A Letter From Germany

SUCH manifestations of the national life of Germany in 1901 as would be of interest to the foreign reader are found not so much in positive legislation as in the political and economic agitations of the year, — in the relations with the United States, together with the rise of the so-called “American danger; ” in the relations with England, attended by a remarkable outbreak of Anglophobia; in the perennial struggle between the Agrarians and other classes, culminating in the new Tariff Bill; in the Polish agitation and the punishment of Polish students and rioters; in the great industrial depression, accompanied with revelations of business immorality which shocked the public conscience. In giving, therefore, my usual annual review of events in Germany, I have this time to deal less with reforms instituted and legislation adopted than with larger movements and tendencies.

The political and economic relations between Germany and the United States in 1901 occupied an unusual amount of public attention in Germany. Notwithstanding the repeated and malicious efforts of a sensational New York newspaper to represent Germany as about to gobble up some part of South America or the West Indies, these inventions only served to bring out all the more clearly the correctness of Germany’s attitude toward our government. When the German ambassador at Washington returned to his post, in November, with special assurances from the Kaiser that Germany entertained no such designs, sensible people in both countries felt that this should end all talk about Germany’s schemes in the western hemisphere. That it has not done so among some of our bellicose young naval and military officers is to be regretted. The recent breach of international propriety committed by some of these Hotspurs in predicting a war with Germany was duly frowned upon at home, and it was rated at its true value in Germany.

If any proof were needed of Germany’s purpose to maintain good relations with our country, her course in the Venezuela matter has amply supplied it. Indeed, the fact that Germany came to an understanding with our government before taking forcible measures against Venezuela is of most momentous significance. Why? Because this was the first explicit recognition of the Monroe Doctrine by any Continental Power. It is a notable milestone passed in the history of our country and its relations with European governments. It gives the Monroe Doctrine a validity no longer to be disputed. All this was instantly recognized in Germany. “‘ America for the Americans, ’ ” said a great Berlin daily, “has become an irreversible fact.” German Jingo organs were dazed, and angrily exclaimed, “Must we ask permission at Washington to collect our claims from Venezuela? ” Papers of more rational temper, however, accepted Germany’s course, as not only without detriment to her dignity, but as in harmony with her political interests. Indeed, this saner section of the German press was even pleased that the government had thus made such an emphatic disavowal of the aims and dreams of the noisy, fantastic Pan-Germans. The whole incident, it is to be hoped, will open a new chapter in our relations with Germany by finally removing whatever misunderstandings or grievances were occasioned at the time of the Spanish War.

All Americans who desire the friendliest relations between our country and Germany may rest assured that the Kaiser is exerting his powerful influence to this end. He has latterly taken occasion, more frequently than ever, to show his personal good will for the American people and their President. Among the messages borne by the German ambassador to President Roosevelt was the direct assurance from the Kaiser that all the talk about his efforts to unite the European Powers for resistance to the American commercial invasion of Europe was without foundation. The Kaiser’s recent request that the President permit his daughter to christen the pleasure yacht now building for the Kaiser in the United States, while a small incident in itself, is one of those pretty acts of thoughtfulness and courtesy for which William is noted. The deep interest which he takes in America has been repeatedly expressed in recent conversations with our ambassador at Berlin, in which he has spoken with enthusiasm of the splendid economic development of our country, the vast enterprises which have been consummated by our financiers, and the energetic, forceful character of our President.

