nor the energy to reconvert itself to peace productivity. Much of the capital left is either concealed or has been carried abroad. German holdings of foreign securities were estimated at twenty milliards before the war and not more than one milliard now. Over a milliard of the gold reserve at the Deutsche Bank has been paid for foreign provisions, leaving only a milliard and a-half to cover a note issue of thirty milliards.

Germany must by March, 1921, deliver up all payment in kind, i.e., goods, ships, coal, etc., which might possibly exceed the total of £800,000,000 provided by the Treaty. On the other hand, Germany must pay the pensions due to disabled soldiers and the relatives of the fallen, which in the case of France alone amounted to £8,000,000,000. In all, Germany is liable for a sum of £15,400,000,000, which should be paid off in a period of thirty-six years. For the two first years after the war she will pay nothing, but subsequently she must pay £554,000,000, with interest at 5 per cent. The total amount paid by Germany will therefore amount to £18,520,000,000 at the end of thirty-six years.

And most serious loss of all—she has lost for a time, anyway, all will to work. Improvement in food and general conditions of life will do something for this, socialisation of industry and introduction of the Council system would do more, but it will take time. Even if Germany obtained at once a return of energy, a reopening of markets, a re-entry of raw material and a free recourse to foreign capital, and she will have to wait long for all of these, even so it seems very doubtful whether she could make a living under such a load of debt. This will mean the emigration of from ten to twenty million Germans in the course of the next few years, to the West if it is open to them, but otherwise to the East. Germany will, in fact, be brought down to the political and economic conditions of Portugal.

We pursued this policy of ruining Germany for a century because we were still under the impression of animosities and anxieties that belonged to war conditions. Our attitude was that the Allies should get what they could out of Germany while they could; and if the attempt ruined Germany, Germany had deserved it.

This was the attitude that prevailed during the armistice period. But the Peace of Versailles has inaugurated a more systematic and far-reaching exploitation. This is no place to review its economic and financial provisions; but no one could read them without realising that our policy is apparently to make Germany work for us as its bankers, brokers, shippers and creditors with unlimited claims. To take a rake-off as merchants and middlemen from all German manufactures and to set up a receivership over Germany that we call a Reparation Commission, with the right to claim any remaining profit. The powers of this receivership are such as to prevent the development of any German competition with us in the conduct or control of German production. Combined with the claims for damages these powers would, indeed, make all government impossible. For example, under them Germany is liable to pay the pension claims of the dependents of Sikhs, Senegalese or South Carolina negroes to the exclusion of its own wounded and widows. But the policy, in so far as a compilation of the unchecked schedules and uncriticised schemes of war profiteers can be said to have a policy, is that of making the German workmen produce for British Big Business. The functions ascribed to the so-called "Reparation Commission" represent an attempt to make the German proletariat work under foreign exploitation. Experiments in foreign financial control we have had in Eastern Europe, with semi-civilised peoples; but this is an attempt to set up foreign economic control over a people which in industry had won for itself the first place in Europe. At first sight one is inclined to reject this policy as a practical impossibility; but so extreme is the debility of Germany, and so exceptional the docility of the people, that I am inclined to think it might have had some temporary and partial success but for one thing—the Council movement and the demands of the workmen for the socialisation of industry.

Without some measure of socialisation of industry, without some measure of political representation through Councils, the unemployed will not return to work and the employed will only work in fitful intervals between strikes.

Between the November revolution and the end of February the coalminers alone forfeited 23 million marks of wages in more or less meaningless strikes; and this was before the great strikes of the spring, which had an obvious political purpose. This is three times the loss incurred in the last pre-war strike of 1912. The decrease in production rose from a quarter-million tons in December to a million in February, and this was little compared with the loss that followed, estimated at no less than ten million tons.

During the first six months of 1919 there were always at least a million and a half workmen drawing an unemployment pay of about two-thirds of their average wage.4] Add to this outlay that of the force raised to prevent the workmen from realising their revolution—the seven hundred thousand Frei-Corps, engaged at such a high pay that this Prussian volunteer force of to-day is budgeted for at the same total as the vast German armies that dominated Europe before the war. It is curious that Germany should now be paying the same amount to terrorise a few working quarters that it paid five years ago to terrorise the world. And the second attempt is as hopeless as the first, for the revolution will not be denied. Even the bureaucratic Social-Democrats of the present Government recognise this and try to placate it with words.

"Socialisation has come," proclaim the Government posters all over Berlin, and when I was in Berlin I thought I'd see if I could find it. First, I went to the special department responsible, where in a commandeered hotel I was introduced by a charming lady typist to an equally charming temporary official. He was an enthusiastic alpinist, and asked affectionately after my brother and other English climbers; and, finally, with the help of the typist we unearthed some pamphlets and propaganda leaflets. It was quite a shock on leaving to find oneself in the Wilhelmstrasse, not in Whitehall. Then I tried Westminster—I mean Weimar—where I found two Government Bills being shoved through in a great hurry, because the Socialist supporters of the Government had, like me, been investigating what was behind the posters and pamphlets, and had found only brick walls and bureaucrats.

And to what does it all amount? Practically nothing, except as regards the coal industry, and so far rather less than nothing there. But the course of events is instructive and particularly interesting for us.

The German coal industry, even more than ours, has in the last quarter-century become a monopoly under control of great capitalist combines. Their power is not affected either by the State-owned Prussian mines or by any possibility of new coalfields, as these are either held in reserve by the combines or are too unremunerative to compete. Already before the war this monopoly had been recognised by all parties as not in the public interest; but "nationalisation" in the sense of State exploitation was prejudiced by the poor results given by the State-owned properties of the Saar fields.

This inferiority was due not to inferior industry on the part of the workmen but to inferior initiative and independence in the management. What effect over-papered, under-paid officialdom can have on the productiveness of a coalfield is shown in the following annual percentages of total production: