ELMER ROBERTS 
 
 MONARCHICAL SOCIALISM 
 IN GERMAN^ 7 " 
 
 Uiijilil! li 
 
 !
 
 MONARCHICAL 
 SOCIALISM IN GERMANY
 
 /MONARCHICAL 
 SOCIALISM IN GERMANY 
 
 BY 
 
 ELMER ROBERTS 
 
 NEW YORK 
 
 CHARLES SCRIBNER'S SONS 
 1913
 
 COPTEIGHT, 1913, BT 
 CHABLES SCRIBNER'S SONS 
 
 Published March, 1913
 
 CONTENTS 
 
 CHAPTER PAGE 
 
 I. STATE-OWNED ENTERPRISES 1 
 
 II. GERMAN RAILWAY POLICY 17 
 
 III. THE PASSING OF THE UNSKILLED ... 33 
 
 IV. LABOR EXCHANGES IN GERMANY .... 53 
 
 V. EXPERIMENTS WITH UNEMPLOYMENT INSUR- 
 ANCE 72 
 
 VI. GOOD-WILL TOWARD TRUSTS 89 
 
 VII. TAXING THE INCREASE IN LAND VALUES . . 109 
 
 VIII. MONARCHICAL VERSUS RED SOCIALISM . . 116 
 
 IX. LOOKING TOWARD THE FUTURE .... 135 
 
 X. EMPEROR WILLIAM II 144 
 
 XI. SOME REFLECTIONS ON THE GROWTH OF THE 
 
 GERMAN NAVY 153 
 
 XII. THE PLAY INSTINCT IN GERMANY . . . 168 
 
 APPENDICES: 
 
 A. Notes on the Compulsory Insurances 
 
 of Germany 179 
 
 B. Programme of the Social-Democratic 
 
 Party 185 
 
 C. William II and Americans .... 191
 
 STATE-OWNED ENTERPRISES 
 
 THE motive of this writing is to convey 
 some notion of the extent in which the 
 associated monarchies, forming the Ger- 
 man imperial state, are engaged in profit-yield- 
 ing undertakings that in other states are usually 
 left entirely to persons and companies, and also 
 to give some account of other social and eco- 
 nomic experiments. Americans are acquainted 
 with the aims of the Social-Democratic party, 
 the revolutionary socialism of Germany, with 
 four and a quarter millions of voters, organized, 
 irreconcilable, aflame with zeal. That might be 
 called the paper socialism in Germany. Perhaps 
 "paper socialism" is too light a phrase to use to- 
 ward a force so formidable and so implacable. 
 
 It is, however, the doctrinaire socialism of Ger- 
 
 i
 
 2 MONARCHICAL SOCIALISM 
 
 many that has not yet passed a law, nor admin- 
 istered a parish. The socialism in being, the 
 only collective ownership of mines, railways, 
 lands, forests, and other instruments of produc- 
 tion, is monarchical socialism, existent by acts of 
 the crown in co-operation with conservative par- 
 liamentary majorities. 
 
 The imperial government and the govern- 
 ments of the German states took profits in 1911 
 from the various businesses conducted by them, 
 of $282,749,224. Estimating the capital value 
 at a 4 per cent ratio, the value of the produc- 
 tive state-owned properties is $7,068,729,600. 
 Roundly, the governments operate dividend- 
 yielding works, lands, and means of communica- 
 tion worth $7,000,000,000, and the governments 
 continue to follow a policy of fresh acquisitions. 
 Taking the federated states together, 38 per cent 
 of all the financial requirements for govern- 
 mental purposes were met last year out of prof- 
 its on government-owned enterprises. Including 
 the imperial government, a new-comer with rela- 
 tively few possessions, about one-quarter of all 
 the expenses of the state and the imperial gov- 
 ernments for the army, the navy, and for all 
 other purposes, were paid out of the net profits 
 on government businesses. Among the under-
 
 STATE-OWNED ENTERPRISES 3 
 
 takings are no tobacco, spirit, or match monopo- 
 lies. 
 
 The miniature ducal monarchy of Schaum- 
 burg-Lippe, with a population of 44,992, and an 
 area of 131 square miles, made $12,008 from 
 property owned collectively, or 5 per cent of the 
 requirements of the state. The still smaller prin- 
 cipality of Reuss, the elder, with 122 square miles 
 area, and a population of 70,603, has an income 
 of $10,000, the smallest actually, and the small- 
 est in proportion, of any of the German states. 
 The little neighbor of Reuss, Schwarzburg-Ru- 
 dolstadt, has $350,000, or close to one-half all 
 the public requirements, derived from state do- 
 mains and mines. Schwarzburg-Sonderhausen 
 draws 33 per cent of the budget from farms and 
 forests; Oldenburg, 22 per cent; Mecklenburg- 
 Strelitz, 49.14 per cent. But it is the great 
 states of the empire where state management of 
 large properties shows the more important re- 
 sults. Bavaria pays 39 per cent of all the ad- 
 ministrative costs from public-owned properties; 
 Saxony, 31 per cent; Wiirtemberg, 38.7 per cent; 
 and Prussia, 47.36 per cent. Prussia, which 
 forms about five-eighths of the empire, has a 
 constantly increasing revenue from state-owned 
 enterprises, which yielded, in 1911, net returns
 
 4 MONARCHICAL SOCIALISM 
 
 of about $178,000,000, or more than twice the 
 state's income from taxes, which was $85,452,- 
 000 ; the average income from taxation per capita 
 was 18.1 marks; while the average per capita ta- 
 ken in taxation was 8.7 marks. In that year 
 the state, owing to extensions in canals, railways, 
 and other public works, raised by loans what 
 amounted to an average per capita of 7.1 
 marks. The state income from public properties 
 amounted to somewhat more than the total in- 
 come from taxation and from borrowings. The 
 railways were the largest source of income, and 
 netted $151,782,000, or about 8 per cent on the 
 total invested by Prussia in its railway system 
 since the state began to buy and build railways, 
 in 1848-49. Prussia derived from other sources, 
 from its crown forests, the leased farms, the iron, 
 coal, potash, salt, and other mines, the porcelain 
 factories, banking, and a variety of less impor- 
 tant industries, $27,200,000. The policy of Prus- 
 sia, which dominates the empire, is strongly in 
 the direction of increasing the participation of 
 the government in industrial enterprises. The 
 Prussian legislature, acting upon a recommenda- 
 tion of the Emperor, in the speech from the 
 throne at the opening of the diet in 1906, passed 
 a bill extending widely an old act, giving the
 
 STATE-OWNED ENTERPRISES 5 
 
 state the right to take over at a valuation any 
 discovery of mineral riches on private lands. 
 
 German manufacturing and mining is rather 
 more completely under the control of combina- 
 tions than is the industry of any other country. 
 The closely organized syndicates in the coal and 
 iron industries control production and selling 
 prices more effectively than does the United 
 States Steel Corporation in the United States. 
 The Prussian Government, in its desire to have 
 a seat in the coal syndicate, determined five 
 years ago to buy a controlling interest in the 
 shares of the Hibernia Coal Company, mining 
 7 per cent of the coal in the Rhine- Westphalian 
 region. The Dresdner Bank, acting under a 
 private arrangement with the Prussian treasury, 
 bought shares on the stock-exchange until a ma- 
 jority of the capitalization had been acquired. 
 The announcement that Prussia had bought the 
 control of the company so vexed the group of 
 coal-owners who had previously ruled the com- 
 pany that they increased the capitalization, and 
 issued the new shares to themselves, thus reac- 
 quiring a majority. The Prussian Government 
 brought a suit to pronounce the new issue illegal, 
 but since the intermediate courts and the su- 
 preme court of the empire have decided against
 
 6 MONARCHICAL SOCIALISM 
 
 the Prussian contention, the matter has been 
 dropped, so far as the Hibernia Company is 
 concerned. The policy of Prussia remains un- 
 changed, and further efforts, it is publicly under- 
 stood, will be made by the government to obtain 
 a vote, not only in the coal, but in the steel 
 and other master syndicates. The theory of the 
 Prussian cabinet and the crown is, that it is for 
 the interests of the people that the state should 
 take part in industrial combinations that under- 
 take to regulate the prices of articles, or the pro- 
 duction hi any industry. Public opinion sup- 
 ports this principle. 
 
 Besides the productive ownerships of the em- 
 pire, and of the individual states, the cities of 
 Germany have gone deeply into street railways, 
 gas, electricity, water-works, slaughter-houses, 
 market halls, cold storage, canals, and wharfs. 
 Thus the republic of Liibeck pays 18.29 per cent 
 of its expenses from such sources, Hamburg, 4.25 
 per cent, and Bremen, 6.07 per cent. It is a fact 
 of some interest that the republics among the 
 states of the empire are far more backward in 
 communal ownership than are the monarchies. 
 
 A summary of the government-owned prop- 
 erties and the income derived from them is sub- 
 joined:
 
 STATE-OWNED ENTERPRISES 
 
 
 
 VALUES 
 
 RET INCOMES 
 
 Farms 
 
 
 $198,122,725 
 
 $7,925,309 
 
 Forests ... 
 
 
 730,898,200 
 
 29,235 928 
 
 Mines 
 
 
 128,907,725 
 
 5,116,309 
 
 Railways 
 
 
 4,757,579,750 
 
 191,943,190 
 
 "Telegraphs 
 "Telephones 
 
 
 694,816,650 
 
 27,792,666 
 
 "Express packages 
 "Mails 
 Other works 
 
 
 435,184,900 
 
 17,407,476 
 
 
 
 
 
 "These services are government monopolies. 
 
 Upon no department of industry do any of the 
 state governments lose except upon steamers. 
 The grand duchy of Baden runs its internal navi- 
 gation lines at a loss of about $15,000 yearly. 
 Saxony, Wiirtemberg, and Mecklenburg-Schwe- 
 rin gain on their lines some $7,000 annually, so 
 that on the whole of the state-owned steamer 
 lines there is a loss of $8,000. 
 
 This structure of collective ownership, which I 
 have called monarchical socialism, rests upon a 
 way of thinking in Germany which differenti- 
 ates the social and political conditions there from 
 those of any other great industrial state. The 
 representatives of the monarchical principle in 
 association with the conservative classes have 
 accepted this way of thinking, and it has entered 
 into the very texture of their ideas of govern-
 
 8 MONARCHICAL SOCIALISM 
 
 ment, and is supported by the great orthodox 
 economists, such as Schmoller and Wagner. 
 The policy of acquiring and managing industries, 
 lands, mines, and means of communication by 
 the government is so vital and living a part of 
 the German empire, the subordinate states, and 
 the parishes, that it is slowly making Germany 
 fundamentally different industrially and politi- 
 cally from the United States, Great Britain, 
 France, or any country that comes into com- 
 parison with Germany. 
 
 The American or the Englishman, when talking 
 with a German about social or political questions, 
 finds that he and the German are looking at 
 things from different basal conceptions of the 
 functions of government. The Englishman has 
 that background of eight centuries, during which 
 his race has developed individual liberty, and has 
 given free political institutions, or some form of 
 them, to all other modern states, including Ger- 
 many. A social system has been developed 
 whose key-idea is to give the citizen free play to 
 his individuality. The system has worked well 
 and continues to work in the United Kingdom, 
 the great British colonial states, and in America. 
 The German, while modified by the individualist 
 school of thinking, has grown up among a differ-
 
 STATE-OWNED ENTERPRISES 9 
 
 ent order of ideas prevailing on the Continent, 
 derived in part from Roman law and from auto- 
 cratic monarchical practice. The individual has 
 had a less important place in the organism. The 
 strength, welfare, and health of the whole has 
 been the ruling conception. Hence it was possi- 
 ble for an enlightened society, such as that in 
 France, to have a vigorous sincere party urging, 
 during the Dreyfus trial, that it were better for 
 an individual to suffer wrong than for the state 
 to be weakened by loss of respect for the French 
 army. The English point of view would be that 
 it were better for a state that could not give an 
 individual justice to perish in the endeavor to do 
 so than for society to maintain prestige for an 
 institution through a disregard for the rights of 
 one person. 
 
 The Hohenzollerns in Prussia, and the mon- 
 archies in the minor German states, in dealing 
 with the pressure of their peoples for greater 
 political rights, took into full consideration the 
 economic reasons that caused political fermenta- 
 tion. The monarchies gave a progressively bet- 
 ter administration, and undertook the respon- 
 sibility of protecting the weaker members of 
 society against economic misery. The so-called 
 Prussian common law, as modified by Frederick
 
 10 MONARCHICAL SOCIALISM 
 
 William II, promulgated July 1, 1794, con- 
 demned idleness, recognized the right of every 
 subject to work, and defined the state to be the 
 protector of the poor. The common law pro- 
 claimed: 
 
 I. It is the duty of the state to provide for the 
 sustenance and support of those of its subjects 
 who cannot obtain subsistence for themselves. 
 
 II. Work adapted to their strength and ca- 
 pacities shall be supplied to those who lack 
 means and opportunity of earning a living for 
 themselves and those dependent upon them. 
 
 III. Those who, from laziness, love of idle- 
 ness, or other irregular proclivities, do not choose 
 to employ the means offered them of earning a 
 living shall be kept at useful work by compulsion 
 and punishment, under proper control. 
 
 VI. The state is bound to take such meas- 
 ures as will prevent the destitution of its sub- 
 jects, and check excessive extravagance. 
 
 XV. The police authority of every place 
 must provide for all poor and destitute persons, 
 whose subsistence cannot be insured in any 
 other way. 
 
 This fundamental law, supplemented by the 
 Stein-Hardenberg legislation of the second dec- 
 ade of the last century, was the foundation upon
 
 STATE-OWNED ENTERPRISES 11 
 
 which Bismarck stood, when, on May 9, 1884, 
 in speaking upon industrial insurance, he pro- 
 claimed the doctrine of the right of work: 
 
 "Give the workingman work as long as he is 
 healthy, assure him care when he is sick, insure 
 him maintenance when he is old. Was not the 
 right to work openly proclaimed at the time of 
 the publication of the common law? Is it not 
 established in all our social arrangements, that 
 the man who comes before his fellow-citizens 
 and says, 'I am healthy, I desire to work, but 
 can find no work,' is entitled to say also, 'Give 
 me work,' and that the state is bound to give 
 him work?" 
 
 "But large public works would be necessary," 
 exclaimed an opponent. 
 
 "Of course," replied Bismarck. "Let them 
 be undertaken. Why not? It is the state's 
 duty." 
 
 The Bismarckian policies, carried out with the 
 full approval of the old Emperor, and by conser- 
 vative majorities in the Prussian legislature and 
 the imperial parliament, have left as deep an 
 impression upon the social life of Germany as 
 his part in the unification of Germany. Mod- 
 ern Germany began with him to abolish pauper- 
 ism, to make ordered provision for indigent old
 
 12 MONARCHICAL SOCIALISM 
 
 age, the sick, and the disabled. Poverty is 
 abundant in Germany, but it does not shade off 
 so quickly into pauperism next-door to starva- 
 tion as it does in the United Kingdom and in 
 some American cities. The poverty is one that 
 can, with self-respect, receive medical aid or 
 maintenance of right from funds to which it has 
 contributed, and will continue to contribute. 
 These measures, while quite a separate chapter 
 from state participation in industry, are inter- 
 related, because both are consequences of the 
 dominant school of political thinking that finds 
 stability and health for society through the state 
 sharing in business, and in compulsory provisions 
 against the social maladies of pauperism and the 
 unemployed. 
 
 The aim of the government in its policy of 
 acquisition and control of mines, of communi- 
 cation and transport, and of sharing, to some 
 extent, in all production whether agricultural, 
 mineral, or industrial, is not primarily to raise 
 revenue. The declaration of Bismarck upon the 
 subject of state ownership of railways continues 
 to be true. He said: 
 
 "I do not regard railways as in the main in- 
 tended to be an object of financial competition; 
 according to my view, railways are intended
 
 STATE-OWNED ENTERPRISES 13 
 
 more for the service of traffic than of finance, 
 though it would, of course, be foolish to say 
 that they should not bring financial advantages. 
 The surpluses which the states receive in the 
 form of net profits, or which go to shareholders 
 in the form of dividends, are really the taxation 
 which the states might impose upon the traffic 
 by reason of its privilege, but which, in the case 
 of private railways, falls to shareholders." 
 
 The state railway systems of Germany are 
 managed upon two general principles. First, 
 they are to serve the general interests of domes- 
 tic and external trade, and second, they are to 
 show a satisfactory profit. The Prussian rail- 
 way administration in 1910 lowered its regular 
 freight tariffs for 66 per cent of the traffic, in 
 order to serve the exigencies of trade, especially 
 export trade, during a period of commercial de- 
 pression. The government is in a position in 
 Germany to influence the whole machinery of 
 trade and transportation as no other government 
 in the world can do, and this fact must be taken 
 into account when other peoples think of com- 
 peting on equal terms with the Germans in the 
 Far East or in South America. 
 
 The administration of the railways, tele- 
 graphs, telephones, mines, and the public do-
 
 14 MONARCHICAL SOCIALISM 
 
 mains by the state is possible only through 
 trained civil servants. The efficiency of state- 
 managed mines and factories in competition 
 with privately owned enterprises in Germany 
 comes from the character of the bureaucracy. 
 This permanent civil service is one of the great- 
 est glories of Germany, and one of the most 
 powerful of reasons upholding the monarchical 
 principle in a semi-autocratic form in Germany. 
 The Prussian bureaucracy, the model of the 
 other German states, is the creation of the 
 Hohenzollern family during three centuries. It 
 had been developed and improved under all the 
 efficient sovereigns of the Hohenzollern line, 
 such as the Great Elector and Frederick the 
 Great, and it has been a principle of the private 
 policy of the Hohenzollern family to rule through 
 a body of civil servants, whose place in the state 
 is as honorable as that of the army, or perhaps 
 it would be more just to say as ranking next 
 to the army. The non-partisan administrative 
 body, with its own disciplinary courts for cutting 
 out of the public service any member who uses 
 his official position to favor a private interest, 
 either his own or that of another, has kept the 
 civil service up to a code of honor that can be 
 compared in the United States only to the codes
 
 STATE-OWNED ENTERPRISES 15 
 
 regulating the army and the navy. Thus in 
 Germany a public servant, because of the power 
 that his class possesses, the personal distinction, 
 and the social position that go with the public 
 service, is willing to work for the state for less 
 than he could receive in the service of a private 
 company. The chiefs of technical bureaus in the 
 mining, agriculture or forestry, telegraph, tele- 
 phone, or railway services, are paid from $1,750 
 to $3,000 a year. The director-general of the 
 Alsace-Lorraine railways is paid $3,375, and an 
 allowance for house-rent. District superintend- 
 ents on the Prussian lines, each of whom has 
 supervision over from 1,500 to 2,000 miles of 
 line, are paid $2,750 a year, with free dwellings. 
 It frequently happens that men in the govern- 
 ment service, of unusual capacity, reject offers 
 from private concerns of two or three times the 
 salaries they are receiving. The officials who 
 decline such proposals have the same feeling 
 about them that a United States army engineer 
 would have. His pride in the service, the sense 
 of usefulness to the country, the social considera- 
 tion shown to his service, and the certainty of 
 being promoted regularly, and of having a pen- 
 sion upon his retirement, make the public ser- 
 vice more attractive than a private one could be.
 
 16 MONARCHICAL SOCIALISM 
 
 The present Emperor has the passion for effi- 
 ciency which was the most eminent quality in 
 Frederick the Great. The Emperor trusts, and 
 in every possible manner honors, the civil servant 
 who has done an exceptional thing. As Mr. 
 Bryce says of Frederick, it was not enough for 
 this great man that a thing was well done, but 
 that it must be done in the best possible manner. 
 The qualities and the efficiencies that are re- 
 quired of the bureaucrat have made it possible 
 for the German Emperor as King of Prussia to 
 retain his autocratic power in the state during a 
 period when democratic government has ruled 
 the great neighboring states, with the exception 
 of Russia, and during a period when Germany 
 has made its greatest advances in culture and in 
 industry.
 
 II 
 
 GERMAN RAILWAY POLICY 
 
 THE non-German trading upon a frontier 
 of the world has the uneasy sense that in 
 competing with the German he is oppos- 
 ing not an individual but a nation. The Ameri- 
 can in the Levant* South Africa, or the Far East 
 may be supported by a corporation powerful at 
 home, with wide-spread alliances, yet he becomes 
 dimly aware that while he after all only repre- 
 sents an individual company, somehow behind 
 his German competitor is the German nation in 
 a real and co-operating sense. It is the inter- 
 action of government and business, the conscious 
 adjustment by directing mind of one part of 
 national endeavor with another, that makes pos- 
 sible much of the narrative of trade conquest told 
 quarterly in the thin brochures of the imperial 
 statistical office. Tasks of statesmanship in 
 German ministries, next to those of adminis- 
 tration, concentrate on contributions to the 
 national trade policy. The Prussian ministry 
 
 of education has reduced the unskilled within 
 
 17
 
 18 MONARCHICAL SOCIALISM 
 
 twenty years from about one-third of the indus- 
 trial army to one-tenth by directing boys to- 
 ward learning trades and by providing specific 
 instruction. The protection and extension of 
 trade spheres have become the vital principle of 
 foreign policy. Questions of prestige and de- 
 light in playing the game for its own sake have 
 become secondary. Diplomatic controversies of 
 this century, those settled and those pending, in 
 Turkey, China, Morocco, Persia, relate to trade 
 opportunities. The friendly attitudes of the im- 
 perial and Prussian Governments toward syn- 
 dicates and other trade combinations rest upon 
 trade considerations. The convincing argument 
 for the navy is security for the sixteen billions 
 of marks planted fruitfully abroad. An inquiry 
 into each of these divisions of trade policy would 
 be instructive, especially those concerning friend- 
 ship with the syndicates, the measures taken to 
 have boys and girls grow up into skilled instead 
 of raw workers, and the benefits that science has 
 given to technique. But in examining the Ger- 
 man system with a purpose to understand how 
 it comes about that foreign trade, taking good 
 years with bad, has advanced $113,000,000 each 
 twelve months since 1897, the imperial govern- 
 ment's use of the private and state-owned rail-
 
 GERMAN RAILWAY POLICY 19 
 
 way has been to me the most amazing and full of 
 meaning. 
 
 While the imperial government is not itself a 
 large railroad-owner, it has unified the policies 
 and the charges upon the state and privately 
 owned lines of the empire so that so far as the 
 shipper perceives he is deah'ng with one trans- 
 portation system whether the point of origin is 
 on a line owned by one of the thirteen private 
 companies or by Prussia, Bavaria, Baden, Wiir- 
 temberg, Saxony, or by the empire in Alsace- 
 Lorraine. The control of the rates is centralized 
 under the Bundesrat, the Senate as it were, con- 
 sisting of members appointed by the govern- 
 ments of the twenty-five individual monarchies 
 and republics of the empire. The Bundesrat 
 from time to time calls a "general conference" 
 for regulating railway rates. The railways have 
 voting powers in the conference according to 
 mileage as follows: up to 50 kilometres (31 miles) 
 one vote; above 50 and up to 150 kilometres 
 (93.2 miles) two votes; from 150 kilometres to 
 300 (186.4 miles) three votes; beyond 300 and up 
 to 500 kilometres (310.7 miles) four votes, and 
 for each additional 200 kilometres (124.3 miles) 
 one vote more. Business for the general confer- 
 ence is prepared by a permanent rate commis-
 
 20 MONARCHICAL SOCIALISM 
 
 sion with representatives from fourteen railway 
 boards. A subdivision of membership called the 
 Trader's Committee is made up of five repre- 
 sentatives of agriculture elected by the combined 
 agricultural chambers of the empire, five repre- 
 senting the manufacturing interests, and five the 
 distributing commercial interests. ' The two lat- 
 ter classes are elected by the chambers of com- 
 merce of the country acting together. These fif- 
 teen and a member appointed by the Bavarian 
 Government recommend to the permanent com- 
 mission authoritatively, especially in adjusting 
 rates equitably among zones of traffic into which 
 the empire is apportioned, so that a shipper in 
 one part of the country shall not be at a disad- 
 vantage in internal trade through his geographi- 
 cal location. 
 
 The railway direction is informed upon lo- 
 cal conditions through district advisory boards. 
 Members of the boards are elected or appointed 
 in various ways, according to which state or pri- 
 vate road is concerned. The principle of choice 
 is that the district board shall be representative 
 of the agriculture, the forestry, the manufact- 
 ures, the mines, and the trade of the division. 
 Prussia, which dominates the imperial railway 
 plexus, draws district advisers through election
 
 GERMAN RAILWAY POLICY 21 
 
 for three-year terms by chambers of commerce, 
 merchants' associations, agricultural provincial 
 unions, and other bodies designated by the min- 
 ister of public works. The shipper dissatisfied 
 with a rate starts his complaint with the local 
 board. He may of course appeal from the judg- 
 ment of the board. 
 
 The Bundesrat in railway matters acts under 
 general instructions agreed upon by the feder- 
 ated governments as follows: 
 
 1. The advancement of the internal indus- 
 trial and agricultural production by cheapening 
 the cost of raw materials or equipment for pro- 
 duction. 
 
 2. To facilitate the export of German prod- 
 ucts. 
 
 3. To support the trade of German commer- 
 cial centres. 
 
 4. To favor German railway lines against 
 competing foreign waterways and railways. 
 
 The central government began its supervision 
 of railway rates, whether state-owned or private, 
 under clauses in the imperial constitution of 
 1871. Article 4 places the railways "subject to 
 surveillance of the empire and to imperial leg- 
 islation," while article 8 creates the permanent 
 committee of the Bundesrat or Federal Council
 
 22 MONARCHICAL SOCIALISM 
 
 and article 42 provides "that in the interests of 
 general commerce the federal governments un- 
 dertake to administer the German railways as a 
 uniform system. ' ' Article 45 gives the empire con- 
 trol over rates and requires that uniform charges 
 shall be introduced as soon as possible, agriculture 
 and industry to have special privileges. In the 
 development of the German railway system the 
 clause of the constitution respecting special priv- 
 ileges has been utilized to fix exceptional rates, 
 based on political and national considerations, 
 upon more than half of all the freight carried. 
 The railway board has established twenty-seven 
 classes of exceptional tariffs for internal trade 
 and thirty-one classes of exceptional rates for 
 seaport traffic. When the railway board was 
 created by the imperial parliament in 1873 there 
 were ninety railway administrations in Germany, 
 with 1,357 different rate-tables. This was in the 
 days when the railways of Germany were largely 
 in private company control. Bismarck, speak- 
 ing April 26, 1876, on a different phase of the 
 subject, said: "Nowadays we see that railway 
 administrations, without benefit to the railways 
 and the shareholders, and as it were as a kind of 
 sport, wage with each other wars which cost 
 much money, and which are wars of power more
 
 GERMAN RAILWAY POLICY 23 
 
 than anything else, without financial competi- 
 tion." 
 
 The exceptional tariffs for goods going abroad 
 are designed on the general principle of giving 
 as low a proportionate rate to parcels as is given 
 to carload lots destined for internal use. The 
 wholesale glass-dealer in Berlin shipping to Ham- 
 burg must pay at the rate of ten marks a metric 
 hundredweight on shipments of glassware in less 
 than carload lots. If, however, his shipment of 
 less than a carload is for export, he pays only 
 three marks a metric hundredweight. The sub- 
 joined are some of the rates on goods for export 
 contrasted with internal rates, in ten-ton lots 
 per metric ton (2,204.6 pounds) : 
 
 SHIPPING-POINTS 
 
 MILES 
 
 GOODS 
 
 EXPORT 
 BATE 
 
 NORMAL 
 BATE 
 
 Cologne to Hamburg. . 
 
 267 
 
 Copper wares 
 
 $3.14 
 
 $6.38 
 
 
 267 
 
 Lead in blocks 
 
 3.17 
 
 4.86 
 
 if 
 
 267 
 
 Cotton goods 
 
 3.64 
 
 6.38 
 
 
 
 267 
 
 Machinery and machine 
 parts 
 
 2.53 
 
 4.86 
 
 
 
 267 
 
 Iron plates and locomo- 
 tives 
 
 1.33 
 
 3.83 
 
 Frankfort to " 
 
 330.6 
 
 Machinery and iron 
 wares 
 
 3.07 
 
 6.00 
 
 Bremen. . . 
 
 285.2 
 
 Machinery and iron 
 wares 
 
 2.69 
 
 5.21 
 
 Liibeck. . . 
 
 385 
 
 Machinery and iron 
 wares 
 
 1.67 
 
 4.71 
 
 Niirnberg to Hamburg 
 
 394.6 
 
 Thuringian wares, toys . 
 
 5.83 
 
 9.33
 
 24 MONARCHICAL SOCIALISM 
 
 Exceptional rates, such as those in the fore- 
 going table, are constructed upon three princi- 
 ples : that the goods are intended for export and 
 must, therefore, be carried at a lower rate than 
 goods for internal use; that the rate to such a 
 port as Liibeck, whose steam-ship lines, running 
 to certain limited territories, ought to have a 
 preferential rate over the great ports of Ham- 
 burg and Bremen; and, finally, that the rates on 
 particular lines of goods are adapted to condi- 
 tions abroad that influence the export trade. 
 For example, in bad trade years the rates are 
 lowered far below the usual exceptional rate. 
 Sometimes the exceptional rate is cut a third, or 
 even a half; and this is also done on internal 
 shipments when extraordinary conditions pre- 
 vail, such as a failure of the hay crop. 
 
 The national railway supervision also makes 
 exceptional tariffs on shipments from other coun- 
 tries passing through Germany, as for instance 
 on the grain traffic from Russia to oversea coun- 
 tries. A special grain rate is made from Hun- 
 gary to England by way of Hamburg in order to 
 draw freight to Hamburg in competition with 
 Belgian, Dutch, French, and Adriatic ports. 
 These rates on goods of foreign origin are often 
 made regardless of distance, and are designed to
 
 GERMAN RAILWAY POLICY 25 
 
 secure the traffic for German railways and steam- 
 ship lines. The fundamental idea is the use of 
 transportation facilities as a basis for national 
 industrial and commercial advantage. The im- 
 perial railway direction also grants extensive re- 
 bates to the large shippers. Thus, when coal is 
 shipped it may have several exceptional rates, 
 depending upon the amount shipped. The ship- 
 per pays at the time of shipment the ordinary 
 exceptional rate, and at the end of the year a re- 
 bate is paid him, according to whether the total 
 of his shipments for the previous year falls into 
 one or another of the special exceptional rates 
 granted to the great shippers. 
 
 The railway management grants individual 
 exceptional rates. For instance, a man of en- 
 terprise in a village, having found that the sand 
 near by is adapted to the making of a certain 
 kind of glass, decides to start a factory, provided 
 he can have the combining chemicals and coal 
 brought to him at a price low enough to make 
 his idea a profitable one. He applies first to the 
 chamber of commerce within whose jurisdiction 
 his locality is. It is the duty of the chamber of 
 commerce, which in Germany is a semi-official 
 body with a compulsory contributing member- 
 ship, to investigate the value of the idea techni-
 
 26 MONARCHICAL SOCIALISM 
 
 cally. Should the project appear commercially 
 sound, the governing body of the chamber will 
 support an application for an individual rate on 
 the materials required. A fresh examination is 
 made by the railway authorities, and, if the con- 
 clusions of the chamber of commerce are verified, 
 the extraordinary rate is granted. 
 
 Sixty-six per cent of all the freight carried on 
 German railways is now taken under exceptional 
 rates. The privileged traffic has increased from 
 45.6 per cent in 1895 to 66 per cent in 1911. 
 
 The national railway supervision has pre- 
 pared tariff rate-books for combined rail and 
 sea routes arranged so simply that even the 
 layman can understand them. A merchant at 
 Burgas, Smyrna, or Galatz, in the Levant asks of 
 an American maker in Grand Rapids and of a 
 German manufacturer in Coburg a price on one 
 hundred refrigerators, inclusive of freight and 
 all other charges, delivered at his port. The 
 Grand Rapids firm, if it has never before shipped 
 to Smyrna, Burgas, or Galatz, must make wide 
 inquiries taking much time and trouble before 
 being able to determine approximately what 
 the transportation, terminal, and forwarding 
 charges by rail and steamer will be, and he will 
 probably not be able to learn exactly what the
 
 GERMAN RAILWAY POLICY 27 
 
 charges of forwarding will be. After delays that 
 may prevent his getting the order, he is obliged 
 to name a price that will cover the possible dif- 
 ference between the compilation of freights and 
 forwarding charges and what they may actually 
 be upon foreign shipping lines. The Coburg 
 manufacturer, by referring to the Levant rate- 
 book under Coburg, sees that refrigerators are 
 listed in the eleventh classification, and that the 
 rate, including land and water, is at the rate of 
 marks 6.74 per 100 kilos for shipments under 
 5,000 kilos, marks 6.59 if beyond 5,000 kilos, and 
 marks 6.42 if amounting to more than 10,000 
 kilos. 
 
 The railway administration undertakes also 
 to be responsible, in connection with steam-ship 
 companies, for the delivery of the shipment, so 
 that the shipper, when he has paid the freight 
 charges, need give himself no further concern. 
 The railway management obtains for him a bill 
 of lading when the goods are placed aboard a 
 steamer at Hamburg or Bremen, upon which the 
 shipper may obtain his money at a bank, or, if 
 he prefers, will forward the bill to the consignee. 
 The essential facts in the transaction are that the 
 shipper has worked out for him in advance the 
 exact cost of transportation and delivery, and
 
 28 MONARCHICAL SOCIALISM 
 
 that he is able to have the government look after 
 the delivery of the goods with no further bother 
 to himself than if he were mailing a letter with 
 the proper postage prepaid. Thus export is 
 enormously facilitated, especially for small con- 
 cerns. 
 
 Such rate-books as that described for the Le- 
 vant have been worked out by the railway super- 
 vision for the whole world, although they are not 
 published for distribution except for the Levant 
 and South Africa. It appears to be considered 
 more judicious from the stand-point of the ex- 
 porter not to publish rates for every part of 
 the world for general distribution. The exporter 
 can learn the rate to any port or railway station 
 outside of Germany by inquiring at his local rail- 
 way station. Such inquiries regarding American 
 cities reveal, I am told, that some rates are made 
 from interior points in Germany to cities west 
 of the Mississippi River lower than the rates on 
 the same goods from the Atlantic seaboard to 
 the same cities west of the Mississippi. 
 
 It has seemed to me possible that railways in 
 the United States might co-operate under na- 
 tional supervision as effectively as the German 
 railways, although conditions in the United 
 States are extremely different from those in Ger-
 
 GERMAN RAILWAY POLICY 29 
 
 many, in that 91 per cent of the mileage in Ger- 
 many is owned by the German states and only 
 9 per cent by private companies. Private com- 
 panies are dependencies of the state-owned rail- 
 ways, because the state may take over the pri- 
 vate lines whenever it may wish to do so, at a 
 fair valuation based upon the dividends of the 
 previous ten years. In case a road has not been 
 in operation as long as ten years, the dividends 
 for three years may be taken as the basis 
 of valuation. The imperial constitution estab- 
 lishes national supervision under the clauses that 
 have been mentioned. Yet, under the recent 
 legislation of Congress a more definite correla- 
 tion of the railway interests of the United States 
 has been begun than the Interstate Commerce 
 Commission was able previously to undertake. 
 
 The private lines in Germany have been 
 treated liberally enough to allow them to declare 
 dividends that have been steadily increasing 
 with the development of the country. The divi- 
 dends of thirteen of the more important private 
 lines run from 6 to 9 per cent. For instance, the 
 private " Lubeck-Buchener and Lubeck-Ham- 
 burger Railway," with a capital of 25,000,000 
 marks and bonds for 19,650,000 marks, has paid 
 during the last three years 8 per cent, the high-
 
 30 MONARCHICAL SOCIALISM 
 
 est dividends paid since the opening of the line in 
 1852. The dividends began at 2 per cent and, 
 with slight fluctuations, have risen during fifty- 
 eight years to the present 8 per cent. The pros- 
 perity began in the early seventies, when the 
 dividend rose to 5j per cent, and it has never 
 fallen below that figure since. The Liibeck- 
 Biichener and Lubeck-Hamburger Railway is not 
 selected from the thirteen for its prosperity, but 
 is taken as a representative company. The Prus- 
 sian state railways, which dominate the German 
 system, pay 8 per cent on an actual cash invest- 
 ment of 9,000,000,000 marks. The railways are 
 carried on the books of the Prussian government 
 at about 18,000,000,000 marks, since 4 per cent 
 is regarded as a reasonable dividend basis. The 
 German experience, therefore, has been that 
 both the state and the privately owned railways 
 make an excellent return on the capital invested. 
 The returns have been large, notwithstanding 
 the use one might say the manipulation of 
 the railways to meet the exigencies of the export 
 trade, the competition of foreign railways and 
 ports, and the peculiarities of local internal con- 
 ditions. 
 
 German railways, state and privately owned 
 yet under national supervision, give discriminat-
 
 GERMAN RAILWAY POLICY 31 
 
 ing rates, grant rebates, treat localities and indi- 
 viduals exceptionally, charge all the traffic will 
 bear under one set of conditions and extraordi- 
 narily low rates for other circumstances, em- 
 ploying all the devices condemned and passion- 
 ately opposed in America, and exercise all the 
 powers of absolute monopoly. There is, how- 
 ever, this basic difference : that while in America 
 these devices are suggested, even necessitated, 
 by the war of interests or the wills and judg- 
 ments of individual managers, they are applied 
 in Germany according to principles of equity 
 which take into account industry, trade, and 
 agriculture as a national whole, granting excep- 
 tions, taking one sort of traffic as privileged, an- 
 other as normal, upon calculations wide enough 
 to include the interests of the whole people. So 
 far as perceived, shippers, whether falling into 
 one category or another, feel no sense of unfair 
 treatment. They know that the system is in- 
 tended to be just and nationally effective, that 
 whatever rate is made is a result of reasoning 
 together by those who made it and those who 
 use it, and that the rate can be changed pro- 
 vided inequity can be shown or that a lower rate 
 would be of advantage to the national organ- 
 ism. There are no secret rates.
 
 32 MONARCHICAL SOCIALISM 
 
 Notwithstanding the immense differences be- 
 tween American and German railroads in owner- 
 ship and in variety of conditions, it may be that 
 partly by legislation and partly by the co-opera- 
 tion of some of the powerful railroad managers 
 in the United States a close national control 
 might be developed from the foundations already 
 laid. Political considerations and the perma- 
 nent well-being of the wealth massed in railways 
 might co-operate in building a system of control, 
 subordinating railways, to their ultimate ad- 
 vantage as dividend-payers, to industrial, com- 
 mercial, and farming interests as an entirety. 
 The railway captains would lose something of 
 the joyousness of free-lance independence, but 
 they would be more solidly effective as corps 
 commanders in a co-ordinated army. They 
 might also draw larger allotments of revenue for 
 their shareholders as a result of saving the waste 
 of working alone and by concentrating attention 
 upon service to economic unity rather than to 
 economic war.
 
 Ill 
 
 THE PASSING OF THE UNSKILLED 
 
 THE industrial spirit of the German people 
 seeks to prepare the growing generation 
 for achievements in production as im- 
 posing in contrast with the present as the work 
 of to-day compares with that of the eighties. 
 Faith in work, the resultant of things done, 
 drives forward in a many-sided preparation for 
 greater things to be done. The German, with a 
 past of extraordinary hardship and suffering, in a 
 land poor rather than rich in natural resources, 
 has by thought and contrivance, by sea trans- 
 port and exchange, availed himself of the re- 
 sources of other peoples. Compulsory sanitary 
 living and other legislation requiring a minimum 
 of social well-being have lengthened the average 
 life and increased the height and bodily frame 
 of both sexes. The German mind has now a 
 stronger physical instrument with which to work 
 than the generation that fought with France. 
 The training of that instrument is expressed in- 
 tensely in relation to skilled production by the 
 work of the continuation and trade-schools. 
 
 33
 
 34 MONARCHICAL SOCIALISM 
 
 The explanation the German generally gives 
 of the sudden and immense industrial expansion 
 beginning in the seventies is the compulsory ele- 
 mentary education of the whole people. The 
 Germans were ahead of any European people in 
 primary mental training and possessed, there- 
 fore, material more easily converted into ma- 
 chine builders or metal workers or electrical- 
 instrument makers than the untaught laborer. 
 The German workmen, not so capable probably 
 as those of the United States or of the United 
 Kingdom, achieve (through training and through 
 obedience to authority, also trained finely in the 
 higher reaches of scientific technic) results that 
 seem individually beyond their strength. The 
 observer from abroad sees the military system 
 reproduced in the factory. It is rather that the 
 character of the German is disclosed with equal 
 clearness in mine and factory management, the 
 military system, the civil administration, and by 
 the organization of labor upon landed estates. 
 The disciplined life at home, in the school, in 
 the workshop, in the army, and again at work, 
 are all designs in the same weave. The same 
 threads run through all patterns. How these 
 character threads were spun in the hard centu- 
 ries of struggle and persistence and are now be-
 
 THE PASSING OF THE UNSKILLED 35 
 
 ginning to show in strangely interesting design, 
 is a high study. The endeavor of this essay 
 is only to indicate one of the figures running 
 through the loom the making of the labor unit 
 more efficient by special training in his youth. 
 
 The son of a day-laborer, who, within the 
 view of the national policy, should be more use- 
 ful to himself and the commonwealth than his 
 father, is the subject of careful expert observa- 
 tion. His teachers, the school physician, and 
 the parents endeavor to determine the handi- 
 craft to which the boy is adapted. The physi- 
 cian takes note of the body. The strong boy of 
 average build is classified as suited to become 
 a brewer, a smith, a carpenter, a mason, or a 
 worker in iron construction, or some other call- 
 ing requiring at least average strength. The 
 undersized or weaker boy is considered as being 
 better adapted to become a tailor, a bookbinder, 
 a basket-maker, a wood-carver, a locksmith, a 
 jeweller, a glazier, a joiner, a cabinet-maker, a 
 potter, a brush-maker, or a confectioner. The 
 boy with weak lungs is excluded from trades 
 where there is a good deal of dust, such as that of 
 the wood-turner or the paper-hanger. The boy 
 with pulmonary weakness would also not be al- 
 lowed to become a shoemaker or a tailor, because
 
 36 MONARCHICAL SOCIALISM 
 
 of the bent attitudes in which he would have to 
 work. Should the boy have a weak heart, he 
 would be classified as unfit for the heavy work of 
 the smith, the butcher, the miller, or any of the 
 building trades. The youth who has chroni- 
 cally perspiring hands is deemed incapacitated for 
 gold-work, clock-making, bookbinding, or lith- 
 ographing. The boy with inflamed eyelids is as 
 fully excluded from work in colors as though he 
 were color-blind. Within the view of the school 
 medical counsellor, the boy must be saved from 
 entering upon a trade in which he will always be 
 at a disadvantage physically, and his whole life 
 be a struggle on unequal terms with those better 
 qualified to deal with the peculiar conditions of 
 that trade. 
 
 The teachers undertake to measure the mental 
 capacities of the boy. If he is generally a dull 
 pupil, he will be indexed as being better adapted 
 to a trade not far removed from unskilled labor. 
 The bright pupil, especially if he should show 
 manual delicacy in the systematic tests to which 
 he is subjected toward the end of his school 
 period, would have a choice of some fine handi- 
 craft, such as that of instrument-making, en- 
 graving, or jewel-setting. 
 
 Painstaking effort is made to determine the
 
 THE PASSING OF THE UNSKILLED 37 
 
 boy's inclinations, so that the great misfortune 
 may not happen to him of being deprived of the 
 joy of work, of satisfaction in the thing done. 
 Within the view of the Prussian school admin- 
 istration, and this is equally true of Bavaria 
 and most of the other German states, the skilled 
 worker ought to find in his calling one of the 
 great satisfactions of life a certain artistic 
 pride, the disposition to do his work, not alone as 
 he has been taught, but to add to it something 
 of his own individuality, because he loves the 
 work and puts something of his spiritual self 
 into it. No boy is compelled or unduly forced 
 into the choice of a calling. He is handled 
 temperamentally and sympathetically. The en- 
 deavor is made to stir the boy's ambition. Mas- 
 ters and parents confer. The parents working 
 at common labor almost always want their chil- 
 dren to do better in life than they have done. 
 They readily co-operate in getting the convic- 
 tion fixed in the boy's mind that he ought not to 
 be an unskilled workman, that when he finishes 
 his school work he ought not to be content to 
 be among those at the bottom of society doing 
 the coarse labor of the ditch, but that he ought 
 to choose a trade and fit himself for one of the 
 higher levels where intelligence counts for some-
 
 38 MONARCHICAL SOCIALISM 
 
 thing and where wages and opportunities are 
 larger. The germ of the whole system of manual 
 training is considered by the Prussian Ministry 
 of Commerce and Industry to be in the awak- 
 ening of the boy's aspirations fora life above 
 the ordinary. This awakening is much more of 
 a problem for the children of the unskilled or 
 the nearly unskilled classes than for those of the 
 higher artisan class. The surroundings and the 
 tone in the home life of a superior workman 
 usually settle the inclination of the boy to be at 
 least equal to his father. 
 
 The Munich administration has added an 
 eighth year to the usual seven of compulsory 
 primary education, which is given almost en- 
 tirely to drawing, card-board, and wood-work 
 training. The school authorities have two ob- 
 jects in view. One is to start the boy in the 
 direction of a particular trade, his studies to 
 be completed in compulsory continuation trade- 
 schools. The second object is to give the boy 
 who has not selected a trade a distaste for un- 
 skilled work, so that he may later feel impelled 
 to choose a skilled occupation. This policy has 
 been worked out by Doctor Kerschensteiner, 
 whose name is international and whose ideas 
 are well known in the United States. Of 2,200
 
 THE PASSING OF THE UNSKILLED 39 
 
 boys who left the highest class of the element- 
 ary schools in Munich in an average year, 2,150 
 went into handwork or other skilled occupation 
 at once. Thus 2 per cent only were lost to 
 skilled industry. Not one boy from the school 
 is known to have allowed himself to fall into that 
 ugly classification, "the unemployable." 
 
 The teacher tries to impress on the youthful 
 mind the worth of labor, how labor will win all 
 things, that pleasure in making, producing, cre- 
 ating may be one of the truest joys of life, that 
 in it may be found for most persons the service 
 of Heaven, the country, the community, and 
 one's self. The elementary reading-books in- 
 clude a variety of such stories as this one, entitled 
 "The Gentleman in England." "When the 
 celebrated philosopher and printer, Benjamin 
 Franklin, came to Europe he had with him a 
 negro servant. Franklin, as is well known, was 
 very inquisitive and travelled through the whole 
 of England in order to see factories and other 
 objects of interest. His servant went with him 
 and also saw everything. They finally returned 
 to London. The following day Franklin said to 
 the negro: 'Now that you have seen all of Eng- 
 land, how does it please you?' The negro shook 
 his head and said: 'England is a very strange
 
 40 MONARCHICAL SOCIALISM 
 
 country ; everybody works here. The water and 
 the smoke work, the horses, the oxen, and even 
 the dogs work. The men, the women, and the 
 children work. Everybody works except the 
 pigs. The pig does not work; he does nothing 
 but eat and drink and sleep. The pig alone is 
 gentleman in England.' ' 
 
 It has long been a house law of the Hohen- 
 zollerns that each should learn a handicraft. 
 The prince, it is considered, is only in this way 
 able to understand the qualities in a subject that 
 make him a good artisan. The prince also gains 
 that feeling of confidence in his own powers that 
 comes from skilled handwork. The Emperor is 
 a bookbinder. Among the Emperor's fine col- 
 lection of bindings are specimens of American 
 work, chiefly from Philadelphia. He probably 
 appreciates no product of American industrial 
 art so highly as that of the bookbinder. The 
 Crown Prince is a turner, another of the Em- 
 peror's sons is a blacksmith, the third a brass- 
 worker. The teacher who seeks an illustration 
 for competence in any trade can usually find a 
 royal example, either present or past. The Em- 
 press and her daughter Viktoria are excellent 
 sewing women, and have gone through courses 
 in cooking. It is a pleasantry in the diplomatic
 
 THE PASSING OF THE UNSKILLED 41 
 
 corps that to interest the Empress one must have 
 something new to say about household manage- 
 ment, the children, or the church. The psycho- 
 logical part of the method is to make the boy 
 believe really that virtue, happiness, and the re- 
 wards of life are derived from work, that neither 
 a prince, a member of the cabinet, an officer, nor 
 a millionaire can escape work, or indeed that 
 he wishes to avoid it. All this seems very much 
 like Sunday-school instruction and parental plat- 
 itudes. That is true. It has been noted by an 
 economic writer in The London Times, after a 
 study of Germany, that the German is brought 
 up on just the kind of moral nourishment that 
 was made common in England thirty or forty 
 years ago by Carlyle, Ruskin, and Kingsley. 
 The commonplaces appear to be driving power, 
 to put moral energy into the ordinary task. 
 In a trade-school shop, where forty or fifty boys 
 are at work, intent and earnest, one seems to feel 
 the spirit of Germany of to-day duty, work, 
 skill. 
 
 The continuation trade and commercial schools 
 are not cubes in a rigid, finished structure. They 
 are germinating, flourishing, growing in immense 
 variety out of local conditions, moulded by local 
 individualism. Some schools are owned by the
 
 42 MONARCHICAL SOCIALISM 
 
 states, some by guilds, municipalities, trades- 
 unions, manufacturers' associations, and by pri- 
 vate societies and persons. The school or group 
 of schools in any industrial district has been 
 founded ordinarily to train workmen for the spe- 
 cialties produced there. The pupil is usually a 
 beginner in one of the factories, and he is dealing 
 in the school with the difficulties and problems 
 that arise day by day in the factory. The in- 
 struction is of the best. The master-workmen, 
 up-to-date and capable men of the neighboring 
 works, serve in the school-room. The equip- 
 ment, the tools, the machinery, are usually of 
 the latest design, so the youth feels that he is 
 getting the best that can be learned. The trade- 
 school is in such close working co-operation with 
 the adjacent manufacturers that, besides bor- 
 rowing some of the best workmen for short peri- 
 ods for instructors, the advice of the manufact- 
 urers is sought or voluntarily given. 
 
 The learner, if the school is compulsory, may 
 be punished by public reprimand, a two hours' 
 confinement, or by expulsion. Expulsion is in- 
 frequent because the school opinion is so strong 
 that any boy does not like to put himself outside 
 of his fellows' good-will. Besides, the youth feels 
 that his whole future is involved and that he
 
 THE PASSING OF THE UNSKILLED 43 
 
 must endure and persevere. An essential fact 
 of the primary technical continuation school in 
 Germany is that, under an imperial law of June 1, 
 1891, as corrected by the so-called industrial law 
 of June 30, 1900, employers are required "to 
 grant to those of their employees under eighteen 
 years of age, including female clerks and female 
 apprentices who attend a continuation school ar- 
 ranged by the government or a local authority, 
 the necessary time for school attendance as pre- 
 scribed by the authority in question." Any one 
 contravening these regulations is subject to a 
 fine of twenty marks for every offence and, if 
 this is not paid, to three days' imprisonment. 
 The compulsory system has been in operation in 
 Berlin six years; and in the beginning the admin- 
 istration had difficulty with business houses re- 
 garding the times of attendance, rather than 
 with the principle. The trades-unions and So- 
 cial Democrats were energetic for compulsion. 
 Penalties have been resorted to reluctantly, a 
 representative of the school management usually 
 having been able to win voluntary compliance 
 by pointing out the clear conditions of the law 
 and the advantages to the young persons con- 
 cerned. A good many instances of resistance 
 were fined in the second year. Now that the
 
 44 MONARCHICAL SOCIALISM 
 
 employers and parents understand that resist- 
 ance is useless, there are few refusals to give 
 the necessary time. Some employers are of the 
 opinion that compulsory continuation schools 
 tend to raise wages and to make employees un- 
 willing to do menial work and the automatic 
 machine operations of subprocesses in produc- 
 tion. Yet four-fifths, or even a higher percent- 
 age, of opinions which have been gathered by 
 the Prussian Ministry of Commerce at first- 
 hand from employers in all branches of produc- 
 tion indicate good-will toward the schools. 
 
 Prussia, which is five-eighths of the empire, 
 has roundly 3,000,000 persons from fourteen to 
 eighteen years old. Of this number 1,473,000 
 are youths, 1,527,000 are girls. Two-thirds of 
 the whole, or about 2,000,000, are working 
 1,250,000 boys and 750,000 girls. Agriculture 
 takes 813,000, about equally divided between 
 the sexes. Industry employs 650,000 boys and 
 191,000 girls; 70 per cent of the boys have been 
 trained in some variety of continuation school, 
 and 48 per cent of the girls. In trade and trans- 
 portation 114,000 were employed last year, and 
 of that number 56 per cent had gone to some sort 
 of commercial school; of the 67,000 girls within 
 the ages of fourteen to eighteen in trade and
 
 THE PASSING OF THE UNSKILLED 45 
 
 transportation, 52 per cent had been instructed 
 in commercial schools. In Berlin 89 per cent of 
 the workers between the ages of fourteen and 
 eighteen are taking continuation courses, 55 per 
 cent in Hesse-Nassau, 48 per cent in Hanover, 
 50 per cent in the province of Posen, 70 per cent 
 in the province of West Prussia. Under a Prus- 
 sian law giving subsidies to municipal trade- 
 schools, provided they are compulsory, the num- 
 ber of pupils increased during the six years 
 preceding 1910 by 55 per cent. The continua- 
 tion trade-school administration works with the 
 official labor exchanges of the empire in the en- 
 deavor to direct the choosing of trades into those 
 callings where the greatest opportunities exist 
 for employment. The central labor bureau for 
 Prussia draws up a sheet at the end of each 
 month which shows exactly the number out of 
 employment in all trades. Taken over a period 
 of years, it is thus easy, of course, to determine 
 relatively the chances of employment. Thus, 
 if the stone-working trade is overdone, the en- 
 deavor on the part of the school administration 
 is to guide boys who might otherwise be adapted 
 to stone-working into some related building 
 trade in which opportunities for work would be 
 greater. By co-operation among the German
 
 46 MONARCHICAL SOCIALISM 
 
 states it is expected that the supply and demand 
 in individual callings will be understood so com- 
 pletely that a continuous process of adjustment 
 will maintain the equilibrium between supply 
 and demand in all trades. The design is to re- 
 place the haphazard distribution of workers by 
 a balanced system. The boy, who can know 
 nothing accurately about the position of the 
 labor market, owing perhaps to the operation of 
 international causes, will be spared the tragedy 
 of going into a dying trade. The effort will be 
 to place him in a trade in which he will have an 
 equal chance with others to obtain employment 
 and keep it. 
 
 The German governmental theory of the col- 
 lective responsibility of society to the individual, 
 and of exacting from the individual proportion- 
 ate service to the whole, works out in industrial 
 education, as I have indicated, in two principles 
 of action, intelligent persuasion and compulsion. 
 One is intended to be the complement of the 
 other. Compulsion is congenial to the German 
 in command. X The discipline of the home and 
 the elementary school is naturally extended to the 
 workshop. The merits of compulsory attendance 
 are summarized in an old decree of the Minister 
 of Trade and Commerce, that of 1899, thus: 
 
 &hf+C- AH Ct-tUi \ !$^Qrt^jfrWL I / 
 , ' * f f 
 
 O~*4L
 
 THE PASSING OF THE UNSKILLED 47 
 
 "There are still some who think that voluntary 
 attendance at industrial continuation schools is 
 preferable to compulsory attendance. I con- 
 sider it my duty to draw attention to the recog- 
 nized fact that, according to all experience known 
 to the present time, the continuation school only 
 flourishes and fulfils its purpose if attendance is 
 made compulsory by a local by-law. The oppo- 
 nents of compulsory attendance maintain that 
 it lowers the standard of the schools. It is con- 
 tended that the voluntary pupils are willing and 
 ready to learn, whereas those who are compelled 
 to attend are refractory and lazy, and thus im- 
 pede the progress of the better pupils and make 
 it difficult to maintain school discipline. I ad- 
 mit that, among the number of industrial labor- 
 ers under eighteen years of age who are brought 
 to school by compulsory attendance, there may 
 be some undesirables who cannot be brought 
 under school discipline. But this drawback can 
 be obviated by a proper classification of the 
 pupils, especially by rigorously enforcing the 
 grading system and by employing suitable 
 teachers. Moreover, the difficulty can be over- 
 come if, injiie initial stage of the compulsory 
 system, those young persons who have been out 
 of school for several years are not admitted. In
 
 48 MONARCHICAL SOCIALISM 
 
 the earlier stages, the by-law should only be en- 
 forced for the lowest stage of the continuation 
 school, and should be extended in operation 
 year by year. Experience shows that attend- 
 ance at the continuation school will soon be 
 regarded as a matter of course, just as is the 
 case with attendance at the elementary schools. 
 This plan has the further advantage of grad- 
 ually building up the school stage by stage. 
 This meets another objection, viz., that any 
 sudden increase in the number of pupils would 
 make too great a demand for school places and 
 that the expense of providing them would be 
 beyond the means of most of the communities. 
 The critics of the compulsory system further 
 maintain that schools with voluntary attend- 
 ance show better educational results. This 
 statement is certainly wrong, and the tests lately 
 instituted by me prove the contrary. Irregular 
 and unpunctual attendance is a standing com- 
 plaint with nearly all the schools when attend- 
 ance is voluntary. In some instances it has hap- 
 pened that schools with voluntary attendance 
 have had to waste hah 6 the time appointed for a 
 lesson because sufficient pupils had not arrived 
 to make it possible to begin." 
 
 The pressure to turn the unskilled into the
 
 THE PASSING OF THE UNSKILLED 49 
 
 skilled is applied to both city and country in a 
 broad sense. It is in the municipalities that this 
 pressure takes the form of artisan training. In 
 the country, the laborers on the farm, in the 
 dairy, and in forestry are trained, to be sure, but 
 are trained experimentally, only those intended 
 for foremen and managers being sent to special 
 schools. In the percentages that have been 
 given all farm and mine laborers have been taken 
 to be unskilled. The government does not con- 
 sider that the laborer on the land might be a 
 source of danger to the commonwealth because 
 he is not trained for what is commonly called 
 skilled work, but that, on the contrary, he is one 
 of the soundest units of the community. The 
 government does consider that the presence in 
 cities and industrial centres of great numbers of 
 unskilled laborers is a weakness that must be 
 overcome. 
 
 Who, then, will do the coarse work of Ger- 
 many if the present ideal of converting every 
 German into a skilled workman is attained? 
 The landed proprietor complains now of the 
 scarcity of labor, largely due to the migration to 
 the towns of the young people from the country. 
 The land-owners in 1911 employed 565,000 for- 
 eign laborers between January 1 and October 1,
 
 50 MONARCHICAL SOCIALISM 
 
 as is shown by the number of special passes 
 issued to foreign agricultural laborers from Rus- 
 sia, Poland, the Austrian states, and Italy. 
 Twenty per cent of the miners in Westphalia are 
 foreigners, and 8 per cent are Italians. The num- 
 ber of foreigners employed in industry as com- 
 mon laborers was 440,000, of whom 18 per cent 
 were from Italy, 10 per cent from the Nether- 
 lands, and the remainder largely from the states 
 to the eastward. A vast movement of foreign- 
 ers to and from Germany increases yearly. The 
 foreign laborer is attracted by the higher wages 
 that he can earn there over those paid in his own 
 country. He is able to pay transportation both 
 ways each year, for under the German laws the 
 foreign laborer may not remain in the country 
 longer than one year, and the field laborer usu- 
 ally remains about nine months. The state puts 
 obstacles in the way of foreigners doing skilled 
 work. The police, under the close registration 
 system, take note of a foreigner holding a work- 
 man's pass who engages in higher manual em- 
 ployment. The employer's attention is drawn 
 to the fact that the man in question is a for- 
 eigner; and under the statutes of some states the 
 employer is obliged to discharge a foreign work- 
 man. Obstacles are also placed in the way of
 
 THE PASSING OF THE UNSKILLED 51 
 
 ordinary workmen becoming German subjects. 
 Naturalization is refused to workingmen, except 
 under special conditions. Many workmen from 
 the eastern European countries who might other- 
 wise settle in Germany emigrate to the United 
 States. 
 
 The son of a common laborer or of a farm hand 
 takes up a trade and goes to the city. The son 
 of the artisan becomes a bookkeeper, a minor 
 civil servant, a shopkeeper, or a draughtsman. 
 The daughters of artisans refuse domestic service 
 and go into shops, counting-rooms, or industrial 
 art-work. The children of those in turn strive 
 for social position and better wages by studying 
 in the higher technical schools and becoming en- 
 gineers, illustrators, or factory chemists. While 
 the ministries of education and of commerce and 
 industry seek to stimulate the children of those 
 on the lowest levels to become skilled workers, 
 the effort is also made to prevent too many from 
 going into the higher technical fields, because 
 Germany cannot give opportunities to the thou- 
 sands graduating yearly from the technical uni- 
 versities. The surplus scientific proletariat is 
 obliged to find employment in other countries, 
 England, France, ,the United States, in compe- 
 tition with Germany.
 
 52 MONARCHICAL SOCIALISM 
 
 The processes at work tend to convert the 
 whole population into the users of tools and ma- 
 chinery. The theory of those directing the ar- 
 tisan training is that the time is not remote 
 when all common labor will be done by the ma- 
 chine user who will bring to his work knowledge 
 and zest.
 
 IV 
 
 LABOR EXCHANGES IN GERMANY 
 
 GERMANY, looked upon casually from 
 abroad, has long seemed to be overflow- 
 ing her frontiers and, owing to the 
 pressure of population, to be falling below what 
 might have been her numbers and power had her 
 territories been wider. That was true up to a 
 generation ago, when emigration from German 
 states rose above 200,000 annually. The dissat- 
 isfied, the enterprising, the adventurous, without 
 the solicitations of the steam-ship agent, sought 
 the Golden West. The Imperial Ministry of 
 Marine, in assembling reasons in 1905 for naval 
 expansion, presented figures to parliament show- 
 ing that 3,000,000 born in Germany lived abroad 
 and that 2,250,000 of them had become citizens 
 of other countries. But from the year 1881, 
 when migration reached 220,902, the number go- 
 ing over seas for fortune or social betterment fell 
 to 19,883 in 1908 and rose slightly in the follow- 
 ing years to 22,690 in 1911. Strangely enough, 
 the number of immigrants who have become 
 German subjects or permanent residents has av- 
 
 53
 
 54 MONARCHICAL SOCIALISM 
 
 eraged during the last fifteen years 9,000 more 
 annually than the emigrants. Every year some 
 thousands who left in their youth come back 
 well-to-do to live again at home. Other thou- 
 sands from all countries of Europe settle there to 
 share in economic opportunities which they think 
 Germany has over their own countries. 
 
 The present population of 65,000,000 increases 
 through the excess of births over deaths by 900,- 
 000 yearly, or at about the rate the population of 
 the United States increases excluding immigra- 
 tion. The resources of Germany, as at present 
 managed, are therefore sufficient to attract more 
 than enough immigration to replace emigration 
 and to take care of the excess of 900,000 newly 
 born subjects beyond the number that have died. 
 Besides meeting these responsibilities, German 
 production is able to provide a living for 1,000,- 
 000 foreign laborers admitted on special pass- 
 ports to do rough work chiefly on farms or in 
 mines, as we have seen in a preceding chapter. 
 
 Something happened in Germany in the 
 eighties that changed the outlook on life, and 
 whose influence penetrated to those classes which 
 had previously supplied the enormous emigra- 
 tion. Bismarck, speaking in the Reichstag, 
 June 14, 1882, said:
 
 LABOR EXCHANGES IN GERMANY 55 
 
 "I have often drawn attention to the fact that 
 emigration is not a consequence of over-popu- 
 lation, for emigration is smallest from over-popu- 
 lated parts of the country; it is greatest from the 
 least populous provinces. ... In a purely agri- 
 cultural population the career which a laborer 
 can follow is straightforward and without change. 
 When he is twenty-eight or thirty years old, he is 
 able to overlook his work to the end. He knows 
 how much he can earn and he knows that it is 
 impossible by means of an agricultural occupa- 
 tion to raise himself above his condition. ... In 
 industry a workman cannot foresee how his life 
 will close, even if he should not raise himself 
 above the common level, and should have no 
 connections. We have very many manufacturers 
 who in one or two generations have risen from 
 simple artisans into millionaires, powerful and 
 important men. I need not name any such men 
 to you the names are on everybody's lips, and 
 they are also on the lips of the workingman. For 
 the artisan, industry has the marshal's baton, 
 which it is said the French soldier carries in his 
 knapsack. This raises and animates the hopes 
 of the artisan and he does not need to become a 
 millionaire. Industry furnishes a thousand ex- 
 amples such as I have myself seen in Pomerania,
 
 56 MONARCHICAL SOCIALISM 
 
 little affected though it is by industry, of how the 
 man who as an agricultural laborer never gets 
 beyond ordinary day's wages, can in the factory, 
 as soon as he shows more skill than others, earn 
 much higher wages and eventually rise to the 
 position of manager and higher; indeed, skilled 
 workmen, who often go farther as self-taught 
 men than the most learned technologists, may 
 hope to become partners of their employers. 
 The prospect keeps hope active and increases the 
 pleasure in work. ... It is the destruction of 
 hope in a man that drives him to emigration." 
 
 The something that happened in Germany in 
 the eighties was that industrial and commercial 
 expansion attained momentum and began to 
 flourish because of the character and the uni- 
 versal mental training of the people. Also, Bis- 
 marck began to graft upon monarchical and 
 aristocratic institutions his vast schemes of gov- 
 ernment supervision and participation in busi- 
 ness, and compulsory provision for the ill, the 
 disabled, and the aged. 1 Bismarck's long con- 
 versations with Ferdinand Lasalle, a good many 
 years before, became fruitful in a quite different 
 way from the aims of the great socialist. Bis- 
 marck undertook to adjust limited collectivism to 
 
 1 See Appendix A.
 
 LABOR EXCHANGES IN GERMANY 57 
 
 the monarchy. His ideas for economic reor- 
 ganization have been understood in their full 
 meaning in recent years only. It will probably 
 take more decades than have passed already, to 
 test the soundness of his internal policies and 
 for other states to determine whether they must 
 follow and imitate them. Besides leading the 
 monarchy into state ownership of transporta- 
 tion, and imposing under government insurance 
 compulsory thrift upon employed and enforced 
 contributions from the employer, Bismarck un- 
 dertook to interpose the powers of the state be- 
 tween the employer and the work people, and 
 interweave the powers of administration with 
 what had hitherto been considered individual 
 rights. Under his initiative the Prussian fiscus, 
 the bureau supervising state domains, forests, 
 and mines, became an active dealer in real 
 estate, and is now the greatest land speculator 
 in Germany, taking care to secure for the state 
 as much "unearned increment" as the rise in 
 city and country land values yields to large 
 capitals and to time. 
 
 One may attribute too much to Bismarck in 
 statesmanship, because it is not easy to discrim- 
 inate between what he did and the force of 
 the political and economic thought of his time,
 
 58 MONARCHICAL SOCIALISM 
 
 which, although led by him, also impelled him in 
 the direction that Germany has taken in social 
 legislation. Among the ways that government 
 and public associations have taken to bring or- 
 der into the confusion caused by "hard times" 
 and unemployment, from whatever cause, is that 
 by labor exchange. The endeavor is to bring 
 plan and effective intelligence into a field where 
 the haphazard personal canvass of the individ- 
 ual has often been his only means of selling his 
 labor. The man out of work is now able through 
 the labor registries, and their co-operation with 
 one another, to know the conditions in his trade 
 in all the industrial districts in Germany. Em- 
 ployment fluctuates in ordinary times according 
 to the orders ahead, and often with the courage 
 and enterprise of the employing company. A 
 high purpose of the labor bourses is to make 
 fluid the labor surplus, so that it may flow into 
 the changing forms of production, take the work 
 to be done and meet the requirements of the em- 
 ployer, no matter in what part of Germany he 
 may be. The question of transportation is dis- 
 posed of in most states by the government-owned 
 railways giving reduced rates to the man going 
 for work. The conviction resting upon much 
 experience is that national industry is served ef-
 
 LABOR EXCHANGES IN GERMANY 59 
 
 fectively by making it a simple transaction for 
 the man out of work to get it immediately an 
 opening occurs in any part of the empire, and 
 for the manager who wants help to have it with- 
 out delay. 
 
 These labor markets are a curious develop- 
 ment of the time. In them 3,708,000 men and 
 women put up their services for sale in 1910. 
 Employers offered 2,208,000 places, and 1,524,- 
 000 of them were bought and sold. 1 Five years 
 have seen transactions in these markets doubled. 
 In some cities almost all the unskilled labor is 
 marketed in the local exchange. High percent- 
 ages of skilled workmen and the employers of 
 skilled artisans find in the exchange the largest 
 opportunity and the largest selection. Hence 
 the business of the exchanges has expanded 
 sometimes 100 per cent a year. Thus the Ber- 
 lin suburban exchange, at Charlottenburg, filled 
 15,690 positions in 1910, as compared with 7,595 
 the preceding year. In Wiesbaden, the figures 
 for the same years were 13,628 and 7,970. The 
 municipal bureau in the little city of Rends- 
 burg arranged employment for 1,884 persons 
 compared with 619. The numbers in the gun- 
 
 1 The figures for 1911 are not yet fully made up in available form, but 
 they show a general increase *>f 19 per cent in the number of workmen 
 placed. AUTHOB.
 
 60 MONARCHICAL SOCIALISM 
 
 making town of Essen^ were 9,656 and 5,329. 
 Municipal labor bourses in cities such as Diissel- 
 dorf, Wiesbaden, Magdeburg, Posen have con- 
 centrated in their offices almost all the transfers 
 in certain classes of employment. 
 
 A variety of employment offices existed before 
 state or municipal governments were convinced 
 of the propriety of using public funds for facili- 
 tating private contracts between master and man. 
 Trades-unions, guilds, associations of employers, 
 societies providing relief for the indigent unem- 
 ployed, had long tried to bring effective direction 
 to the man-out-of-work and to the employer 
 wanting hands. The ordinary way of recruiting 
 labor from the men hanging around the factory 
 gates, or of a man finding work by tramping from 
 one set of works to another, was perceived to be 
 inefficient. Benevolent observers, unions, and 
 employers' organizations started offices where 
 men could inquire for vacancies, and where the 
 unexpected requirements of mines and shops 
 could be met. The basis of these agencies was 
 found to be inadequate. They were managed 
 from what might be called particularist policies. 
 If they were employers' associations the tendency 
 was to depress wages and to form blacklists. If 
 they were relief stations for the very poor, or
 
 LABOR EXCHANGES IN GERMANY 61 
 
 those who had been brought low by detrimental 
 habits, too much stress was placed upon moral 
 qualities, and efficiency was often below 100 per 
 cent. The sense of collective responsibility in 
 Germany increased. The professors of scientific 
 state organization were bothered by the hap- 
 hazard situation of the unemployed. Every day 
 of preventable delay in the sound unemployed 
 unit getting work meant a certain deterioration in 
 the man, a drain upon some fund for the unem- 
 ployed, the under-nourishment of his children, or 
 discontent with political and social conditions. 
 The failure of any employer, by even a day, to 
 have work done reduced by that much the pro- 
 duction of the nation, and was, therefore, eco- 
 nomic waste. When some tens of thousands are 
 idle in a country because they do not know of 
 positions already vacant, or because they live in 
 localities distant from the vacant places, the col- 
 lective loss would maintain an army corps, or 
 pay the year's bill for new naval construction. 
 The reasons have been considered sufficient to 
 justify most German states, municipalities in in- 
 dustrial districts,, and semi-official agricultural 
 chambers in farming provinces in using public 
 funds to finance labor exchanges. Although in 
 cities the exchanges are largely in municipal con-
 
 62 MONARCHICAL SOCIALISM 
 
 trol, others are managed by societies receiving 
 state or municipal appropriations. 
 
 The exchange most important in Germany, 
 and the one upon which many a municipal bourse 
 in the provinces is modelled, is the Berlin Labor 
 Exchange (Centralverein fur Arbeitsnachweis). 
 The Exchange was founded in 1883, by a society 
 that had the aim only to mediate for a work- 
 seeker without regard to any fact about him 
 except that he looked for employment. If he 
 could work, the society undertook to bring him 
 into relations with the person who needed a 
 worker of his grade. The society undertook, 
 also, to satisfy employers by the fitness of the 
 labor supplied. The employer was spared the 
 preliminary examination of record and refer- 
 ences and the personal "sizing-up" of the candi- 
 date, this being done with skill by the exchange 
 manager. A reputation was founded for effi- 
 ciency and good-will toward all interests. Un- 
 der a liberal organization, the Exchange has 
 drawn in the employment bureaus of many 
 unions, among them the upholsterers, plumbers, 
 painters, bookbinders, locksmiths, laundresses, 
 and female linen workers. The unions share in 
 the management. The board of twenty-one is 
 advised by an executive committee of employers
 
 LABOR EXCHANGES IN GERMANY 63 
 
 and workmen in each branch of industry repre- 
 sented on the Exchange. Associations of employ- 
 ers designate their members, and the unions and 
 apprentices' committees theirs. Consequently, 
 the management is in the hands of employ- 
 ers and men who have personal knowledge of 
 the situations in their lines and are able to assign 
 men to vacant places with certainty of judgment. 
 Unskilled workers are represented by members 
 of the industrial court. 
 
 The Berlin Exchange is a huge brick structure, 
 built by the Imperial Insurance Office, which has 
 at its disposal the immense capitals accumulated 
 for the national old-age pensions and other so- 
 cial insurances. The Exchange pays the office 
 a rental equivalent to two and a half per cent on 
 the investment and the city of Berlin guarantees 
 a yearly subsidy sufficient to cover the charge. 
 The municipality contributes, also, $10,000 
 (40,000 marks) for working expenses, which last 
 year were about $25,000. The other $15,000 
 was derived from the five-cent fee charged work- 
 men for registration. The employers pay noth- 
 ing, because the administration in Berlin and 
 elsewhere considers it sound policy not to have 
 the least obstacle to employers using the Ex- 
 change. A supply of labor in most departments
 
 64 MONARCHICAL SOCIALISM 
 
 is always there, but the demand must be en- 
 couraged. The success of the exchanges tends 
 toward obliging employers to apply to them for 
 hands or have difficulty in getting them from 
 casual sources, which are disappearing because 
 the exchanges are monopolizing the supply. 
 Labor has become standardized, as it were, and 
 the personal side of the free contract between 
 the master and man has disappeared. The 
 submanager of locomotive works, for example, 
 simply wants ten more brass-workers, or twenty- 
 five additional metal-planers, and prefers to tele- 
 phone the Exchange rather than bother to send 
 word to a waiting list or to examine the men 
 around the yard entrance. Besides, if he has 
 ever done business with the Exchange he has 
 probably been satisfied with the standard quality 
 of the men sent him. Should the manager upon 
 seeing the men desire to reject some of them, all 
 he need do, and that is not obligatory, is to pay 
 their carfare back and ask for another lot to re- 
 place the ones he did not like. 
 
 The institution in Berlin has three vast apart- 
 ments. One for skilled workmen, arranged ac- 
 cording to trades, accommodates conveniently 
 2,000, another 1,000 to 1,500 unskilled laborers, 
 while the third is for women. The Exchange 

 
 LABOR EXCHANGES IN GERMANY 65 
 
 somewhat resembles a vast workingman's club 
 with a women's annex. The place has about it 
 none of the depressing suggestions of unemploy- 
 ment, none of that dreary atmosphere of the 
 groups around the factory entrance waiting for 
 something to do with all the disadvantages on 
 the side of the individual down in the world and 
 worried. Deserting the factory gate, he offers 
 his services in the recognized brokerage, the one 
 to which employers of his class of labor will, in 
 fact must, apply. He will be registered there no 
 longer than a day before his number is advanced 
 on the list. Some, perhaps all, of the men who 
 were ahead of him will have been employed. 
 Within two weeks, on an average, the man offering 
 skilled labor and belonging to a union is engaged. 
 The unemployment in Germany has ranged, dur- 
 ing eight years, from one and one-tenth per cent 
 of the wage-earning population in 1906, the low- 
 est year, to two and nine-tenths per cent in 1908, 
 the highest year since the government has cal- 
 culated percentages covering the whole empire. 
 In 1909, the percentage out of work during the 
 year averaged two and eight-tenths per cent, or 
 an average of nine days in the year if the whole 
 employed wage-takers are considered. In 1910 
 and 1911 the percentages were slightly less. Since
 
 66 MONARCHICAL SOCIALISM 
 
 fluctuations in employment do not affect great 
 numbers of the employed, the period of loss of 
 work for those actually unemployed is consider- 
 ably longer. The operation of the labor bourses 
 has the result of equalizing the terms of unem- 
 ployment so that the loss of work is distributed 
 more evenly. No individual runs the hazard of 
 not finding work for months. The only prefer- 
 ence on the Exchange is for married men, who, as 
 against the unmarried, are served first. Em- 
 ployers appear to prefer unionists for two rea- 
 sons: because they have no trouble on that ac- 
 count with their other men, and because the 
 union member is nearly always a qualified work- 
 man. 
 
 On the unskilled-labor floor the waiting time is 
 longer. During bad seasons a man may wait a 
 month to earn the lowest wage. The waiting, 
 whether in the skilled or unskilled divisions, is 
 under rather agreeable conditions. The great 
 rooms are astir with activity. Telephone bells, 
 the communications of sub-managers to the 
 classified sections, the summons of a coppersmith 
 from his group, or of five glass-blowers, or a 
 dozen steam-fitters from their divisions, engage 
 the interest of the new-comer. Checkers, dom- 
 inoes, and chess are played, but no cards. The
 
 LABOR EXCHANGES IN GERMANY 67 
 
 restaurant supplies a meal, a drink, and a cigar 
 for seven and a half cents (thirty pfennigs) 
 ten pfennigs for two rolls, another ten for sau- 
 sage, five for beer, and five for a cigar. Then 
 from 400 to 600 persons are employed every day, 
 or, to be precise, 447 on an average for each 
 working-day. The man-out-of-work may go 
 home without a job, but he has had a not un- 
 pleasant day talking politics, playing a game, 
 getting a dinner at the lowest price, and if he 
 needs them the attentions of clothes-menders, 
 cobblers, and barbers, so that he may keep a 
 good front toward the world. The effect of the 
 whole is psychologically stimulating. 
 
 Upon the women's board the supply is less than 
 the demand. Employers offered 46,935 places 
 while 36,026 women and girls applied for them 
 and only 28,843 accepted offers, or an average of 
 65 in the hundred. The widest disproportion 
 was in the domestic-service division, one of the 
 smallest in the Exchange, probably because both 
 mistresses and servants find the neighborhood 
 employment agency the more convenient, even 
 though a fee is charged. The government in 
 1910 placed all private agencies under close su- 
 pervision, fixing fees and observing transactions. 
 However, 1,170 servant-girls entered themselves
 
 68 MONARCHICAL SOCIALISM 
 
 at the Exchange in 1910 and 1,031 took service 
 from among 3,528 offers. The mistresses in this 
 instance go there to be examined by the maids. 
 The women's domestic-service department is the 
 envy of men out of work, and many an amusing 
 little tale is told of the manner in which the pre- 
 tensions of madame are reduced by the inde- 
 pendence of the maid. The director of the 
 unskilled department has overheard the men de- 
 scribing imaginary interviews, after the style 
 of the domestic, between themselves and the 
 imaginary employer, with amusing stipulations 
 concerning the beer allowance, days off, family 
 dinner in the middle of the day, cold supper at 
 night, and laundry limitations. Few women 
 workers are out of a position more than a day or 
 two. The law respecting two weeks' notice and 
 three afternoons out to find another place is ob- 
 served almost absolutely by employers. 
 
 Some odd particulars about the occupations of 
 men are tabulated in the reports of the imperial 
 labor department. Only one cigar-maker was 
 out of work in the first quarter of 1909 in the 
 whole country, and none was reported as idle the 
 second quarter. Then, owing to an increase in 
 the tobacco taxes, 183 were unemployed the next 
 quarter, and 107 the last three months of the
 
 LABOR EXCHANGES IN GERMANY 69 
 
 year. The preceding year eight tobacco-work- 
 ers were unengaged during the twelve months, 
 and at no one time were more than three out of 
 places among a total of 203,224 workers in to- 
 bacco. Unemployment among miners, doubt- 
 less due to the hard, dreary, poorly paid work, 
 runs low. The miners' unions reported to the 
 government that during the first quarter of 1909 
 48 were out of work. The largest number in any 
 quarter of the year was 253, while during the 
 same year thirty-seven per cent of the journey- 
 men barbers were unengaged at one time. 
 
 The number of unemployed in Germany ap- 
 pears to be smaller, relatively, than in other 
 industrial countries. International comparisons 
 are difficult because of the different methods used 
 by the labor departments in various countries in 
 obtaining figures of unemployment. The British 
 Board of Trade issued in January 1911 a fourth 
 official compilation of foreign labor statistics, 
 in which percentages were given of the fluct- 
 uations in employment in Germany, the United 
 States, France, Belgium, and Denmark, based 
 upon the reports of trades-unions to the govern- 
 ments of the European countries mentioned and 
 to the State governments of New York and Mas- 
 sachusetts. The percentages of unemployed were :
 
 70 
 
 MONARCHICAL SOCIALISM 
 
 TEAS 
 
 GERMANY 
 
 FRANCE 
 
 UNITED 
 STATES 
 
 BELGIUM 
 
 DENMARK 
 
 1903 . 
 
 2.7 
 
 10.1 
 
 
 3.4 
 
 
 1904 . . . 
 
 2.7 
 
 10.8 
 
 12.1 
 
 3.0 
 
 
 1905 
 
 1.6 
 
 9.9 
 
 8.5 
 
 2.1 
 
 13.28 
 
 1906 
 
 1.1 
 
 8.4 
 
 6.8 
 
 1.8 
 
 6.12 
 
 1907 
 
 1.6 
 
 7.5 
 
 13.6 
 
 2.0 
 
 6.79 
 
 1908 
 
 2.9 
 
 9.5 
 
 28.1 
 
 5.9 
 
 10.96 
 
 1909 
 
 2.8 
 
 8.1 
 
 14.9 
 
 3.4 
 
 13.32 
 
 
 
 
 
 
 
 The British report, while indicating that the 
 statistics must be taken with caution in making 
 contrasts between countries, affirms that the per- 
 centages form a useful index to the fluctuations 
 in the labor markets of the countries themselves. 
 The percentages in Germany, as will have been 
 noted, are not only far below those of other coun- 
 tries, but they are less irregular than those else- 
 where, except in France. The figures for the 
 United States were derived from the statistics of 
 New York and Massachusetts alone and are fur- 
 ther impaired by the circumstance that the build- 
 ing and wood-working trades in those States 
 were represented in New York by thirty-four 
 per cent, and in Massachusetts by twenty-three 
 per cent, of the totals. The fluctuations in these 
 trades are more violent than in any others. 
 The steadiness of employment in Germany is 
 wrought by a variety of causes found in the char-
 
 LABOR EXCHANGES IN GERMANY 71 
 
 acter and institutions of the people, but among 
 them may be placed the contributing influence 
 of the 712 labor bourses in intimate co-operation. 
 They do not originate opportunities to work. 
 They do take over the task of seeing that neither 
 the machinery of production nor the man willing 
 and competent to produce shall be hindered 
 from coming into relations by so much as an 
 hour of delay preventable by intelligence and 
 organization. 
 
 Not far from where employable labor waits in 
 Berlin for opportunity is the vast asylum for the 
 night (Nachtasyl) maintained by the munici- 
 pality. It is a last crumbling foothold of those 
 mostly unemployable before the police arrest, 
 and the magistrate condemns to forced labor on 
 the city sewage farms. There from 3,000 to 5,000 
 men, women, and children are fed and lodged for 
 the night, but they may not be taken in oftener 
 than five nights in three months. The stream of 
 broken lives flowing through those iron-bedded 
 halls sends a rivulet to the Exchange, which un- 
 dertakes to do for the man on the edge of the 
 abyss what he cannot do for himself. The 
 others, society cannot yet tell why, disappear 
 into the depths.
 
 EXPERIMENTS WITH UNEMPLOYMENT 
 INSURANCE 
 
 POLITICAL thinking in Germany, begin- 
 ning with the later Bismarckian days, 
 abandoned the idea that the individual 
 alone is responsible for his situation in life, his 
 employment or unemployment, and decided that 
 somehow inwoven with individual responsibility 
 is the responsibility of society, of the whole state. 
 This way of thinking may now be called the min- 
 imum German state socialism, the kind of think- 
 ing that is still called radical in Great Britain or 
 in America, but in Germany is conservative. It 
 became evident to observers that the loss of em- 
 ployment in industrial crises was brought about 
 by events over which the workman could have 
 no control. Besides periodical depressions, the 
 development of immense organizations, formerly 
 unknown, in the management of which the indi- 
 vidual workman does not participate and in 
 which there can be no direct bargain between 
 
 the managing employer and the employed, has 
 
 72
 
 UNEMPLOYMENT INSURANCE 73 
 
 brought economists and the governments of Ger- 
 man states to the conviction that the state or 
 the local government must justly share responsi- 
 bility for unemployment and must devise meas- 
 ures for the creation of a fund out of which the 
 unemployed may of right take assistance. The 
 government has therefore in the course of the last 
 twenty-five years abandoned the stand-point of 
 the imperial industrial laws guaranteeing com- 
 plete liberty of action between the giver of labor 
 and the applicant, and has undertaken to inter- 
 vene by a policy of protection. This policy of 
 protection for the employee runs parallel with 
 protection of agriculture, of internal trade, of 
 foreign commerce, and through an intricate sys- 
 tem of adjustments, between all individuals, 
 whether great capitalists or small workmen, and 
 the economic whole. It has been therefore an 
 easy question to dispose of, whether public funds 
 should be used in insurance against the results 
 of unemployment. The majorities of those delib- 
 erating upon the question in municipal councils 
 or in state commissions have decided that such 
 application of government funds is correct in 
 principle. 
 
 The trying to think out and experiment with 
 insurance against the results of intermittent em-
 
 74 MONARCHICAL SOCIALISM 
 
 ployment is a continuance by German cities and 
 the governments of German states of the striv- 
 ing to squeeze dependent pauperism out of the 
 social system, to round out the imperial in- 
 surances begun in the eighties for the widow, 
 the ill, the aged, the orphan, and the disabled. 
 Since the state enforces compulsory education, 
 military service, and precautions for the health of 
 the workman, it is regarded as a proper exten- 
 sion of the powers of government to prevent the 
 labor unit from degenerating while temporarily 
 out of use. He must be cared for and kept in a 
 state of efficiency for re-employment, for the 
 army, and for his general functions as a living 
 and contributing organism of the state. Neither 
 circumstances nor the individual's own inade- 
 quate powers of resistance must be allowed to 
 transform him into a parasite. The main ele- 
 ment of the problem is regarded as psychological, 
 to maintain the human unit in good condition 
 by keeping his spirit in a healthy state of self- 
 respect and courage. After the old, the sick, 
 and the defective have been sifted from the un- 
 employed and cared for each under his classifi- 
 cation, and after the police and the magistrates 
 have driven to forced labor those otherwise able 
 yet without the will to work, there remain the ca-
 
 UNEMPLOYMENT INSURANCE 75 
 
 pable and the willing for whom there is no work. 
 Official and semi-official labor exchanges make 
 it easy for the person who desires work to be 
 brought into relation with the person or com- 
 pany having work to give. But after all has 
 been done, a temporary and varying surplus 
 remains of workers over the amount of work to 
 do. The solicitude of the state for the unem- 
 ployed in Germany is greater perhaps than in 
 most other countries, because the imperial policy 
 is to make life at home easy enough and endur- 
 able enough to continue to keep Germans in 
 Germany, to give them employment and a sense 
 of security for the future. The German work- 
 man does seem to have the feeling that he is 
 upheld by the whole of the splendid and power- 
 ful society of which he is an obscure member. 
 Life is dingy, but he feels that he will not be 
 allowed to become submerged utterly, no matter 
 what calamities may happen to him individu- 
 ally or to his trade. 
 
 Munich, Dresden, Cologne, Diisseldorf, Ma- 
 yence, Strasburg, Liibeck, Rostock, Karlsruhe, 
 Elberfeld, Magdeburg, Cassel, Altenburg, Qued- 
 linburg, Erlangen, and Wernigerode are the prin- 
 cipal industrial municipalities that are operating 
 some form of so-called insurance for unemployed.
 
 76 MONARCHICAL SOCIALISM 
 
 The municipality of Cologne has had, since the 
 autumn of 1896, an insurance against hardships 
 from loss of work. The administration is in the 
 hands of a committee created by the municipal 
 council, consisting of the mayor, the president of 
 the labor exchange, twelve insured workingmen 
 elected by the insured, and twelve honorary mem- 
 bers chosen from the long list of prominent citi- 
 zens who are honorary contributors. The gov- 
 ernor of the district, who is an appointee of the 
 Prussian crown, has a supervisory relation to the 
 committee. The fund out of which the insur- 
 ances are paid was begun by voluntary contribu- 
 tions, amounting to 100,000 marks, of manufact- 
 urers, other employers of labor, and honorary 
 members. The city appropriated 25,000 marks. 
 The remainder of the funds, during a period of 
 sixteen years since the foundation, has been raised 
 by the assessments on insured workingmen; the 
 total from this source, however, amounting to a 
 little more than one-third. The conditions giv- 
 ing a workman the right to participate in the 
 insurance are that he shall be eighteen years of 
 age, have resided at least a year in the Cologne 
 district, that he shall have a regular calling, and 
 that he must have paid a weekly contribution of 
 from thirty to forty pfennigs that is, seven and
 
 UNEMPLOYMENT INSURANCE 77 
 
 a half to ten cents weekly for a period of thirty- 
 four weeks. He then becomes entitled, should 
 he be out of employment during the winter, from 
 December 1 to March 1, to be paid after the 
 third day of unemployment two marks a day 
 for the first twenty days and one mark a day 
 thereafter until the winter season shall be at an 
 end. As the imperial government's laws con- 
 cerning insurance against illness or accident pro- 
 vide for these categories, the workman can only 
 continue to receive insurance if he is in sound 
 health and fit for work. He may not benefit if 
 he is on strike or if he has been dismissed through 
 an obvious fault of his own, if he refuses work 
 or has given false information regarding himself. 
 The insurance office is run in intimate connec- 
 tion with the official labor exchange, whose duty 
 it is to know where labor is wanted in any divi- 
 sion of effort in the Cologne district and to draw 
 from the body of unemployed enrolled at the 
 exchange those suited to the vacancies that exist. 
 The insured are largely members of the building 
 trades, such as masons, stone-cutters, plasterers, 
 paperers, and carpenters. The results, there- 
 fore, are not regarded as representing what they 
 would be were the insurance to extend over the 
 entire working year and to include every vari-
 
 78 MONARCHICAL SOCIALISM 
 
 ety of workers. The scheme, however, operated 
 sufficiently well to insure its continuance. The 
 plan has been modified in details from year to 
 year, and has become adjusted to local condi- 
 tions. The winter of 1910 the number of the in- 
 sured was 1,957. Of this number seventy-six 
 per cent became entitled to insurance to the ex- 
 tent of 61,934 marks. The insured themselves 
 had contributed 23,439 marks. The remainder 
 of the requirements were paid out of the perma- 
 nent fund, which, with the exception of 6,000 
 marks, was restored by a grant of 20,000 marks 
 from the city of Cologne and by contributions 
 from other bodies and persons. 
 
 Private persons in Leipsic eight years ago 
 founded a non-dividend-paying company, with a 
 reserve of 100,000 marks, with the object of insur- 
 ing against unemployment. The municipality 
 declined to contribute because of socialist oppo- 
 sition, based upon the belief that insurance enter- 
 prises of this sort tend to compete with similar 
 provisions of the trades-unions, which pay out 
 yearly in Germany about 5,000,000 marks on ac- 
 count of intermittent employment of their mem- 
 bers. The trades-union insurance schemes are 
 usually solvent and well managed. The Leipsic 
 concern divides its risks into four classes. The
 
 UNEMPLOYMENT INSURANCE 79 
 
 members pay the equivalent weekly of seven and 
 one-half, ten, twelve and one-half, and fifteen 
 cents throughout the year, the insurance under 
 this arrangement covering the entire year. A 
 special class has also been erected for members 
 of societies, or for entire bodies of workmen in 
 factories, to be insured. The member is quali- 
 fied for receiving 1.20 marks insurance per day 
 after he has contributed forty-two weeks. The 
 usual conditions of non-payment in case of strike 
 or refusal to accept work or for incapacity for 
 work are attached. 
 
 The conflict with the trades-unions has been 
 overcome in the city of Strasburg by the mu- 
 nicipal government co-operating with the trades- 
 unions, and adding one mark per day to the sub- 
 scription of two marks for each member made by 
 the trades-unions; or in instances where the pay- 
 ments of the trades-unions were less than two 
 marks, the city shares proportionately. This 
 co-operation has been found to work well. The 
 city insurance office settles monthly with the 
 trades-unions. Only one instance has been dis- 
 covered of deception on the part of a member 
 of a trades-union who was receiving insurance. 
 One consequence naturally has been that the 
 position of the trades-unions has been strength-
 
 80 MONARCHICAL SOCIALISM 
 
 ened. The unorganized labor is taken care of 
 by relief works. In Strasburg, as well as in other 
 cities, a close working arrangement exists be- 
 tween the insurance office and the labor ex- 
 changes. The co-operation between the trades- 
 unions and the insurance office in Strasburg 
 has had the advantage of providing the insur- 
 ance office with accurate information regarding 
 every person in receipt of insurance, and a system 
 of control against deception. 
 
 The municipality of Munich has a bill under 
 consideration for paying three marks a day for 
 married men and two marks a day for unmarried, 
 during a period in each year not exceeding eight 
 weeks, to those irregularly employed. The mag- 
 istrates decide who are to come within the bene- 
 fits of the municipal insurance fund, which is 
 created by appropriation from the city treasury, 
 by contributions from employers, and by the sub- 
 scriptions of public-spirited individuals. Diissel- 
 dorf has spent during each of three winters half a 
 million marks in public relief works. The twenty 
 or more other German cities that are experiment- 
 ing with insurance against the loss of work are 
 doing so upon one or other of the lines already 
 mentioned. 
 
 The subject has, however, taken a larger form
 
 UNEMPLOYMENT INSURANCE 81 
 
 in German thought than the experiments of mu- 
 nicipalities, though these experiments form an 
 interesting body of results. The broad aim to- 
 ward which German statesmen are thinking is the 
 building of a governmental machinery that shall 
 bring about compulsory thrift on the part of 
 those liable to unemployment, and the compul- 
 sory contribution of the employer of labor, with 
 an addition by society, as a whole, to the fund 
 thus created. Employers are not generally op- 
 posed to such a law. Several of the great em- 
 ploying companies of Germany have private sys- 
 tems of insurance: as, for instance, the Lanz 
 Machinery Company of Mannheim, which has a 
 capital set apart for the maintenance of skilled 
 workmen for whom the company has provision- 
 ally no employment on account of industrial 
 exigencies. The principle upon which the Lanz 
 Company and other companies doing the same 
 thing act is that, when a body of skilled work- 
 men has been brought together and organized 
 with a highly specialized division of labor, the 
 company would suffer a greater loss by allowing 
 the workmen who form trained parts of their 
 industrial machine to migrate to other places in 
 search of work than by paying to keep them 
 ready for re-employment. The Lanz Company
 
 82 MONARCHICAL SOCIALISM 
 
 also considers that, as it employs men to the full 
 capacity of the works only during brisk times, 
 it is simple justice to give these workmen a share 
 of the accumulated profits during slack times. 
 German companies acting thus toward their 
 workmen have found that an economy was ef- 
 fected by having efficient men ready to fill va- 
 cancies or to take up work during periods of 
 expanding business, so that the full profits of 
 expansion could be realized immediately without 
 the delays that might otherwise be caused by 
 training inexperienced men or by getting trained 
 men from other localities always a difficult 
 thing to do during a period of prosperity. 
 
 The Reichstag in 1902 adopted a resolution 
 asking the imperial government to examine into 
 the possibility of insurance against unemploy- 
 ment. The government charged the imperial 
 bureau of statistics to inquire into the subject, 
 and after three years an extensive report was 
 presented to parliament based upon the begin- 
 nings of the experience by German municipalities 
 and in Switzerland and Belgium. Although this 
 volume was published only seven years ago, it is 
 out of date because insurance for unemployment 
 has made such rapid progress that data have, 
 from year to year since 1906, been so multiplied
 
 UNEMPLOYMENT INSURANCE 83 
 
 that anything written one year has become anti- 
 quated the next. Count von Posadowsky, while 
 he was imperial minister of the interior and vice- 
 chancellor, undertook to work out a comprehen- 
 sive plan for the maintenance of those able to 
 work but for whom no work could be found. He 
 gave the subject much personal attention, and 
 the statisticians to whom he committed divisions 
 of the work brought together a large body of facts 
 and conclusions based upon them. The mate- 
 rial, however, could not be brought into a form 
 satisfactory to the analytical and comprehensive 
 mind of Count von Posadowsky. He never sub- 
 mitted the results to the chancellor or to the Em- 
 peror. The main outlines within which Count 
 von Posadowsky undertook to enclose his scheme 
 are understood to have been compulsory contri- 
 butions by workmen during the periods of em- 
 ployment, enforced contributions by employers 
 graduated according to wages and the character 
 of the employment, and proportionate contribu- 
 tions from the imperial finances. A considera- 
 tion that has apparently delayed the imperial 
 government in pushing forward provisions for 
 the idle employable has been the position of the 
 national finances. The annual deficits, covered 
 by annual borrowings on account of large ex-
 
 84 MONARCHICAL SOCIALISM 
 
 penses in other directions, caused the feeling that 
 fresh obligations indefinitely large ought not to 
 be undertaken until the imperial expenditures 
 were balanced by revenue. The idea of an in- 
 surance against unemployment on a scale co- 
 terminous with the empire is for the present in 
 suspense, but it is likely to be taken up as soon 
 as financial embarrassments are out of the way. 
 In the meantime, the problem is being worked 
 out by the governments of German states and 
 by municipalities . The imperial government con- 
 tinues to take censuses of unemployed and to 
 make theoretic studies with the ultimate object 
 of devising a national scheme. 
 
 The government of Bavaria appointed a com- 
 mission in November, 1908, to discuss public in- 
 surance against results of loss of work. The 
 conference met the following March, and the 
 principal branches of industry, agriculture, the 
 chambers of commerce, and the departments of 
 the government were represented. The proper- 
 tied interests were sceptical regarding the possi- 
 bility of an equitable distribution of the burdens 
 of such insurance, while economists and the gov- 
 ernment representatives took the view for the 
 most part that insurance of this sort was desir- 
 able, and that the difficulties could be overcome.
 
 UNEMPLOYMENT INSURANCE 85 
 
 The statistical results of German experiments 
 form already a literature of about eighty pam- 
 phlets and books most of them prepared of- 
 ficially by city statistical offices, or by economists 
 and statisticians employed by municipalities for 
 the purpose. Nearly all the material is accom- 
 panied by discussions that in themselves indicate 
 how new the subject is. Herr Doktor Jastrow, 
 who has prepared one of the most lucid commen- 
 taries for the city council of Charlottenburg, a 
 suburb of Berlin with 300,000 population, con- 
 siders that the discussion has advanced far 
 enough for it to be regarded as non-political, and 
 that the question need not longer be discussed as 
 it was some years ago by labelling all those who 
 hold ancient views as reactionaries, and those 
 who believe in such insurance as radicals. 
 
 The main preliminaries which have been de- 
 cided by municipalities that have already put 
 into operation some form of unemployment in- 
 surance, are that the use of public money for 
 this purpose is admissible, that the results of 
 unemployment are to be considered in principle 
 as a public matter, and that it is technically pos- 
 sible to provide such assurance. 
 
 Insurance is based upon statistics that deter- 
 mine the frequency with which a risk would be 
 likely to avail itself of the guarantee. No ade-
 
 86 MONARCHICAL SOCIALISM 
 
 quate statistics concerning unemployment, nor 
 long-established systems for premiums and in- 
 demnities, exist. It has been affirmed that the 
 need for insurance might depend upon the in- 
 sured person himself, and that the employed 
 workman could easily cause himself to be dis- 
 missed so that he could receive money without 
 work. The objection has also been made that 
 in other forms of insurance there can be a resto- 
 ration of the damage sustained, and that the 
 remedy for unemployment ought to be work of- 
 fered, instead of payments for not working, and 
 that the question would still be open as to 
 whether the insured should accept work that 
 might be distasteful to him. These objections 
 are considered to-day as having been disposed of 
 by reflections along this line: 
 
 Modern statistics of unemployment are imper- 
 fect, but life, fire, transport, and casualty insur- 
 ances were begun without statistics, and cre- 
 ated them only in the course of time. Even the 
 imperfect statistics of unemployment to-day are 
 more adequate as a basis from which to work, 
 Herr Doktor Jastrow avers, than the statistics 
 were at the time of organizing most of the 
 branches of existing insurance. The objection 
 that the beginning of the benefits of insurance 
 depends upon the will of the insured person
 
 UNEMPLOYMENT INSURANCE 87 
 
 himself, has been answered by pointing out that 
 this applies likewise to liability insurance, where 
 bad faith in the person insured is possible. 
 
 An objection more often raised than others is 
 that of unemployed strikers. This has been 
 treated by separating unemployed strikers from 
 the unemployed from other causes. In some dis- 
 cussions of this phase of the subject it is con- 
 sidered that even strikers, when an arbitration 
 court organized under the supervision of the gov- 
 ernment should have decided that the strike was 
 a just one, could avail themselves of the insur- 
 ance just as though they had become unem- 
 ployed through the operation of involuntary 
 causes. This phase of the subject indicates the 
 serious obstacles that are yet in the way of a 
 comprehensive insurance system which shall 
 compulsorily embrace all able to work, yet unem- 
 ployed. The losses that have to be replaced in 
 every kind of insurance do not exist as an effect 
 of detached events, but are a permanent condi- 
 tion daily created under the workings of society 
 and daily effaced, with intervals of greater or less 
 severity. 
 
 As in other kinds of insurance, it is economi- 
 cally more reasonable to prevent losses than to 
 pay them. Guarantees against unemployment
 
 88 MONARCHICAL SOCIALISM 
 
 tend, it is observed, to render communities that 
 are paying unemployment insurance at present 
 more careful of the rights and wrongs of the 
 employer and of the employee, to stimulate 
 measures that prevent unemployment just as 
 fire-insurance companies assist in the organiz- 
 ing of fire and salvage brigades in places where 
 they do not exist and as the invalid-insurance 
 department of the government spends consider- 
 able sums for the care of tuberculous patients in 
 order to prevent the spread of a disease that will 
 add to the losses. The difference between insur- 
 ance against unemployment and other branches 
 of insurance is that the policy of prevention lies 
 open in a specially high degree. New questions 
 of dispute have arisen, as, for example, what kind 
 of work can be reasonably provided for the un- 
 employed. Is not a watchmaker justified in re- 
 fusing to take temporary work shovelling snow, 
 because hard manual labor will thicken the cuti- 
 cle of his hands so that he is disabled from work- 
 ing at his delicate trade should he have an op- 
 portunity to do so? Arbitration courts have 
 been organized in cities experimenting with un- 
 employment intrusted with the decision in such 
 cases, and their verdicts are usually recognized 
 as fair.
 
 VI 
 
 GOOD-WILL TOWARD TRUSTS 
 
 BARON VON RHEINBABEN, lately 
 Prussian minister of finance, announcing 
 to parliament the reorganization of the 
 coal syndicate, said: "To my great delight, I 
 am able to tell you, for the tranquillizing of our 
 whole industry, that the coal syndicate has been 
 renewed." The Right, the Centre, and the Left 
 applauded, the Socialists forming the extreme 
 left were passive. That episode has in it much 
 of the political quality of the present position of 
 co-operative capital in Germany, the good-will 
 of the government, the approval or indifference 
 of the parties. The calm of the German work- 
 ing under an intense centralization of financial 
 power appears strange to the American ac- 
 quainted with the agitations and fervors of pol- 
 itics at home. An outline of the economic uni- 
 fication of Germany and the course of political 
 thinking that sees therein few dangers to the 
 imperial commonwealth may have for us a pe- 
 culiar interest.
 
 90 MONARCHICAL SOCIALISM 
 
 The Austro-Hungarian Consulate-General in 
 Berlin, reporting to the Foreign Office in Janu- 
 ary, 1907, on the industrial situation in Ger- 
 many at the close of the preceding year, affirmed 
 that "economic Germany is under the absolute 
 rule of half a hundred men." The report de- 
 velops this observation, and avers that this group 
 decides the amount of production, the prices 
 within the country, prices abroad, the terms of 
 credit, the rates of interest, wages, and the stip- 
 ulations upon which capital is advanced for ex- 
 tensions of enterprise an<J the founding of new 
 companies. These are strong assertions, but I 
 believe that most persons d> ing business in Ger- 
 many or with Germans are convinced that the 
 conclusions of the Austrian Consulate-General 
 are broadly correct. The weight of high finance 
 in industrial combinations, and the pressure of 
 these combinations upon the distributing agen- 
 cies, are recognized by every interest. Non- 
 conformity is exceptional and rarely profitable. 
 
 Seven Berlin banks form the core of the sys- 
 tem. They have shares usually amounting to a 
 paramount interest in about forty of the large 
 provincial banks, and these in turn are part 
 owners in the smaller institutions of their prov- 
 inces, so that agreements among the large banks
 
 GOOD-WILL TOWARD TRUSTS 91 
 
 in Berlin have the effect of decrees upon the 
 twigs, as it were, of the financial tree, and upon 
 the detached undergrowth. The Deutsche Bank, 
 the most influential of the Berlin group, has a 
 capital, a surplus, and deposits amounting to 
 800,000,000 marks, which, with the resources 
 of its provincial tributaries and those banks or- 
 ganized for the Asiatic, African, and Latin Amer- 
 ican trade, rises to about 1,750,000,000 marks. 
 The resources of the Berlin group and their de- 
 pendencies exceed 8,000,000,000 marks, or about 
 $2,000,000,000. These details appear necessary 
 to an understanding of the economic unification 
 of Germany, for it is through the fibres of the 
 banking net-work that centralization is accom- 
 plished. 
 
 German, unlike American, banks have direct 
 participation in industrial enterprise. The bank 
 that gives extensive credit to a manufacturing 
 company has shares in the company and a rep- 
 resentative on the board. Thus the bank has a 
 relation to production that simplifies the organi- 
 zation of syndicates and maintains them, be- 
 cause the banks are able to act with solidarity 
 upon and with the promoters of industry. 
 Writers and public men in Germany like to re- 
 peat that "trusts" do not exist in their country.
 
 92 MONARCHICAL SOCIALISM 
 
 Certain enormous businesses, such as the Allge- 
 meine Elektricitats-Gesellschaft or the Krupp 
 gun and armor works, in their monopolistic char- 
 acter, are quietly disregarded. Production and 
 distribution, however, are controlled by syndi- 
 cates so organized that the policy of the partici- 
 pating business is made over to the executive of 
 the syndicate, thus having an essential character- 
 istic of trusts. The percentage of production is 
 allotted by the directing committee, the selling 
 is done by the syndicate alone, and the syndicate 
 board is, in most syndicates, supplied by each 
 member in advance with signed checks to be 
 filled in with penalties for non-observance of the 
 contract obligations. The syndicate, organized 
 as an independent company with which the 
 members make contracts, may be compared to 
 the American holding company, and in this form 
 it has a status before the law and a long record 
 of legal existence dating back to the middle of 
 the last century. The means for binding mem- 
 bers indissolubly to the central organization have 
 been perfected to a degree unknown in the 
 United States or in England. The breakdown 
 of the old pooling system in the United States 
 was chiefly due to the laxness of the contracts, 
 and their constant violation by less scrupulous
 
 GOOD-WILL TOWARD TRUSTS 93 
 
 members. The trust in America replaced the 
 pool. In Germany any disregard of the syndi- 
 cate contract is almost certain to be discovered 
 and penalized. The continued disregard of syn- 
 dicate contract obligations would probably bring 
 about the financial ruin of the delinquent. 
 
 The experience of coal proprietors has been an 
 enduring argument of syndicate-makers. The 
 average wholesale price of bituminous coal in 
 1893, when the Rhenish- Westphalian coal syn- 
 dicate was formed, was $1.68 (seven marks) a 
 ton on the Essen exchange. The following year 
 the price was raised twelve cents, and it remained 
 at $1.80 for two years. In 1896 the average was 
 $1.99; in 1897, $2.06^; in 1899, $2.18>; in 
 1900-02, $2.42>. The price was then low- 
 ered on account of the industrial crisis in Ger- 
 many, and coal sold at $2.16 and $2.23 during 
 four years. In 1906 the average selling price of 
 the syndicate was advanced to $2.40, in 1907 to 
 $2.64, in 1909 to $2.86. The shares of important 
 coal companies that are members of the syndi- 
 cate have risen since 1903 from 90 to 1000 per 
 cent. Gelsenkirchen, for instance, has risen 
 from 127 to 370, Consolidation from 140 to 422, 
 Nordstern from 4*0 to 400, at which price it was 
 taken over by the Phoenix in 1897. The shares
 
 94 MONARCHICAL SOCIALISM 
 
 (Cuxen) of the Graf Bismarck mine have in- 
 creased from 12,000 marks in 1893 to 78,000 
 marks each, Ewald from 7,000 to 54,000, Konig 
 Ludwig from 3,200 to 32,000. The quotations 
 vary somewhat with the state of the market. 
 Those given are representative of prices from 
 1905 to 1912. 
 
 The imperial ministry of the interior classifies 
 the following industries as controlled by syndi- 
 cates: coal, iron, other metal industries besides 
 iron, chemicals, textiles, leather and rubber 
 wares, timber, paper, glass, tiles, bricks, pottery, 
 foods and drinks, and electric appliances. Not 
 all the works in a single line belong necessarily 
 to a single national syndicate. Often there are 
 territorial syndicates which have agreements 
 among themselves. The whole number of syn- 
 dicates, as recorded by the ministry of the in- 
 terior, is 385. 
 
 This economic unification founded upon syn- 
 dicates and alliances among the banking powers 
 is not a completed structure; change and growth 
 have been continuous in the direction of co-or- 
 dination, coercive only by the logic of dividends. 
 As will presently be indicated, the imperial gov- 
 ernment has now taken an extraordinary step 
 in the direction of compelling private companies
 
 GOOD-WILL TOWARD TRUSTS 95 
 
 to form a syndicate. The imperial government 
 had occasion ten years ago, after a discussion in 
 the federal council, to make a public declaration 
 of neutrality toward combinations restraining 
 competition. Count von Posadowsky-Wehner, 
 imperial vice-chancellor and minister of the in- 
 terior, said in the Reichstag on November 14, 
 1902: 
 
 "The syndicate question has for a long time 
 had such an important place in the economic 
 life that the imperial administration has consid- 
 ered it a duty to observe the movement care- 
 fully. For the present, the imperial government 
 takes a position neither for nor against syndi- 
 cates." 
 
 Count Posadowsky, speaking on the same sub- 
 ject in parliament a few days later, said : 
 
 "Complaints about syndicates have become 
 audible since the high tide of our production has 
 been reached. On one hand it is affirmed that 
 prices within the country are too high to enable 
 home industries to compete with foreign indus- 
 try in the world's markets, and on the other side 
 that the syndicates often export at too low 
 prices raw materials and half -finished goods, to 
 the disadvantage of fully manufactured goods. 
 The government has nothing to say at this time
 
 96 MONARCHICAL SOCIALISM 
 
 upon these complaints. The impression is that 
 the syndicates have been often deceived in their 
 judgment of the market situation, because they 
 are not in close enough touch with their cus- 
 tomers. The fact is that the effects of the syn- 
 dicates extend far beyond the direct buyers from 
 syndicates to the extreme borders of our eco- 
 nomic life." 
 
 Public opinion in 1902 and 1903 was more con- 
 cerned over the powerful development of indus- 
 trial combinations than now, and the influence 
 of the agitation in America was felt in Germany. 
 Parliament requested the government to inquire 
 into the question. Count Posadowsky, as min- 
 ister of the interior, directed the inquiry and laid 
 the results before parliament in four volumes, 
 which report fully and simply an immense num- 
 ber of facts about the syndicates, their organiza- 
 tion, the movement of prices, their relation to 
 their members, and their activities in the foreign 
 market. The spirit throughout the report is one 
 of detachment. The government acts as though 
 it were a disinterested agent. 
 
 Herr Moeller, Prussian minister of commerce, 
 said in the Prussian legislature while the gov- 
 ernment inquiry was in progress: "The problems 
 connected with syndicates are difficult to solve,
 
 GOOD-WILL TOWARD TRUSTS 97 
 
 but to overthrow syndicates would destroy the 
 ability of our country to compete abroad." 
 
 The state and the imperial governments, 
 through owning immense producing properties, 
 have become members of syndicates, or work 
 with them. The freight rates made by the asso- 
 ciated state and private railway companies of 
 Germany, under the supervision of the imperial 
 federal council, make a distinction between the 
 small and the large shipper, thus favoring the 
 syndicate holding companies. The Prussian ad- 
 ministration of mines, while not a member of 
 the coal syndicate, has a common policy, al- 
 though it is not friendly to the syndicate in some 
 ways. The Prussian state digs 25 per cent of 
 the Upper Silesian coal output, and more than 
 one-half of that from the Saarbruecken fields, 
 but in the centre of the coal-mining industry, 
 Westphalia, Prussia has no independent owner- 
 ship. Herr Delbrueck, now imperial minister of 
 the interior, then Prussian minister of commerce, 
 said in the Prussian legislature, November 26, 
 1907: 
 
 "I am asked whether we can prevent the coal 
 syndicate from fixing prices arbitrarily. I pass 
 over the question as to how far the syndicate 
 has gone beyond reasonable limits in fixing coal
 
 98 MONARCHICAL SOCIALISM 
 
 prices. The test as to whether prices have been 
 fixed according to economically right principles 
 will be applied in the event of a further decline 
 in industry. We are not in a position now to 
 exert influence on the syndicate's prices, and 
 such influence would only be possible under gen- 
 eral syndicate legislation, regarding which the 
 necessary investigations have not yet been com- 
 pleted." 
 
 Herr Moeller, who preceded Herr Delbrueck 
 as Prussian minister of commerce, said in the 
 Prussian house of lords in June, 1905, in advo- 
 cating a measure to ameliorate the conditions of 
 labor in the mines : 
 
 "The reform is a consequence of the concen- 
 tration of capital in the mining industry. I 
 have often admitted the necessity of such con- 
 centration, and opposed anti-syndicate laws, but 
 the government must show the syndicates that 
 they cannot, in the public interest, go beyond 
 certain limits; and such a transgression by the 
 coal syndicate has occurred. The syndicate has 
 taken a too masterful position toward the jus- 
 tifiable demands of the working people." The 
 bill was adopted. 
 
 Professor Gustav Schmoller would give the 
 state the authority to appoint one-fourth of the
 
 GOOD-WILL TOWARD TRUSTS 99 
 
 directors of the larger syndicates in the public 
 interest. He has also suggested that one-half 
 the profits beyond a certain amount, for instance 
 10 per cent, should go to the state. 
 
 The imperial government has compelled pot- 
 ash-mine owners to avoid merciless competition 
 among themselves by forming a syndicate. The 
 governments of Anhalt, Prussia, and the imperial 
 province of Alsace-Lorraine had for many years 
 been members of the potash syndicate. It was 
 formed in 1879 under the lead of the Prussian 
 Government, with the government's two mines 
 and two private concerns. With the opening of 
 fresh mines and the increased market for the 
 product the syndicate was from time to time en- 
 larged. The Prussian fiscus, the board having 
 control of the state properties, was always active 
 in the formation of the syndicate, and a Prus- 
 sian official was chairman. The syndicate agree- 
 ments expired June 30, 1909, and could not be 
 renewed because one powerful member believed 
 that more money could be made by running his 
 mines to their fullest capacity, extending them, 
 and underselling the syndicate in the American 
 market, the largest buyer. Long-term contracts 
 were made by the insurgent within a few hours 
 after midnight, June 30. When it became evi-
 
 100 MONARCHICAL SOCIALISM 
 
 dent that agreement was impossible, the Prus- 
 sian cabinet recommended to the imperial gov- 
 ernment a measure establishing a compulsory 
 syndicate. The bill was accepted by the federal 
 council, and submitted to parliament, but was 
 withdrawn because of a protest by the American 
 government on the ground that American con- 
 tracts were unjustly affected. The bill was 
 changed in terms, but not in effect, and adopted 
 by parliament. The act, running for twenty 
 years, allots to each of sixty-five mines the per- 
 centage it may mine, prices are subject to the 
 federal council, should wages be reduced the 
 mine's percentage of output is correspondingly 
 reduced, and minute regulations protect the 
 workman in hours of health and extra compen- 
 sation. The statute is so drawn that mine pro- 
 prietors, for their own convenience in comply- 
 ing with the requirements of the law, have been 
 obliged to reconstitute the syndicate. 
 
 The acceptance by parliament of the principle 
 that the state has the right of compulsory regu- 
 lation of private production may have a pro- 
 found effect upon the future in Germany. In 
 the potash production it has enabled the govern- 
 ment to exercise the vital powers that it would 
 have over properties were they owned by the
 
 GOOD-WILL TOWARD TRUSTS 101 
 
 government without buying them. Parliament 
 would almost certainly have refused to grant the 
 200,000,000 marks, or more, which would have 
 been required to buy the mines. The mine-own- 
 ers, owing to the dissolution of their syndicate 
 and the impossibility of agreeing among them- 
 selves, for the most part welcomed interposition 
 by the government. Speakers pointed out that 
 if the government could erect a state monopoly 
 in potash while the properties affected remained 
 in private ownership, the same thing could be 
 done in coal or iron or any other product. The 
 only limitations would be those of expediency. 
 This assertion the government did not dispute. 
 Ministers stood frankly upon the position that 
 the monopoly designed was in the interest of the 
 nation, that it would conserve a national treas- 
 ure, that it would enable German agriculture to 
 obtain fertilizers at a moderate price, and that 
 it would enable the producers to make a large 
 profit out of the foreign buyers. The govern- 
 ment did not controvert, indeed it accepted the 
 idea that other natural products might also be 
 controlled by statutory syndicates. 
 
 The creation of government syndicates is a 
 middle course between private combinations of 
 capital and government ownership. The gov-
 
 102 MONARCHICAL SOCIALISM 
 
 eminent, it is reasoned, will be able to have all 
 the advantages of state ownership without in- 
 vestment, and without taking the management 
 of individual properties out of the experienced 
 hands of their owners. Should the potash syn- 
 dicate work according to the expectations of its 
 contrivers, Germany will probably have a suc- 
 cession of such state monopolies. An immense 
 perspective of change is opened. 
 
 Although ministers have not at all times said 
 the same thing regarding the centralization of 
 industrial capitals, the attitude of the govern- 
 ment of the empire and those of the states has 
 been friendly. The indications are rather to- 
 ward the government-made syndicate than to- 
 ward legislative checks on the syndicates as now 
 existing. The considerations underlying this 
 position toward these combinations appear to be: 
 
 First, the prevailing official political economy, 
 such as Wagner and Schmoller teach, that pro- 
 duction on a great scale must inevitably replace 
 individual company production just as factory 
 production took the place of cottage industry. 
 Therefore the most efficient and economical unit 
 of production in an industry is likely, in some 
 form, to be coterminous with the nation. 
 
 Second, the syndicate, after supplying the in-
 
 GOOD-WILL TOWARD TRUSTS 103 
 
 ternal market, is able, with a relatively small 
 additional cost, to turn out a surplus for the for- 
 eign market. The conviction is strong in Ger- 
 many that the syndicates have been important, 
 sometimes deciding, factors in the export trade. 
 
 Third, the syndicates have given life to smaller 
 enterprises that might otherwise have been ex- 
 tinguished by competition without quarter or 
 compromise. The syndicates have systema- 
 tized and steadied production and distribution, 
 so that alongside the syndicate works grew the 
 independent works until strong enough to be 
 worthy of attention; when they were, they were 
 taken into the circle. The potash syndicate 
 grew from the four mines existing in 1879 to the 
 sixty-five forming the present statutory syndi- 
 cate. The law provides for the admission of 
 seven other mines that were being opened at the 
 time the act was passed. 1 
 
 Fourth, no strong party seeks to restrain the 
 power and growth of syndicates. The imperial 
 and state governments have been mentioned as 
 apart from political parties, because the ministers 
 
 1 Other new mines after five years may participate in the govern- 
 ment allotments. Hence, at the end of 1912 thirty-four newly opened 
 mines were in operation and waiting for a full share in the profits. 
 The potash business shows, therefore, fresh indications of depression. 
 AUTHOR.
 
 of these governments are responsible, under the 
 German system, to the crown alone, and not to 
 parliaments or diets. In theory, and also largely 
 in practice, the imperial and Prussian govern- 
 ments are above and independent of parties, yet 
 sensitive to public and party opinion. 
 
 One would suppose that the Social-Democratic 
 party, with 4,250,329 l votes in the country, would 
 be resolutely and implacably opposed to the 
 principle of trust organization. Quite other- 
 wise! The Socialist position toward "trusts, 
 syndicates, and rings" is defined in a resolution 
 adopted at the national convention of the party 
 for 1904 in Frankfort, in which it is affirmed that 
 these combinations in all civilized countries, and 
 especially in Germany, are the natural result of 
 capitalistic production, and that they "hasten 
 with increasing rapidity to their culmination." 
 The purpose of associations of producers is de- 
 clared to be the regulation of production and the 
 fixing of prices so that the profits may be the 
 highest attainable. "The competing middle and 
 small producers are quickly eliminated as a nec- 
 essary consequence of these capitalistic organ- 
 izations," says the resolution. "The working 
 classes have no occasion to disturb the revolu- 
 
 1 The number cast at the Reichstag elections, January 12, 1912.
 
 GOOD-WILL TOWARD TRUSTS 105 
 
 tionary process of the syndicate system through 
 reactionary legislative attempts, because every 
 progressive step in the centralization of capital 
 whereby the interests of the masses are separated 
 from the interests of property teaches impres- 
 sively and visibly the irresistible superiority of 
 nationally and internationally organized and 
 centrally directed production over the scattered 
 production of free competition. This develop- 
 ment is, therefore, a step toward the realization 
 of socialism." 
 
 The resolution avers, however, that the syndi- 
 cate is a scourge that the capitalists use upon the 
 workmen to depress wages, and that increasing 
 social and political servility is inevitable; that it 
 is a necessity for the working classes, if they 
 would retain their manhood and self-preserva- 
 tion, to demand, emphatically and categorically, 
 legal protection against any curtailment of the 
 right of organization, and especially through ef- 
 fectual punishment of the attacks upon labor by 
 the employer. The Socialist party, therefore, 
 conducts a continuous, tenacious, and measur- 
 ably successful agitation for better wages, shorter 
 hours, and healthier factory and mine conditions. 
 
 During the discussion the speakers, in alluding 
 to the campaign against trusts in the United
 
 106 MONARCHICAL SOCIALISM 
 
 States and Canada, regarded the anxieties of the 
 "small citizens" as exaggerated and as destined 
 to be transformed into regarding the trusts as a 
 phase in the progress toward collective produc- 
 tion. The prevailing view was that the syn- 
 dicates are restrained from fixing prices des- 
 potically high because of the latent power of 
 competition, ready at any time to produce 
 when an artificial condition is pushed beyond 
 moderate limits. 
 
 The Socialist party, with somewhat more than 
 one-third of the votes cast in Germany, draws 
 within its organization most radicals. The at- 
 titude of the Socialist party, therefore, toward 
 the syndicate and trust question represents the 
 classes and the thought which in America are 
 most active in the agitation against combinations 
 of capital. Journalists are numerous among the 
 leaders of the party. The men who in other 
 countries are sometimes called muckrakers feel 
 themselves estopped in Germany from attacks 
 on capital, except in the orthodox Socialistic 
 way. Since the Socialists accept trust produc- 
 tion as an inevitable phenomenon of the period, 
 and not to be resisted on principle, the govern- 
 ment is relieved of criticism from that source of 
 its friendly bearing toward the syndicates.
 
 GOOD-WILL TOWARD TRUSTS 107 
 
 By odd chance the Conservatives, the mon- 
 eyed national Liberals, the so-called free-think- 
 ing Radicals, and the Socialists hold in wide 
 outline the same convictions regarding the legit- 
 imacy of syndicates. The landed interests, so 
 powerful politically, are committed to an ap- 
 proval of the syndicate principle, because the 
 great land-owners are members of the alcohol 
 syndicate, and are beneficiaries of the sugar com- 
 bination. Land-owners are united in numerous 
 associations with common selling agencies. For 
 instance, the sale of milk in Berlin is controlled 
 by a land-owners' association that adjusts the 
 prices according to what the buyer will pay. Be- 
 sides, agriculture is so highly protected that the 
 conservative land-holding interest is not dis- 
 posed to complain of syndicate manipulation in 
 non-agricultural production. 
 
 I have endeavored to show that the attitude of 
 all the interests agriculture, finance, mines, 
 manufactures is united upon a recognition of 
 the syndicate idea as a necessary principle in 
 production, and that both conservative and ex- 
 treme radical thinking support this view. It is 
 easy, therefore, for the government to be well 
 disposed toward the plexus of monopolies that 
 penetrates every part of German production and
 
 108 MONARCHICAL SOCIALISM 
 
 distribution. Under such favoring political con- 
 ditions the unifying of control of the immense 
 fabric of German finance and industry has ad- 
 vanced to its present highly centralized position, 
 so that it has been called "a state within a state."
 
 VII 
 
 TAXING THE INCREASE IN LAND 
 VALUES 
 
 THE imperial German Government in 1909 
 began to tax the increase in the value of 
 land and went further in that direction 
 in 1910. The percentage taken under the re- 
 vised act is from one-tenth to three-tenths of the 
 increment. One-half goes to the imperial gov- 
 ernment, 10 per cent to the states for collection, 
 and 40 per cent to the municipalities or com- 
 munes. Although the accounts for 1912 have 
 not yet been closed, it is estimated that the 
 increase in land values will amount to about 
 $60,000,000 and that the tax will be about 
 $9,000,000, divided according to the foregoing 
 percentages. This limited application of the 
 "single tax" illustrates so well the prevailing 
 views on the land question that extracts from 
 the memoranda read to the Reichstag com- 
 mittee, November 26, 1910, by Herr von Wer- 
 muth, the imperial minister of finance, are worth 
 while: 
 
 109
 
 "The proposal for a tax on the increase in real- 
 estate values," said he, "emanated from the 
 Conservative party. It is to be found in a 
 motion proposed by Herren Dietrich, Nehbel, 
 Roesike, and Count von Schwerin-Loewitz, on 
 April 23, 1909. It subsequently gained the warm- 
 est appreciation and support of all the parlia- 
 mentary groups. I shall mention the efforts in 
 favor of it by Prince von Hatzfeld and Baron 
 von Gamp, members of the Conservative party; 
 Doktor Weber, Doktor Paasche, and Herren Sieg 
 and Fuhrmann, of the National Liberal party; 
 Doktor Wiemer, Doktor Miiller-Meiningen, and 
 Herr Momsen, of the Radical People's party; 
 Herren Geyer and Stiicklen and Doktor Stide- 
 kum, of the Social Democrats; Doktor Spahn, of 
 the Clerical party; and Doktor von Skarzynski, 
 of the Polish group." 
 
 The minister of finance had, therefore, the sup- 
 port of every party in parliament for the tax. 
 Herr von Wermuth, reviewing the period during 
 which the bill was prepared, said: "We sub- 
 mitted it to outside discussions as far as possible 
 without losing sight of the fact that, in view of 
 the strong opposition of interests, it was essential 
 that the discussion should be based on exact 
 proposals. . . . We entered into relations with a
 
 TAXING LAND VALUES 111 
 
 large number of persons competent to form an 
 opinion. We have consulted bankers, capital- 
 ists, mine-owners, merchants, land-dealers, land- 
 lords, municipal governments, chambers of com- 
 merce, professors, agricultural experts, and eco- 
 nomic writers. Many of them had objections, 
 some in principle, others because of their private 
 interests. Yet in process of discussion many of 
 these objections were modified or withdrawn. 
 Thus, real-estate dealers agreed that, as the ques- 
 tion was well under way, all they desired was 
 that it should be settled as soon as possible, be- 
 cause delay was prejudicial to their interests. 
 I met numbers of persons who preferred an im- 
 perial tax to one laid by the municipalities, be- 
 cause they believed that the imperial tax would 
 not cause so much uncertainty and would not 
 be assessed arbitrarily. The government has 
 found that very many of those who opposed the 
 tax at first have become favorable to it. My 
 statements are not merely rhetorical. I stand 
 ready to furnish proofs in support of all that I 
 have said." 
 
 The finance minister had made a personal 
 study of the real-estate conditions in the Berlin 
 suburb of Reinickendorf , where land values have 
 gone up one-thousandfold during thirty years.
 
 112 MONARCHICAL SOCIALISM 
 
 "In Reinickendorf," said Herr von Wermuth, 
 "there is a strong antagonism between landlords 
 who have built on their properties and those 
 who have not. The non-builders protest against 
 the tax on increased values, although the rate 
 of taxation is unusually low in Reinickendorf. 
 They are opposed to being taxed unless the land- 
 lord is receiving a cash income. They wish at 
 the same time to abolish the tax on building plots 
 and supply the deficits in municipal revenues 
 by increasing the income-tax. The land-owners 
 who have built apartment houses on their lots 
 protest vehemently against any such reduction 
 of the taxes on unimproved property because it 
 would tend to raise the taxes on improved prop- 
 erty. We have here two examples which show 
 where the interests of town dwellers lie." 
 
 The minister of finance had collected the 
 opinions of landed proprietors and of agricultural 
 bodies. One such opinion from Thuringia he 
 read: "If the value of agricultural land increases 
 because it is close to a town, a railway line, or a 
 canal, the enhanced land values ought to be 
 taxed because they are in no way due to the 
 efforts of the owners. Besides that, the value of 
 lands fluctuates and, owing to circumstances 
 outside the control of the owners, the values in-
 
 TAXING LAND VALUES 113 
 
 crease abnormally. ... A tax on increased 
 values will therefore check abnormal transac- 
 tions." 
 
 Herr von Wermuth recited the growth of city 
 populations in Germany since 1871. Hamburg 
 had increased from 239,000 to 907,000, Bremen 
 from 82,000 to 240,000, Stettin from 76,000 to 
 245,000, Koenigsberg from 112,000 to 243,000, 
 and Kiel from 31,000 to 208,000. All of these 
 were sea-coast cities. The industrial towns had 
 increased in even greater proportion. Thus 
 Diisseldorf had increased since 1871 from 69,000 
 to 358,000, Dortmund from 44,000 to 209,000, 
 Essen from 51,000 to 300,000. The land val- 
 ues had increased proportionately. The minister 
 submitted tables going into much detail, show- 
 ing the prices at which land had been transferred 
 within thirty years. In Berlin values had in- 
 creased from 500 to 1,000 per cent, depending on 
 the location. The foreign commerce and manu- 
 factures had undergone a development, he said, 
 during the same period, which had caused real 
 estate to enhance in value. The progress of the 
 whole of Germany in every direction had been 
 brought about to a considerable degree by the 
 measures of the imperial government. The im- 
 perial government, therefore, was entitled to
 
 114 MONARCHICAL SOCIALISM 
 
 take for its purposes and for the benefit of the 
 whole people a part of the increase in value. 
 
 The committee to which the finance minister 
 read his memoranda was composed of the leaders 
 of all the parties. None of them had anything 
 to say against the statement of facts submitted 
 by the minister. This seems extraordinary, be- 
 cause half a dozen of the members were provin- 
 cial landed proprietors and it would have been 
 supposed that they would not have consented 
 under any circumstances to a tax being laid 
 on the increase in the value of their properties. 
 They did so, however, for two reasons : first, that 
 the tax would be much heavier on city proper- 
 ties because they were increasing in value more 
 rapidly; and second, for the reason that agricult- 
 ural lands are transferred less frequently than 
 city property. The tax is reduced by one per 
 cent for each year that has elapsed since the last 
 transfer of the land. 
 
 The remarks of the finance minister on this sub- 
 ject have been given with so much detail because 
 the views that he expressed had been previously 
 approved by the imperial chancellor, Herr von 
 Bethmann-Hollweg, by various other ministers 
 who had been brought into the preparatory dis- 
 cussions, and finally by the Emperor. The utter-
 
 TAXING LAND VALUES 115 
 
 ances, therefore, of Herr von Wermuth are much 
 more than individual opinions and represent pe- 
 culiarly the ways of thinking of the governing 
 body at the top of the German monarchical sys- 
 tem, faithfully supported also by the aristocracy, 
 and, in this particular land measure, as we have 
 seen, by all the parliamentary parties.
 
 VIII 
 
 MONARCHICAL VERSUS RED 
 SOCIALISM 
 
 EMPEROR WILLIAM, democrat and 
 monarchist. As democrat the Emperor 
 lives intellectually in all the progressive 
 thought of the time, striving with comprehensive 
 plan to advance the German in mental training, 
 in technical efficiency, in physical and spiritual 
 well-being. He welcomes the distribution of 
 wealth and ideas, and leads in the crown social- 
 ism that is transforming economic Germany. 
 As monarchist he is tenacious of prerogative, 
 glorifying the services of the Hohenzollerns to 
 Germany, resisting almost immovably those who 
 seek to share what is his by hereditary right, 
 determined to pass on the splendid estate un- 
 impaired to his children. The statesmanship of 
 this duplex personality conserves therefore ev- 
 ery privilege of semi-autocracy and yet uses the 
 forces of the state for a proportional development 
 of the whole. The monarchy and the powers of 
 government associated with it have advanced in 
 
 116
 
 MONARCHICAL VS. RED SOCIALISM 117 
 
 swiftly succeeding stages, considering the life of 
 nations, to a peculiar aristocratic socialism. Po- 
 litical power remains in ancient forms and yet 
 takes over the direction of modern economic 
 forces. Monarchists meet the deep currents of 
 socialism by making their own some principles 
 of the new economy and retaining resolutely the 
 entire application of them. An extraordinary 
 mental and political civil war is in full movement, 
 in which monarchical socialism keeps the mas- 
 tery of material development against republican 
 revolutionary socialism. Although monarchical 
 socialism is in possession, the vast organized 
 striving of another class socialism, the working- 
 man's socialism, causes conservatives annoying 
 apprehension. 
 
 The rise of socialism as a political force in 
 Germany in the sixties and seventies was looked 
 upon by Bismarck as tending to destroy the 
 monarchy, the church, the family, and the very 
 means of material well-being. He advised the 
 crown to make the expression of socialistic ideas 
 a crime. The anti-socialistic laws were devised, 
 fining and imprisoning those found guilty of ap- 
 proving socialism as taught by the Social-Demo- 
 cratic party. They were enforced relentlessly 
 during twelve years, with the complete thorough-
 
 118 MONARCHICAL SOCIALISM 
 
 ness of a strong and efficient government. They 
 could not arrest discussion nor reduce, except 
 temporarily, the socialist vote. The vote did 
 fall from 493,300 in 1877 to 437,600 in 1878, and 
 again in 1881 to 312,000, but thereafter the vote 
 rose to 550,000 in 1884 and to 763,000 in 1887. 
 When Bismarck, in 1890, the last year of his 
 chancellorship, asked the Reichstag to re-enact 
 the socialist laws and make them a permanent 
 statute, he failed to convince a majority, no 
 doubt because it was privately known that the 
 present Emperor, who had in the meantime come 
 to the throne, had small confidence in their ef- 
 fectiveness. 
 
 Correlated with Bismarck's legislation repress- 
 ing republican collectivism were his wide schemes 
 of state socialism spreading over German eco- 
 nomic life. By these he sought to conciliate the 
 working classes. The thought and sustained 
 effort that Bismarck gave to social modification 
 issued directly from his religious and monarchi- 
 cal convictions. "A state," said he, "consisting 
 for the most part of Christians, should be per- 
 meated to some extent by the principles of the 
 religion it professes, especially in regard to the 
 help one gives to his neighbor and sympathy 
 with the lot of old and suffering people." "The
 
 MONARCHICAL VS. RED SOCIALISM 119 
 
 votes given to a socialist candidate," said he on 
 another occasion, "denote the number of persons 
 who are discontented. . . . This discontent with 
 one's condition is natural to man. The desire 
 to improve one's position to get on is a 
 desire that God has implanted in man and those 
 who vote for the socialists do so in the hope of 
 bettering themselves." 
 
 Bismarck, talking long afterward to W. H. 
 Dawson, upon the origin of the industrial insur- 
 ance laws, said: 
 
 "My idea was to bribe the working classes, or 
 shall I say, to win them over, to regard the state 
 as a social institution existing for their sake and 
 interested in their welfare." 
 
 "It is not moral," said the prince, "to make 
 profits out of human misfortunes and suffering. 
 Life-insurance, accident insurance, and sickness 
 insurance should not be the subjects of private 
 speculation. They should be carried on by the 
 state or at least insurance should be on the 
 mutual principle and no dividends or profits 
 should be derived by private persons." 1 
 
 Emperor William II grew up in the midst of 
 political thought of an advanced sort. He was 
 taught the economic philosophies of Wagner and 
 
 l Dawson's "Modern Germany," vol. II, 349.
 
 120 MONARCHICAL SOCIALISM 
 
 Schmoller, state socialistic systems purely. Un- 
 der William I and Bismarck the Prussian and 
 the imperial governments had taken the first far 
 steps in the direction of socialistic changes. Em- 
 peror William II and his advisers, living in the 
 same order of political thinking, have continued, 
 as we have seen, the reaching out of the state into 
 fields of economic effort reserved in most other 
 modern states to private persons and companies. 
 The imperial government has adopted numerous 
 measures limiting individual control in private 
 business, the most interesting of which to the 
 student is that curious law of 1910, mentioned in 
 Chapter VI, placing potash-mining under the 
 control of the federal council which fixes prices 
 and the proportion of foreign and home sales. 
 
 The extraordinary thing about this is the util- 
 ization by the monarchists of what one of them 
 has called "the master force of the age" to main- 
 tain old sovereignties. That which is still con- 
 sidered destructive socialism in some countries 
 is appropriated by the Crown and called mon- 
 archy in Germany. Every collectivist addition 
 to the responsibilities of the state brings a new 
 corps of employees under the immediate control 
 of the functionaries of government. The mon- 
 archy extends its power over the individual
 
 MONARCHICAL VS. RED SOCIALISM 
 
 fortunes of its subjects. The new ascendency 
 operates both economically and socially. The 
 employee of any government-owned undertaking 
 feels that he is a part of the glittering paramount 
 social institution that commands the world, the 
 world as it is known to him. He is treated by 
 the agents of this remote centralized splendor 
 with mingled severity of discipline and favor." 
 The certainty of employment throughout life, if 
 his behavior and his principles are sound, a pen- 
 sion in old age, a differentiation socially from 
 those not employed by the state, work toward his 
 satisfaction with the order that is. He is prob- 
 ably entitled to wear a uniform and after an 
 interval of years his sovereign sends him a medal 
 of honor. 
 