The failure of the President to recommend in his message a liberal revision of the Dingley Law was a keen disappointment to the German freetraders, and gave the high-protectionist element occasion to press all the more eagerly for a heavy increase of duties. The President’s willingness to sacrifice, in making reciprocity treaties, only such duties as are no longer needed for protection made an exceedingly bad impression in Germany, — as if our government were trying to get something of value without giving an equivalent in exchange. This extreme caution, at a time when all European countries are alarmed at the inroads of American competition, is so incomprehensible to the German mind that the conclusion is general here that our tariff policy is swayed by selfish interests outside the government. The President’s inaction has undoubtedly given a strong impetus to the movement for higher protection in GermanyIn particular, it has intensified the anti-American animus of the tariff agitation. Indeed, in the recent tariff debate in the Reichstag, the trade relations of Germany with the United States were discussed more than those with all other countries combined ; and the same is true of discussions in the press and in commercial bodies. While it would be too much to say that the present bill is aimed at the United States, still these discussions give ground for that impression; and it is undoubtedly true that the leading feature of the bill — namely, its heavy increase of duties on grains and meats — will strike American trade more severely than that of any other country. In these discussions it is complained with some bitterness that the American duties average fifty per cent against Germany’s ten. Accordingly, the view is asserted by rigid German protectionists that a thoroughgoing reduction of our tariff duties is necessary before a liberal reciprocity treaty with Germany can be expected; and it is demanded in influential manufacturers’ organizations that the German government should omit any action in favor of such a treaty till our tariff has been reduced to an average of twenty per cent.

Although the imports of goods from the United States in 1901 showed a considerable decrease, still the American danger occupied a larger place in the public mind of Germany than ever before; and the dependence of Germany upon American commercial and financial influences became more than ever apparent. “When two American finance groups, ” exclaimed a prominent member of the Reichstag, in the tariff debate, “can make the world’s markets tremble, that proves that we are already financially dependent upon America! ” This dependence was shown in the growing influence of Wall Street upon the German bourses. “An advance at New York regularly makes a buoyant market here, ” says a German bourse report, “and our market obediently sags when New York realizes.” A leading Berlin financial writer referred to the phenomenon in the following words: “It awakens unpleasant sensations in Europe to see how the United States dominates all departments of European business activity.”

The most striking evidence of the nervousness in Germany regarding the American danger was furnished by the readiness with which the public believed the rumors that American capitalists were planning to absorb the two great steamship companies of Hamburg and Bremen. Immediately after Mr. Pierpont Morgan purchased the Leyland line of steamers, the German press began to fear that he would extend his operations to Germany; and when, later, it became known that blocks of stock in the German lines were being acquired by Americans, this fear assumed an almost panic form in some sections of the press. In order to allay it, the newspapers proposed many defensive measures, and some alarmists even demanded that the great transatlantic lines be acquired outright by the government.

The great wave of indignant protest that swept over the country in response to the well-known speech of the English Colonial Secretary was certainly one of the most remarkable popular movements that has been seen in Germany since the empire was founded. It began among the university students, then extended to veterans’ societies; and for some weeks the country rang with angry declamation from hundreds of indignation meetings. The proportions which the movement assumed, and the intensity of passion accompanying it, produced a dazed astonishment in England ; and even in Germany this remarkable outburst of popular wrath surprised the government, and was finally deprecated by papers which had done most to promote it. It was a wholly spontaneous movement. The government was evidently embarrassed by it. It was annoyed by absurd petitions from excited students, demanding “satisfaction ” through diplomatic action, and it tried for a time to stay the excitement through utterances in the inspired press. Significantly enough, however, the government was itself finally compelled to end the agitation by making a dignified protest, in the semi-official newspaper, against Chamberlain’s words.

The manifestations of anti-British feeling attending the movement found expression in forms that are not pleasant to describe. The comic papers, abandoning humor, berated the English as “cold scoundrels, ” and wreaked their wrath in cartoons repulsive by their brutality. Even the amenities of social life were disturbed by the turbulent waves of Anglophobia. Cases were reported where individual Englishmen suffered insult in German social circles. They were treated with cold neglect in shops and public places, and were jostled on the streets.

Nevertheless, it would be a mistake to suppose that all Germany was swept away by the anti-Chamberlain demonstrations or indorsed the indignities just mentioned. There are German newspapers which have not forgotten the great debt which their country owes to England for her splendid contributions of political ideas to Germany’s progress. These explained the movement as directed, not against England, but solely against Chamberlain. Referring to “ the expressions of our comic papers, in which, with little wit and much complacency, the hatred of the English is fostered and good taste murdered, ” one of these papers said : “ What these comic weeklies have done to wound the feelings of the English and prejudice them against us was done with so much brutality and with such pronounced savagery of feeling that the German public should resist it in behalf of its good name. ” The fact was also pointed out, by papers of this kind, that in no other country of the world did public opinion fall into such excesses in voicing its condemnation of England’s course in South Africa.

This whole anti-Chamberlain movement affords a most striking illustration of a feature of German character which has become obvious to every observer. I mean its extreme sensitiveness to criticism. It was an expression, in a large, spectacular way, of the German’s inherent quickness to resent injuries, real or supposed. Its prototype is found among the corps-students and lieutenants, ever ready to discover insults which can only be wiped out in blood ; and in the German courts, which are beset by all classes and conditions of men seeking redress for petty insults and slanders. I do not attempt here to excuse Chamberlain’s words, and it is not strange that they were resented in Germany; still the fact remains that in other countries, which were equally included in his offensive expression, public opinion was satisfied with a few answering sallies of ridicule in the press.

This sensitiveness, this tendency to seek grievances, found expression at the time of Queen Victoria’s death and the Kaiser’s visit to England. Outside of Germany the Kaiser’s visit was regarded as an act of beautiful devotion to his distinguished grandmother. A certain section of the German press, however, which arrogates to itself a superior degree of loyalty, murmured peevishly because the Kaiser protracted his stay till the funeral. The bestowal of honors upon Lord Roberts — most humane of soldiers — was also most deeply resented ; Prussian army officers and loyal country squires wrote “letters to the editor, ” with ominous words about the Kaiser losing touch with his people and disregarding their sentiments.

It is highly interesting to observe the self-criticism of the Germans, as it was voiced in connection with the above incidents and other events of the year. Writers confessed, with regret, that the old cosmopolitan spirit which prevailed before the empire was founded has not only passed away, but has given place to an excessive nationalism. “Imperialism, militarism, materialism, ” says a German observer of these tendencies, “are impressing ugly features upon our life; and out of this exaggeration of national feeling, out of this brutal Jingoism, a debasement of political morals has developed as a natural consequence. The German character has lost much of its old-time idealism. The Germans of to - day have material, practical aims: they worship power, success, and a certain reckless, dashing personal behavior. ” Although the Germans are undoubtedly a peaceloving people, this overdevelopment of nationalism cannot fail to affect Germany’s relations with other states and to render difficult the task of German diplomacy. When German papers, as is too often the case, lavish insults upon other nations with utter recklessness, while haughtily resenting foreign criticisms of German affairs, well-wishers of the Fatherland cannot be expected to check the growing dislike for Germany. It is a significant fact, however, and promising much good, that the Germans have begun to ask themselves, What is the cause of this growing dislike ?

The home politics of Germany in 1901 strikingly revealed the potent tendencies of the German life of to-day. The Agrarian movement, with its relentless opposition to Germany’s natural economic development, and its indomitable tenacity in asserting the interests of the landed aristocracy; the great manufacturing and commercial classes, rendered powerless by diversity of views, conflicting interests, and the lack of a compact organization, — partly yielding to Agrarian demands, and partly rejecting them with sharp protest; the laboring classes, through their organ the Socialist party, passionately hostile to both these elements; finally, the government, painfully feeling its way for a policy, cautiously steering its course among conflicting interests, and trying to discover a plan of action acceptable to the majority of the nation, —such was the confused, inharmonious panorama presented by Germany’s internal politics in 1901.

In January the government introduced in the Prussian Diet the Canal Bill, which had been defeated in the summer of 1899. It will be remembered that the Agrarian opponents of the old Canal Bill attempted to smother it with numerous other canal plans, intended as “ compensation ” for the projected Midland Canal, which was to connect the Elbe with the Rhine. One of the chief causes of its defeat, no doubt, was the determination of the Agrarians to use it as a handle for securing higher protective duties on agricultural products. The Agrarians were much too shrewd to relax their grip upon this handle before they had obtained an equivalent. The second Canal Bill was an enlargement of the old measure. It included a great waterway from Berlin to Stettin; the improvement of the Spree and the Havel to connect Berlin with the Midland Canal; the enlargement of existing canals from Berlin eastward to the Vistula ; and, finally, the improvement of the streams intersected by the canals. It was thus a vast scheme for creating cheap transportation between the highly developed industrial west and the agricultural eastern provinces.

In introducing the new Canal Bill, the government assumed that the Tariff Bill could be completed and brought into the Reichstag before the Prussian Diet should be asked to vote upon the former; believing that the Agrarian members of the Diet, once they saw the enticing agricultural schedules, would prove tractable and “swallow the canal.” Soon after the Canal Bill was published, Count Bülow threw off his long reserve and publicly promised higher protection for agriculture. He also assured the Agrarians that the Tariff Bill would be rushed to completion with all possible dispatch. The complicated work of preparing the Tariff Bill, however, required more time than the Chancellor had estimated, and the early introduction of the Canal measure turned out to be a grave tactical error on the part of the government. After the bill had been discussed in the Diet it went to a committee, which willfully killed time with it till the Tariff Bill should be published. Finally, however, about the beginning of May, it became apparent that the Canal Bill in its entirety would fail, while several of the compensation schemes attached to it would be passed. It was a droll exhibition of political selfishness that the Agrarians were about to take their compensations, and give nothing in return. The government, however, refused to have its measure emasculated, and prorogued the Diet.

The result of this abrupt close of the session was a reorganization of the Prussian Cabinet. Bülow had taken office with the determination to have a homogeneous government. The principal change made in the Cabinet in May was the dismissal of Finance Minister von Miquel, in order to make it homogeneous. Miquel, it was felt by friends of the Canal plan, had not given the measure his whole-hearted support, and his Agrarian sympathies were too marked to permit him to antagonize that element successfully. While it was recognized by friend and foe alike that he was one of the greatest of Prussian finance ministers, and that he achieved a really great reform in the Prussian Income-Tax Law, Miquel was finally trusted by no political party. He had particularly disappointed his former political associates in the National Liberal party. His appointment as finance minister, twelve years ago, was warmly received by the Berlin Stock Exchange; when his dismissal was announced, the Exchange rang with applause. Miquel was not a bad man, but he was sly to excess. Although in political and economic knowledge towering high above the men associated with him in the government, he created the impression of being without fixed economic convictions ; and, indeed, he more than once expressed in his speeches a complete agnosticism as over and against the economic systems of the books.

The Tariff Bill was finally published at the end of July, and has since been the subject of heated discussions throughout the land. The leading feature of the measure is its pronounced Agrarian character. Not only are the duties on grains and meats heavily increased, but a further important concession is made to the Agrarians through the introduction of a minimal scale of duties on the former. They had felt that their interests were sacrificed by the Caprivi government in making the present commercial treaties: therefore they have for several years made it one of their chief “demands ” that a limit should be fixed, below which the government might not go in making new treaties. To this the government yielded. The Agrarian principle of the measure is well illustrated by the duty on wheat, which is forty-six cents per bushel maximum and thirty-eight cents minimum, while the present conventional tariff duty is twenty-five cents. Duties on animals and most meats are still more sharply advanced.

The commercial and in part the manufacturing interests of the country began immediately a vigorous agitation against the agricultural duties. A congress of all German chambers of commerce protested, by an overwhelming vote, against the high duties on the necessaries of life, since they would constitute a grave hindrance to the negotiation of new commercial treaties, would increase the cost of living for the working population, and would thus impair Germany’s power to compete in the world’s markets. The Verein für Socialpolitik, which is composed chiefly of university professors of political economy, discussed the measure for several days, and most of the leading spirits of the society rejected its agricultural schedules with emphasis. The Central Association of German Manufacturers, which is a strong protectionist organization, condemned the minimal system of duties as endangering the renewal of the treaties, which it regards of paramount importance to German industry. The Agrarians were highly incensed at these demonstrations, and answered with threats that they would declare for complete free-trade if the increased agricultural duties were rejected by the Reichstag. Far from being satisfied with the government’s bill, moreover, they are now agitating for still higher protection. A specimen of their new demands is that for a duty of fifty-three cents a bushel on wheat.

The government had an extremely difficult task to defend the bill in the Reichstag. Germany’s trade has increased phenomenally under the commercial treaties. Exports rose from 3051 million marks in 1894 to 4752 million in 1900; even the exports of manufactures alone increasing more than 1100 million marks. The government, however, in undertaking a tariff revision which would necessitate the denunciation of the treaties, virtually confessed that they were dissatisfied with commercial arrangements which had resulted so advantageously for the country. This was the inherent weakness of their position. The defense of the measure by the ministers was therefore necessarily a lame one. Their only argument was the alleged distress of German agriculture caused by foreign competition. Under the treaties, it was alleged, the farmers had not obtained equal advantages with the manufacturers. The increase of the duties, moreover, would be mainly borne by middlemen, like merchants and bakers. They dilated upon the desirability of making Germany independent of foreign countries for agricultural products; and for the rest, they assumed the solidarity of interest between agriculture and industry, and made fervent appeals to the patriotism of the members.

During the debate the Socialist deputies were able to present a petition against any increase of duties on the necessities of life, which bore the signatures of nearly three and a half millions of working people, — a unique event in German politics. Professor Schäffle, the distinguished economist, shows, in criticising the Tariff Bill, that the Agrarian duties will tax the consuming population to the extent of 1150 to 1350 million marks a year. The result of this taxation, as its Liberal opponents point out, can only be to increase social discontent. It is also remarked that the lack of employment among the working classes renders an increase of duties at this moment highly inopportune. In view of these conditions, the prediction is justified that the bill will sweep large masses of the laboring population and small tradesmen into the Socialist party. What this may mean for Germany it is premature to predict; but certainly there are possibilities in the situation that should give the ministers cause for reflection. England doubtless averted serious evils through the abolition of the Corn Laws; Germany invites greater evils by taking the opposite course.

Long before the Tariff Bill was introduced, Count Bülow expressed in the Reichstag his conviction that Germany would be able to enter into new treaty relations with other Powers immediately upon the lapse of the existing commercial agreements; and, as he said in the tariff debate, the government could concede only such advances of the agricultural duties as would leave the way open to make new treaties. The question now agitating the minds of the commercial classes, however, is whether the Chancellor can make terms with other Powers under the new tariff. The Russian finance minister has uttered direct threats of retaliation, while Austria has already commenced a revision of her tariff, with heavy increases of duties, in answer to Germany’s proposed legislation. It is therefore feared that Count Bülow is committing a serious error of statesmanship in flinging away excellent commercial treaties without knowing what kind he will get in return, — if, indeed, he gets any at all.

The conditions in the Polish provinces, as described in the Atlantic Monthly a year ago, were further intensified in 1901, and the Polish problem undoubtedly assumed a more serious aspect than for many years. The organizations among Polish students caused the Prussian authorities to apprehend that treasonable schemes were brewing; and some sixty pupils of the gymnasium at Thorn, and a number of university students living in the province of Posen, were brought to trial for connection with suspicious secret societies. The trials, however, developed nothing very serious. A number of young men were sentenced to short terms of imprisonment. It was felt, owing to the meagre results of these trials, that the government had made a mistake in acting at all.

A much more sensational matter was the Wreschen affair, which was unduly magnified in the foreign press to the discredit of the Prussian authorities. The facts are these : German has been the language of instruction in all the Polish schools for nearly thirty years, except in the hour given to religious instruction. The rule has been gradually established, however, of introducing German into the religious teaching of the upper classes, too, where the children have already sufficiently acquired the language. This was assuredly no hardship for the pupils, as is shown by the smooth working of the system in many other Polish towns. The pupils in the school at Wreschen, however, instigated by their parents and others, refused to take religious instruction in the German language; and after they had persisted in their refusal for some days, the school authorities of the province directed that corporal punishment be resorted to. This was administered in no inhumane form, — about a dozen of the children receiving from two to four strokes on each hand with a light rattan cane. During the punishment some excited parents and other persons rushed into the schoolroom and made threatening demonstrations against the teachers and the government inspector. This semi-riotous behavior was made the basis of a trial, which resulted in sentences which were condemned for their severity, even by papers friendly to the government. Ultimately, however, Count Bülow ordered the corporal punishment discontinued, out of deference to public opinion.

Very likely these sentences were too severe; yet persons outside of Germany should be slow to conclude that Prussia’s general policy toward the Poles is therefore specially harsh. It may be admitted that the police in Polish cities often show excessive zeal in exerting authority against petty manifestations of Polish tendencies. But the fact remains that the Prussian government has a very real problem to solve in the Polish provinces. The government is bound, under the existing circumstances, to stand by the German element there and prevent its Polonization. At the same time it lies equally in the interest of both races that the Poles should know German. It is to be regretted that the Poles still indulge in impracticable dreams of a restored Polish kingdom, and are thus prevented from accepting present conditions and making the best of them. Foreigners can only do harm by encouraging those dreams. It is too late in history to waste regrets over the division of Poland.

Conditions in the army in respect to dueling and the administration of justice occasioned much concern in the public mind last year. Interest centred around two typical cases. At Gumbinnen a cavalry officer was killed, evidently by one of his troopers; and after several non-commissioned officers had been tried for the crime and acquitted, they were arrested again and brought to trial before another military court, which condemned one of the men to death. The conviction was a great shock to the public conscience, as the evidence was of the flimsiest kind; and the case made the impression that the military spirit which rendered the Dreyfus case possible in France exists to some extent in Germany. It made all the worse impression that the proceedings of the court were highly irregular from the standpoint of the new military code. The Insterburg duel moved the country still more profoundly. The affair was briefly as follows: Lieutenant Blaskowitz, in a state of deep intoxication, struck another officer who was conducting him home. The latter reported the matter to the “council of honor ” of the regiment, which decided that this insult rendered a duel unavoidable ; and Blaskowitz was slain at the first exchange of bullets. The Kaiser at once interfered, and caused the retirement of the regimental commander who had done nothing to prevent this absurd duel. The interpellation in the Reichstag caused by the affair showed that the sentiment of the country against dueling has grown more pronounced than ever. The traditional friends of the duel, who had been accustomed to defend it on similar occasions, were silenced by the Insterburg tragedy. While dueling in the army had already decreased as the result of the Kaiser’s Cabinet order of 1897, public condemnation of the practice has become so general and strong that the country would gladly see him forbid it altogether.

The development of the Social Democracy grows more interesting every year. The ablest thinker in the party is now Eduard Bernstein, who returned a year or two ago from a long banishment in England. Since his return to Germany, Bernstein has been making vigorous attacks upon some of the most important articles of the older Socialist creed. He utterly rejects the proposition, fundamental to the whole Socialist movement, that the working classes, under the existing order of society, necessarily grow poorer, while capitalists grow richer. The annual convention of the party at Lübeck was rendered particularly interesting through an attempt of the elder leaders to silence Bernstein. A great debate was held, in which he refuted, from official statistics, the theory of the growing impoverishment of the working classes. No effective answer was made to this ; and Bebel even admitted that the impoverishment is only relative, — the working classes improving their condition, indeed, but not so rapidly as the rich.

Notwithstanding Bernstein’s radical departure from the elder creed of Socialism, the convention made no attempt to sever relations with him. Bebel drew his mild resolutions of censure, not against any fundamental position of Bernstein, but merely against the “onesided manner ” of the latter’s criticisms. Although Singer asserted that it would be preferable for the party to split up rather than have Bernstein’s views become general, the convention contented itself with the feeble “expectation ” that Bernstein would go to work for the party and talk less. It gave a Pickwickian flavor to the entire controversy when Bebel assured Bernstein that the resolutions meant no vote of censure upon the latter, and when Bernstein declared his adherence to his convictions, but that, in view of Bebel’s assurances, he would have “appropriate regard to the party’s vote.” In other matters coming before the convention, the same compromising spirit, the same lack of sharply defined convictions, was manifested. Hence the impression left upon the public was that the Socialists no longer have a uniform creed; and many critics even expect an early split in the party over theoretical differences. Nevertheless, the party advances in solid phalanx to its practical work. It gained many seats in state legislatures and town councils during the year, and Bernstein himself is about to be elected to the Reichstag.

