754. Territorial losses of Germany.—By the terms of peace Germany ceded territory in the west to France and Belgium, in the north to Denmark, in the east to Poland. The most serious losses were comprised in the provinces of Alsace and Lorraine, and in part of the province of Silesia. Upper Silesia contained mineral deposits, particularly coal, which the Germans asserted to be indispensable to the industrial development of their country, and the contest over the rights involved delayed a decision for more than two years after the signing of the Treaty of Versailles. The final award, rendered by a commission of the League of Nations, divided between Germany and Poland the territory in dispute but arranged that for a period of fifteen years the whole area be kept under the control of a commission which should recognize the mixture of interests and should maintain free economic intercourse.

The total losses of Germany, measured in area, population, agricultural and industrial resources, ranged from 10 to 15 per cent. Losses in particular resources of great industrial importance were still more serious. The country was obliged to abandon mines supplying about one-quarter of the annual output of coal, three-quarters of the iron output, even a higher proportion of the output of zinc.

755. Internal losses of the country.—These losses fixed by the terms of peace were added to the loss which Germany had already suffered in the course of the war. The population in 1914 was 68,000,000. Deaths in the army amounted to 1,800,000, and the number of wounded was over 4,000,000. In the civilian population, also, the mortality in the latter part of the war had been very high and the vitality of survivors was impaired. An indication of the extent and character of the losses is provided by some statistics of Prussia, which show a decline in population, 1914-1919, in every province but three, and show a serious decline in the proportion of males. In 1914 there were 102 women to 100 men; in 1919 the proportion was 109 to 100.

Germany emerged from the war not only short in man power, but also weakened by the depreciation of capital and in serious need of some of the most important raw materials. The demands of the army had taken precedence over any other consideration, and had in the four years of war stripped the country almost bare.

756. Effects of the blockade.—The weakening of German resistance and the final surrender were due in large measure to the inexorable blockade maintained by the allies of the Entente. Germany made an extraordinarily effective use of what resources she had. Her scientists produced nitrates from atmospheric nitrogen and so freed her from dependence on imports from South America for her explosives. Her manufacturers made clothing for the people from paper and nettle fibers. Her officials scoured the country for copper and brass implements, when the stock of copper for munitions was depleted, and gleaned a surprising amount of metal for military use. Her military leaders systematically looted the districts which they occupied. There are limits, however, to the achievements of the most scientific synthetic chemistry, or of the most unscrupulous and efficient administration. A substitute (Ersatz) was provided for almost everything, as the supply of the original good ran low. However successfully the substitute might imitate the original in appearance it rarely proved to have the same efficiency in action. German locomotives deteriorated because they were lubricated with substitute oils and grease; the German people ran down in vigor and power of resistance because they were fed and clothed with substitutes.

757. Commerce of Germany during the war.—Germany maintained active commercial relations with the other Central Powers, importing particularly foodstuffs from the rich plain of the Danube basin, and lignite (brown-coal) from Bohemia. Trade with the more distant allies, Bulgaria and Turkey, proved difficult and relatively unimportant. Railroad facilities were in such demand for the transfer of troops and the movement of munitions to the front, that they could hardly be spared for distant service in southeastern Europe; water carriage on the Danube was preferred but was slow and ineffective.

There was a marked increase in the value of trade with neutral states, of which three, Switzerland, Netherland and Denmark, were directly adjacent, while Norway and Sweden were separated only by water which lay outside the control of navies of the Entente. These states accounted for about one-seventh (14%) of the total trade of Germany in 1913, and took on a new importance when Germany was denied other sources from which to supply her wants. The German government has not supplied statistics by which to measure changes in trade during the war, but they can be traced in the commercial statistics of the neutral states, and are illustrated in the following table.

A feature of the table which deserves particular attention is the relatively small amount of foreign wares which reached Germany through Denmark. Doubtless wares of this kind were smuggled across the border in considerable quantities, and so do not appear in the statistics; but the strictness with which England, in behalf of the Entente, regulated the importation of these wares by the neutral countries, allowed no large surplus for export to Germany, and strangled the overseas trade of that country.

Germany imported from all these neutral countries foodstuffs, especially meat and fats; from particular countries she imported iron ore, metals, and special textiles for military purposes. Payment was made largely in coal and iron products, for which the small states had been used to rely on Germany, and which they sorely needed.

758. Effects of the political revolution.—Sections above enumerated various losses which Germany suffered as a result of the war. To appreciate the condition and prospects of the country after 1918 it is necessary to consider another element of weakness, of which the importance cannot be questioned, even though it may be hard to estimate. This is, namely, the political revolution which accompanied the armistice.

All the faults of the military monarchy of the Hohenzollerns appeared prominently in the outbreak and in the conduct of the war. The world paid a tremendous price to be rid of it, and did not count the cost. The evils inherent in the old political system should not be allowed, however, to blind our eyes to some merits that it had, notably its honest and efficient administration. They should not obscure the important fact that the old system, however bad it might be, was that to which the German people were used, and without which they were at a loss. The monarchical system was deep-rooted in German life. Most of the people accepted it with sincere conviction; the opposition to it, as exemplified in the party of the Social Democrats, was perfunctory rather than popular. In reliance on the monarchy the people had been content to retain a passive attitude; they lacked a sense of individual political responsibility, and lacked political initiative. When, therefore, the people realized at last that their trust had been misplaced, that the war which was to be over (so they had been assured at its beginning) by Christmas, 1914, was never to be ended until they had confessed to utter defeat, they swept away the old system but did not know how to operate the political machine which they erected in its place. Attempts at social revolution by the radical Spartacists, infected by Russian doctrines, and at reaction by adherents of the old military monarchy, rendered the new republic insecure at its foundations; while the desperate conditions of life prevailing at the close of the war shattered the former administrative organization and rendered the new administration costly and ineffective.

759. Peculiar importance to Germany of sound politics.—A decline in political efficiency will have a more serious effect on the productive organization in Germany than it would have in other countries for two reasons. (1). The state has taken a particularly active part in the control of economic affairs. Its power over them was greatly extended in the course of the war, and is still so great that much depends on the wise exercise of this power. (2). The state will transmit to the people by taxation the burden of paying reparations. This burden will be and ought to be a heavy one. The minimum amount to be paid annually, under the terms of the London Settlement of 1921, is variously estimated by German economists to amount to 8 or 16 or 28 per cent of the total real income of the country. The proportion, if we choose the middle figure, does not seem unduly high. Many, perhaps most, American families could sacrifice one-sixth of their income, and still retain the essentials of health and happiness. Conditions were very different in Germany at the close of the war. A considerable part of the people was on a stage of living which may fairly be termed a minimum; depression below that stage implied an actual loss in productive efficiency. Under these conditions it was of peculiar importance that the tax system should be just in principle, economical and impartial in administration. No slight importance, therefore, attaches to the fact that the government even in 1921, three years after the armistice, was still unable to balance its budget, and was meeting its domestic obligations by issuing more and more paper money, a tax which in the long run is of all taxing devices the least effective and in its immediate effects is the most iniquitous.

760. Dismemberment of Austria-Hungary.—Some time before the end of the war, while the power of resistance in Germany still was strong, Austria-Hungary gave evidence of distress. The state had been held together by the military dominance of a minority, and as the end of the war approached and the failure of the military party was evident, the state dissolved into its component parts by a natural process quite independent of any action of the Entente.

Fragments of the old dual monarchy were absorbed by bordering countries. Galicia, the great crescent-shaped province lying to the east of the Carpathian mountains, went to the new state of Poland. It had been grievously ravaged in the course of the war, but promised to develop in time considerable agricultural resources, and was particularly prized for its supply of petroleum in the east and the coal mines of the Teschen district attached to it in the west. Transylvania, with parts of some adjacent provinces, brought to Rumania an area rich in forest products, with some mineral resources and some fertile grain land (Banat of Temesvar). Rumania became by these accessions and by the acquisition of Bessarabia, on the Russian border, one of the larger states of Europe, with a population (about 16 million) double that of Jugo-Slavia, the next largest state in the Balkan peninsula. This new state grew out of the old Kingdom of Serbia, in which the World War began, and which was finally rewarded for its sufferings in the war by union with the kindred people along the Adriatic coast and in the southwest of the old dual monarchy. The trials of Jugo-Slavia were not ended with the war, for it had still to make good its claims to Fiume, its natural outlet at the head of the Adriatic. The justice of its claims were not, in the opinion of the writer, open to serious dispute, but Italy, which had already pushed its Alpine frontier far past the Austrian districts occupied by an Italian population, was jealous of a possible rival in the Adriatic, and refused to agree to the occupation of Fiume by another power. The unfortunate exploits of the Italian bravado, D’Annunzio, complicated the issue, but it was at least settled by a compromise between the two powers which promised in the course of time to give Jugo-Slavia the commercial outlet essential to its prosperity.

761. Czecho-Slovakia.—Of the new states formed within the boundaries of Austria-Hungary that which gave the greatest promise of prosperity was Czecho-Slovakia, comprising the old kingdoms of Bohemia and Moravia, and extending to the southeast to include the Slovak population which had formerly been included in the kingdom of Hungary. This new state took that part of the old monarchy which was most richly endowed with natural resources and which had attained the highest industrial development. Stating the proportions approximately it included only one-fifth of the area of Austria-Hungary, but in that fraction comprised one-third of the factory workers and over one-third of the mining population. The land was fertile and highly cultivated, supporting a dense population and providing a surplus of food for export. The Czechs could look back with pride to a period in the past when they were one of the leading peoples of Europe, and they had prepared themselves for self-government by long struggles against the oppressions of German rulers.

Although Czecho-Slovakia is far distant from the sea it has means of access to it both by the Elbe and by the Danube, and is at the heart of the railroad system of central Europe. Provided with a surplus of products keenly desired in neighboring states, particularly coal, iron and food, its commercial future appears to be assured.

762. Magyar Hungary; German Austria.—Far less favorable was the condition of the two states, Austria and Hungary, which had been the seat of the power of the Hapsburgs in the past, and which had prospered when they had been supported by the labor of subject peoples, but which were now shorn of this support, and given each its own way to make in the world.

The Magyar state of Hungary offered at least tolerable prospects of success. Although it lost the border lands which had formerly supplied practically all its forest products and much of its minerals, it retained a compact and fertile territory, one of the granaries of central Europe, and could hope to exchange its surplus wheat for the products which it needed.

German Austria was left by the terms of peace in a pitiable condition. It retained a population of only 6 million, including less than half of the German-speaking people in the old dual monarchy. Of this total nearly one-third (1.8 million, 1920) was comprised in the single city of Vienna, which had grown to this size largely by the political advantage that it enjoyed as one of the capitals of a great state. Much of the area of the new state was mountainous, suited to grazing but not adapted to intensive agriculture. Before 1914 the territory of the present state was able to produce perhaps two-thirds of the necessary food supplies consumed by its inhabitants; in 1920, with powers depleted by the war, it could render only one-quarter. Endowed with only one mineral resource, iron mines in Styria, Austria could buy the food required for the maintenance of life only by the exchange of industrial products made with imported coal out of imported raw materials. At the close of the war the situation of the country was indeed desperate, for the people had no resource with which to make a start in the process of foreign trade. Gradually markets were opened, and some basis of credit was found for the beginning of commercial transactions, but meanwhile the government had plunged deep in the issue of paper money, which depreciated so far that itself formed a grave obstacle to economic recovery. Austria seemed destined for years to come to rely upon charity, whether private, public or international; and many questioned the wisdom of the peace settlement which forbade the union of this fragment of the German-speaking people with the rest of Germany.

763. Poland; earlier history.—The World War made its greatest change in the map of Europe not by the transfers of territory between bordering states, important as these were to the parties concerned, not by the creation of new states like Czecho-Slovakia but by the resurrection of an old state, Poland. Poland had played no great part in commerce in the previous period of its existence. The surplus supplies of wheat grown on the great estates of its landlords had been carried by road and river to Danzig, to be shipped to western Europe in exchange for metals, manufactured wares and exotic products that made the life of the Polish nobleman more comfortable. The country as a whole was too backward and too far removed from the centers of European progress to become an important member of the commercial system of the time.

The partitions of Poland at the end of the eighteenth century keenly as they were felt by patriots, made little difference in the life of the mass of the people. The divided people went their separate ways: neglected by Austria, schooled and drilled by Prussia, given in Russia at least access to an enormous market which was later to be a great stimulus to manufacture. Most of the people were employed in agriculture under a system of serfdom like the medieval. They were freed from this in the nineteenth century, and acquired in small holdings much of the land which had formerly been held in great estates. A turning point in the economic history of the Polish people came in the last quarter of the nineteenth century, when manufactures developed rapidly in Russian Poland, fostered by the high protective tariff.

764. Resources of the new Poland.—The new state of Poland was welcomed and supported by the Entente as a check on Germany. With a population of about 25 million it had claim to a place among the larger powers of Europe. Its economic endowment was adequate if not abundant; besides a sufficiency of arable land and great forests it had coal supplies comparable in amount to those of France, the oil of Galicia, and other mineral resources. Its gravest lack was that of experience in organization, group-action, both in economics and in politics. In manufactures the Poles have looked to Jews and Germans for leadership; the Poles have supplied labor, but have only by exception taken a place among those responsible for control. Their manufactures showed a high labor cost and heavy capital charge per unit of product. Behind the barrier of the Russian tariff they prospered. They could doubtless be maintained for the supply of domestic needs by protection, but they have shown slight capacity to win in the world market the opening which was formerly afforded to them by Russia.

765. Prospects of Poland.—In the field of politics, as in economic affairs, the Poles have yet to prove their mastery of the complicated problems that arise in the organization of a modern great state. In the years following the armistice that closed the war they showed a readiness for military adventure that boded ill for the future of a country needing all its resources for economic reconstruction. They soon contracted a heavy debt, by the accumulation of huge deficits in the budget and the endeavor to pay their way by printing paper money. The Polish mark, nominally equal to the German and therefore worth about $.24, declined to a point (Sept., 1921) at which 6,700 were exchanged for the American dollar. The position of Poland is difficult at best, and the prospects of the new state will be seriously impaired if a more sober spirit does not prevail in the national councils.

766. Russia and the revolution of 1917.—From the beginning of the war southern Russia was cut off from commercial contact with the Entente by the closing of the straits leading into the Black Sea. In the north the Baltic was likewise closed. Contact was maintained only on Russia’s Arctic coast, and by the Siberian railroad. Means of access by both routes were difficult and expensive; the exchange of products was restricted to those that served imperative military needs.

Since the Russian-Japanese war of 1904 the forces of revolution had been gathering in Russia. The World War brought these to an explosion by the sufferings that it imposed upon the people and by the exposure that it made of the weakness and corruption of the autocratic government. In March, 1917, an outbreak at Petrograd initiated a revolution that in six months ran through nearly as many stages, tending always in a radical direction and leaving the government finally in the control of the Communist or Bolshevik party.

767. Soviets and Bolsheviks.—In the earlier stages of the revolution great influence was exercised by soviets, councils, formed on a democratic basis to represent workers in factories, peasants and soldiers, against the traditional leaders of the old régime. The soviets were features of a world-wide popular movement, which found their counterpart in the shop-councils of England and of the United States. The close of the war left the future of this movement still in doubt, but it appeared to offer a wholesome and welcome change in industrial relations, provided the workers were willing to accept responsibilities corresponding to the powers that they claimed. It is important to an understanding of the Russian revolution to realize that the democratic features of the soviet system were soon abandoned. The Bolsheviks counted less than a million in a population of 120 million; they numbered certainly less than 2 per cent of the adult population. By their boldness and vigor they dominated the situation, and while they maintained the pretence of deferring to the popular will they acted as tyranically and unscrupulously as the autocracy which had preceded them.

768. Difficulties of the Bolsheviks.—The Bolsheviks accepted as gospel the economic doctrines of Karl Marx, the founder of modern socialism, and many enthusiasts for social experiments (“parlor-Bolsheviks”) have expressed regret that they did not have a better field in which to try out these doctrines. Russia was already war-worn to desperation when the revolution took place. Fighting continued, not alone on the external front but now also in civil conflicts which ravaged the face of the country. The states of the Entente found not merely that they had lost an ally, but also that a new enemy to them had arisen, preaching doctrines subversive of the established order and threatening to undermine their power when the struggle with Germany was at its height. They stimulated in Russia opposition to the rule of the Bolsheviks, and sought so far as they were able to seal Bolshevik Russia in isolation lest it profit by the exchange of goods, and spread its doctrines.

769. Failure of Bolshevist communism.—Under the conditions Bolshevism was a disastrous failure. Curiously enough it showed its greatest efficiency in the field of military affairs. In its own particular department, the production and distribution of economic goods, it brought Russia to destitution. Fixed capital inherited from the old order wore out and was not replaced. Railroads and factories ceased to function properly, not only because of depreciation of equipment but also because of a decline in the efficiency of laborers. The yield of agriculture declined so far that a large part of the population was threatened with the starvation that visited whole provinces. Pretensions to forms of social service which other governments did not render were too often found on critical examination to be mere shams; they certainly counted for nothing over against the gross neglect to provide for the elementary needs of the people.

770. Prospects of Russia.—Years after it had begun the Russian revolution was still in process of development, and promised to disturb the life of the people for years to come. By 1921 communism was a recognized failure, but the lines that would be followed in the re-establishment of society on the basis of private property defied prediction. Of this we may be sure, that for decades, perhaps for a generation following the war, Russia will count for little in the history of commerce. Little by little its economic structure will be re-organized. The leaders in the process will be private individuals from other countries, including probably a large proportion of Germans. The process will be slow because it will be retarded by political instability. Russia can hardly be divided into parts; Russia can hardly be governed as a whole. Economic recovery will be a tedious and painful process because it must wait upon the political education of a people who in 1914 had made but the barest beginnings in national self-government.

QUESTIONS AND TOPICS

BIBLIOGRAPHY