The event of the year in educational circles was a remarkable demonstration among the university professors in favor of unprejudiced scientific investigation. The movement was occasioned through the appointment of Professor Spahn to a new chair in the University of Strassburg, which was founded for teaching the Catholic view of history. This appointment, with the confessional limitation carried with it, was highly disapproved by the university men. Professor Mommsen wrote a letter, in which he protested earnestly against the appointment of professors, whether Catholic or Protestant, whose freedom as investigators should be circumscribed by obligation of sect or creed. The publication of Mommsen’s letter called forth strong indorsements from the professors of nearly every university in Germany. In connection with this movement, the government official having charge of appointments of professors in the Prussian universities was sharply criticised by some professors, while others came to his defense, and the Kaiser also made a demonstration in his favor.

The prostration of business, which began in Germany nearly two years ago, assumed in 1901 graver proportions than had been deemed possible in the best informed circles of German financiers. As the year advanced, various financial and industrial establishments failed under sensational circumstances, while many others encountered financial difficulties which greatly impaired their productive capacity and damaged their moral standing. The failure of the Leipziger Bank, an old and trusted institution, at the end of June, created an excitement little short of panic. This bank carried down with it a number of others, as well as some manufacturing concerns. Insolvencies followed one another in rapid succession during the summer, and Germany seemed to be approaching a vortex of economic disaster. In the last quarter of the year, however, failures were fewer and less sensational, and business confidence gradually revived.

Coincident with these calamities credits were sharply contracted by the banks, which had to reef their sails for bad financial weather. This rendered the position of many companies all the more precarious. Production in nearly all branches of manufacturing was much restricted. Prices of most goods fell heavily, and in many important departments, like the iron trade, work was carried on at a loss. Wages were reduced everywhere, and laborers were thrown out of employment in great numbers. The tide of working people, which for several years had been flowing into Germany from Austria, Italy, and Russia, was reversed, and in some cases unemployed foreigners were expelled from the country. At the end of the year it was estimated that the number of persons without work in the empire reached a half million. In many cities measures of relief were adopted, and some of the state governments undertook special public works in order to assist the unemployed.

In my article a year ago I said: “The fact that German industries and German banks could shoot the rapids of the year 1900 without any serious disaster is the best possible proof of the solid and honest business methods that prevail among German industrial and financial institutions. ” This statement must now undergo some modification. While it remains true that the great bulk of German companies are honestly conducted, the failures of last year revealed an amount of moral rottenness which amazed and shocked the country. Men who occupied highly respected positions in society were unmasked as swindlers and forgers. Many of these are now in prison, awaiting trial; some fled the country; while others blew out their brains. All this produced a feeling of deep humiliation in the business community. Germany has long been justly proud of the reputation for commercial integrity which its business men enjoy throughout the world, and the financial solidity of its banks has been widely known. The revelations of the year, however, occasioned frequent confessions in the press that the fair reputation of German business men had been tarnished with a stain which it would take years to wipe out. This new consciousness of the Germans that their financial virtue is not superior to that of other countries can have only a wholesome effect upon the national character.

The chief cause of the great business revulsion from which Germany is now suffering is everywhere recognized as having been a too rapid economic expansion. The great wave of prosperity which set in about the middle of the nineties had a most intoxicating effect upon the public mind, and produced a period of speculation, perhaps not so reckless as that ending with the panic of 1873, but of much vaster proportions. Every enterprise undertaken by German business men seemed to succeed as if by magic, and a spirit of optimism was engendered which finally ignored the limitations of human capacity. German financiers were ready to serve as directors in dozens of enterprises of the most varied character. The public, too, caught this spirit of exaggerated optimism, and abandoned itself to a wild scramble for all the issues of industrial stock that could be thrown upon the market. Manufacturing establishments were enlarged far beyond the consuming power of the country and the probable exporting capacity of Germany.

All this has now been completely reversed. The issues of industrial stock amounted last year to only seventy-six million marks, against six hundred and sixty-six million in 1899. Germany is undergoing a period of economic trial and suspended development until new recuperative forces shall emerge.

William C. Dreher.