 Society and wealth are interwoven more sol- 
 idly with the government in Germany than in 
 the United States, or in England, or in France. 
 It is as though the White House stood at the 
 summit of exclusive society, not only of New 
 York but of all America, and by means of social 
 realities had a predominant influence over the 
 wealth and rank of the country. In such a 
 country as Germany, social position is the 
 cement that holds in place wealth, talent, and 
 rank. While democratic socialism has ceased to
 
 MONARCHICAL SOCIALISM 
 
 be a felony before the law court, it has become a 
 social offence without commutation of sentence 
 or recognition of extenuating circumstances. No 
 one may hold any position in the public service, 
 not even that of a section hand on a railway, 
 and admit that he is a socialist, nor may he teach 
 in any school or university. The "color line" 
 that places the member of the Social-Democratic 
 party below caste is also a force that simplifies 
 leadership above. Aristocratic socialism, when 
 the initiative is with the sovereign, draws easily 
 with it the nobility, the great industrialists, and 
 all lesser gradations of position and wealth, even 
 to the "white-collar proletariat," as red socialists 
 call clerks and office employees. Only two or 
 three times in forty years have the Conservatives 
 departed from their principle of steady unques- 
 tioned support of crown policies, socialistic or 
 otherwise. In 1873 they gave only partial ap- 
 proval to certain tax proposals in Prussia, and 
 in 1909 they refused to concur in Prince Billow's 
 inheritance taxes. They joined in the criticism 
 uttered in the Reichstag in November, 1908, 
 against the Emperor's having talked freely in 
 England in private conversation about German 
 foreign affairs and the anti-English feeling of a 
 majority of his people.
 
 MONARCHICAL VS. RED SOCIALISM 123 
 
 Over against respectability finely and tradi- 
 tionally organized with the church both Prot- 
 estant and Catholic, the schools and universi- 
 ties, much of the press, and that wonderful body 
 of men that leads militant industry and enter- 
 prise, stands implacable workingmen's socialism. 
 This theoretic collectivism is a philosophy, or a 
 religion, or a political platform, or a materialistic 
 hope of the four millions and a quarter of Ger- 
 man men who supported the candidates of the 
 Social-Democratic party at the last general par- 
 liamentary elections in January, 1912, and re- 
 turned 110 members out of a total of 397. 1 
 
 Doctrinaire socialism is subtle enough and 
 comprehensive enough to give its followers ade- 
 quate mental footing. In a monarchist and aris- 
 tocratic country the principles of socialism have 
 behind them the emotional forces that have won 
 the long battles for political liberty in England 
 and by inheritance in the United States. Free- 
 thinkers find in it a new theology, and as a pro- 
 jected system of government and political econ- 
 omy it engages the hopes and the imaginations 
 of those who see the failures and limitations of 
 the things that are. I know nothing like Ger- 
 man socialism in the politics of other countries, 
 
 1 The precise vote was 4,250,329 out of a total of 12,206,808.
 
 124 MONARCHICAL SOCIALISM 
 
 for the grip it has on the thoughts and emotions 
 of the men and the women who have equal 
 rights within the party. The party organiza- 
 tion is quite extraordinary, extraordinary for 
 immediate results in the campaign and more for 
 the long look ahead. The mothers and fathers 
 are persuaded that, while material ease and 
 happy social conditions will most likely never 
 be theirs, their children may win them if they 
 know how to take hold of the levers that the so- 
 cialist party offers to their hands. Therefore, 
 the child must learn the meaning of socialism 
 and all that it may do for himself and his class. 
 Socialist mothers undertake to put their children 
 on the path. Numerous little stories and ro- 
 mances with a socialist moral are in circulation 
 for young people, and the socialist lecturer with 
 magic lantern entertains and informs. Dra- 
 matic and operatic performances, with socialist 
 motive, are given in all cities of importance. 
 Pictures, texts, and mottoes with the party thrill 
 in them are on the walls of half a million dwell- 
 ings. The party owns seventy-six daily news- 
 papers, a press association, several illustrated 
 periodicals, and fifty-seven publishing houses. 
 The literature, including a considerable range 
 of excellent non-socialistic books, is immense.
 
 MONARCHICAL VS. RED SOCIALISM 125 
 
 The party has two hundred central circulating 
 libraries and three hundred and seventy-seven 
 branches. The management of the party acts 
 upon the principle that all stimulating scientific, 
 poetic, philosophic, and romantic literature ad- 
 vances the cause. A variety of special books, 
 designed to detract from the reverence and re- 
 spect for the Emperor taught in the schools, are 
 circulated. They are written boldly, yet with 
 caution sufficient to keep them within the laws 
 against lese majeste and sedition. The party is 
 heavily officered by writers and speakers, some 
 of whom make it a kind of game to shoot their 
 arrows as near the royal reputation as they may 
 and still escape prison. The "muckraker" is 
 numerous and active in Germany and assails the 
 high by witticism, cartoon, cool analysis, and 
 passion-wrought phrase. 
 
 The party maintains an academy at Berlin for 
 instructing the paid provincial secretaries and 
 organizers on the intellectual bases of socialism. 
 National economy, as examined in the light of 
 socialistic dogmas, is taught there, the history 
 of socialism, the history of the development of 
 society, the history of Germany, the arts of ex- 
 pression in speaking and writing, practical jour- 
 nalism, the rights of working people under the
 
 126 MONARCHICAL SOCIALISM 
 
 law, and the legal boundaries of agitation. 
 The party has something of the unity of the 
 Catholic Church. All agitators say the same 
 thing. 
 
 Of the forces that work for republican col- 
 lectivism in Germany, the one most powerful, 
 slow-moving, and enduring is class conscious- 
 ness. Trades-unions have been developing group 
 consciousness during three generations. The so- 
 cialist would extend this consciousness to the 
 mass, choosing as the limit of his sympathies a 
 level about one-quarter below the apex. Beyond 
 that stratum he would have his class regard 
 mankind as dehumanized, thus transposing the 
 formula of the Austrian archduke who said that 
 "Humanity begins with the count." Socialist 
 leadership, through local organization in which 
 good will and equal individual rights decide 
 things, does succeed in making the hand-worker 
 feel that he is not alone as against the official, the 
 employer, the land-owner, the noble, the mag- 
 istrate, or any one who somehow, either by in- 
 heritance, personal dexterity, or accident, as he 
 may think, has a position above him. This put- 
 ting of class against class is stimulated by the 
 easy habitual superiority of the quarter at the 
 top. The school-master's sharpness, the caste
 
 MONARCHICAL VS. RED SOCIALISM 127 
 
 spirit of the whole body of permanent civil ser- 
 vants, even that of the clerk in the post-office, 
 the somewhat harsh discipline in the army, the 
 system of manners and class etiquette, and the 
 remoteness of one social division from another 
 give the daily incitement to class unity below, 
 organizing around convictions of what appears 
 to be economic and political right. As the 
 numbers and strength of the organization in- 
 crease and they do increase with a regular- 
 ity that seems almost like the operations of a 
 natural law the workers without are made to 
 feel that by non-participation they are betraying 
 their own people. The zeal of partisans during 
 election time leads to instances of terrorism 
 against the fro ward. This flourishing class con- 
 sciousness is the subtlest adversary of the exist- 
 ing order. 
 
 Aristocratic socialism and its works, far as 
 they go when observed from more individual- 
 istic countries, are rejected by thorough-going 
 collectivism as trifling with a great cause. The 
 Emperor and his advisers of the state socialistic 
 school are looked upon as having harnessed a 
 wonderful verity to the service of monarchy and 
 of a modified individualism. Imperial socialism 
 is regarded as vitalizing sick and fading institu-
 
 128 MONARCHICAL SOCIALISM 
 
 tions, as hindering the passing of economic and 
 political forms that have been essential to prog- 
 ress but are ceasing to be so. Governmental so- 
 cialism replies that class socialism from below is a 
 monster of teeth and claws, without a brain, 
 tearing at the national life, that the driving emo- 
 tions are hatred, covetousness, envy, and silly 
 destructiveness. 
 
 Monarchical socialism, for all the fervor of the 
 republican collectivists and their numbers, occu- 
 pies positions of commanding strength. The agi- 
 tations of the Social-Democratic party, the possi- 
 bilities of real danger in the movement, brace the 
 monarchists to efficiency and prudence in ad- 
 ministration. Hostile criticism searches out the 
 weak places in the system and they are repaired 
 by the government. The constant effort is to 
 make the monarchy with large powers a rational 
 and ethical general manager of a joint-stock com- 
 pany. Mere numbers do not appear to count 
 against trained talent, placed so abundantly at 
 the disposition of the government, especially when 
 talent takes care to act upon standard principles. 
 Were the large officer class indolent and self-in- 
 dulgent instead of being kept working up to the 
 edge of nervous strain, or were the permanent 
 civil servants lax concerning public money and
 
 MONARCHICAL VS. RED SOCIALISM 
 
 incapable, or were ambitious devotion to the 
 Crown working hap-hazard and not according 
 to plan, the tide from below might submerge 
 them. More than all, the prosperity of Germany, 
 while it has demonstrated that the rich are get- 
 ting richer, has not demonstrated that the poor 
 are getting poorer. The prosperity of the coun- 
 try and the arrangements of the state for allow- 
 ing the mass of workers below to share somewhat 
 in it, have lifted the whole people, except that 
 sad thin stratum of the defective and inefficient 
 at the bottom. The aristocratic government has 
 for the present a grasp of the representative sys- 
 tem which will be hard to loosen. The terri- 
 torial outlines of the imperial parliamentary dis- 
 tricts have not been changed since the empire 
 was founded. Population relatively has shifted 
 from the country to the cities. The cities and 
 the industrial municipalities are precisely where 
 workingmen's socialism is strong. Old tradi- 
 tions have kept their hold on the rural communi- 
 ties. Hence a farm hand's vote has three times 
 the elective value of the factory operative's. A 
 great city, such as Berlin, returns six members, 
 five of them Social Democrats, while according 
 to population the capital should have sixteen 
 seats. Some industrial districts, which meas-
 
 130 MONARCHICAL SOCIALISM 
 
 ured by numbers should have four members, now 
 have but one. In several country districts mem- 
 bers are returned who have only received one- 
 twelfth as many votes as those necessary to elect 
 a member in Berlin. Therefore, the nominal 
 constitutional equality of individuals does not 
 exist. In the state legislatures the influence of 
 property is strangely beyond the ratio in any 
 other modern country. Thus in Prussia, with a 
 population of 41,000,000 out of the total 65,000,- 
 000, the three-class property franchise gives 
 fifteen per cent of the voters two-thirds of the 
 electoral power. These inequalities, although 
 the subject of fierce agitation, are clung to with 
 unshaken tenacity. Such inequalities must, of 
 course, yield in the end, although in Prussia the 
 end is likely to be long delayed. The middle 
 classes, quite as much as landed squiredom, 
 refuse equality of ballot to those in the third 
 or small-property class. Collective-ownership 
 economists, affirming that their theory of indus- 
 trial organization becomes yearly more necessary 
 to the nation, urge patience. No violence, no 
 threats, but steady appeal to the reason and 
 self-interest of the mass. The results, as marked 
 at the Reichstag elections during forty years, 
 have been:
 
 MONARCHICAL VS. RED SOCIALISM 131 
 
 1871 124,700 
 
 1874 352,000 
 
 1877 493,300 
 
 1878 437,600 
 
 1881 312,000 
 
 1884 550,000 
 
 1887 763,000 
 
 1890 1,427,000 
 
 1893 1,789,700 
 
 1898 1,107,100 
 
 1903 3,010,800 
 
 1907 3,259,000 
 
 1912 4,250,329 
 
 These impressive figures change their char- 
 acter somewhat upon examination. The Social- 
 Democratic programme is a wide one and at- 
 tracts a secret ballot from many a man of con- 
 victions on subjects unrelated to the ownership 
 of the "instruments of production." The Social 
 Democrat would make religion a private matter 
 by separating church and state, thus depriving 
 the Lutheran, the Catholic, and the Jewish 
 churches of their proportionate share of taxes 
 collected for religion. He would stop increasing 
 the army and navy, give the ballot to all women 
 twenty years old, secure to communities local 
 self-government, provide free instruction in the 
 higher schools, and require the yearly assessment 
 of taxes by representative assemblies instead of 
 having large categories of taxes run permanently 
 without annual examination. The great enter- 
 prises of government, such as railway ownership, 
 have no sure check on the votes of employees. 
 They may wear the uniform and yet hold hereti-
 
 132 MONARCHICAL SOCIALISM 
 
 cal opinions privately, expressing them only by 
 ballot. 
 
 Social Democrats in thought like to elevate 
 their movement above national boundaries and 
 feel that they have hold of principles that will 
 transform the life of the world. Every success in 
 Germany is regarded as having an influence 
 throughout Europe and America. The ruling 
 Committee of Seven gave a subsidy of ten thou- 
 sand marks to the principal socialist newspaper 
 in New York last year and ten thousand francs 
 to a newspaper undertaking in Spain. German 
 socialists are strongly committed to agitation in 
 Russia, and give help freely to the Scandinavian 
 brotherhoods. 1 
 
 From what has been written here, it might be 
 supposed that the two schools of socialism 
 monarchical and republican divide German 
 political thought between them. That would not 
 be a complete generalization. An important 
 body of opinion, especially among the command- 
 ers of industry, holds to the old individualism 
 and gives assent to government ownership or 
 control either as a forced compromise or as 
 reasonable only in national undertakings such 
 as transportation or forestry. It would seem 
 
 1 See Appendix B for the Social-Democratic party's full programme.
 
 MONARCHICAL VS. RED SOCIALISM 133 
 
 as though these influential individualists are 
 obliged to form a following acting with the conser- 
 vative parties, without being strong enough to 
 decide policies. The great manufacturers, so 
 powerful in England and the United States, are 
 singularly weak politically in Germany. In the 
 Reichstag and the state diets they are always in 
 an inferior position to the landed Conservative 
 and to the Catholic parties. As a political in- 
 fluence they are only mildly articulate. 
 
 From action and recoil, economic adventure 
 and class compromise, German institutions are 
 being changed strangely. Thus far the efficiency 
 and the gathering momentum of the national life 
 do not appear to have been weakened. German 
 thought, research, and discovery are studied at- 
 tentively in foreign laboratories, universities, and 
 workshops. German enterprise is met in every 
 market. In European politics and diplomacy 
 the German shadow falls across the aspirations 
 of great neighbors who do not feel free to act 
 without consultation and combination. The 
 observer from another continent, whatever his 
 angle of observation, may allow another genera- 
 tion or two to pile up results before trying to 
 forge a sure judgment. The German cannot 
 wait. He is deep in the battle of ideas and is 

 
 134 MONARCHICAL SOCIALISM 
 
 forced to conclusion because he must choose a 
 side and act. He cannot avoid the urgencies 
 and possibly the terrors of his progress.
 
 IX 
 LOOKING TOWARD THE FUTURE 
 
 THE foregoing chapters sketch some atti- 
 tudes of the monarchy toward specific 
 social problems and outline some govern- 
 mental forms in the making, which, although 
 unfinished, already penetrate to the foundations 
 of German economic life. These institutions 
 and others like them now germinating before 
 our eyes pre-existed hi the thoughts of cer- 
 tain professors and writing men. Statesmen, in- 
 cluding sovereigns and subjects, took over the 
 ideas and wrought applications of them by de- 
 cree, statute, and administrative act. Thus ini- 
 tiated, watched, and tended by ministers and 
 convinced bureaucrats, constructions that seemed 
 cold and rigid changed into living, growing insti- 
 tutions. The observer seeing them arise, noting 
 the direction in which they develop, would like 
 to complete them mentally, add to them and 
 form conceptions of the German national life 
 as it may become in decades beyond this one. 
 Seeing that the statesmanship of the crown and 
 
 its advisers had expression first in books and 
 
 135
 
 136 MONARCHICAL SOCIALISM 
 
 pamphlets, one may look into them for a fuller 
 idea of what may conceivably be done in these 
 coming decades. 
 
 The master economic thinkers within the view 
 of ruling statesmanship in Germany are Adolph 
 Wagner and Gustav Schmoller. They have 
 lived to see their ideas built into the German 
 state and imperial system by the old Emperor 
 and Bismarck and by the present Emperor and 
 his line of chancellors. They abandoned the no- 
 tion that political economy has any finality in it 
 or that it is to be studied with any expectation 
 of discerning and laying down absolute princi- 
 ples. The economist may observe the facts of 
 social and economic life as they are spread out 
 before him, note the inefficiencies, the waste of 
 effort, the inadequacy of means to ends, and, 
 more than all, the non-ethical tendencies that 
 distort and weaken the state and therefore every 
 individual in it. Institutions are to be judged 
 by their benefit to the greatest number. The 
 government can bring this about for the com- 
 munity only by taking interest directly in the 
 social and economic arrangements, and by lim- 
 iting the freedom of individuals and groups 
 should their activities appear upon examination 
 not to serve the general aims of the organized
 
 LOOKING TOWARD THE FUTURE 137 
 
 life. Finer individuals, ethically and intellectu- 
 ally, are likely to be evolved according to this 
 conception, individuals with freedom to rise 
 spiritually and mentally because they have par- 
 tial economic liberty. This freedom may in- 
 crease with the achievements of the nation in 
 co-operation, invention, and the mutual good- 
 will of classes. 
 
 Wagner, Schmoller, Schoenberg, Schaeffle, and 
 others, originating and supporting principles of 
 monarchical socialism, took the middle course 
 between the extreme socialism of Lassalle, Marx, 
 and Rodbertus, which would have a democratic 
 government do everything, and the individual- 
 ism of the Manchester school, limiting the pow- 
 ers of government to the simplest functions of 
 administration and defence. The endeavor of 
 German statesmanship has been to hold to ev- 
 erything in existing social arrangements neces- 
 sary to produce individuality in the higher or- 
 ders, and yet to intervene in education, sanita- 
 tion, sick, accident and old-age insurance, the 
 physical training of youth in the army, and to 
 participate in transportation, forestry, mining, 
 farming, and industrial enterprises, designing 
 thus to raise the lower orders mentally, physi- 
 cally, and economically, so that they too become
 
 138 MONARCHICAL SOCIALISM 
 
 worthier individuals, adding to the power of the 
 state and the monarchy. The intervention of 
 the government is to be determined by expedi- 
 ency. The government, guided by circumstances, 
 is ready either to take part in phases of economic 
 life or to let individualism remain in control of 
 them. As Wagner is the pre-eminent thinker 
 in this sort of socialism, one may look into what 
 he has written to see what he counsels for the 
 future. Although the writer has read a good 
 deal of Wagner's abundant writings, he cannot 
 summarize this constructive economist's views 
 better than W. H. Dawson did twenty-three 
 years ago: 1 
 
 "He [Wagner] laments and condemns the ex- 
 isting * moral indifferentism in the domain of 
 economic dealings.' It is not enough to talk of 
 buying and selling labor, and to give and receive 
 money for labor as its price; we must remember 
 that the relation of employer and employed, the 
 producer and consumer, is that of man to man. 
 To him the idea of 'regarding labor power as a 
 commodity and wages as its price is not only 
 unchristian, but is inhuman in the worst sense 
 of the word.' He says plainly that the object 
 he has in view is to give the working classes a 
 
 1 "Bismarck and State Socialism," 1891.
 
 LOOKING TOWARD THE FUTURE 139 
 
 better share in the advantages and the blessings 
 of civilization, which are so largely the results of 
 their labor. Not only have they a right to gen- 
 erous education and to free enjoyment of the 
 agencies of culture possessed by the nation, but 
 they can justly claim a higher degree of material 
 welfare in other words, a larger share in the 
 national income. How is the latter to be se- 
 cured? There are two ways in which the desired 
 end may be reached. First: The workman may 
 benefit by the increasing productivity of national 
 labor. This, however, would at best be a slow 
 and uncertain process, and Wagner advocates a 
 more effective method of raising the position of 
 the workingman. Second: Labor may benefit 
 at the expense of capital, the lower classes may 
 benefit at the expense of the higher, by the lat- 
 ter giving to the laborer better remuneration, 
 higher wages, which implies the reduction of 
 profit, interest, and rent in their various forms. 
 Wagner's position differs from that of the So- 
 cialists in that they would abolish social inequal- 
 ities while he would only seek to diminish them.'* 
 Professor Wagner wrote for the Tuebinger 
 Zeitschrifi in 1887 a programme for political ac- 
 tion, in part subjoined: 1 
 
 1 Mr. Dawson's summary.
 
 140 MONARCHICAL SOCIALISM 
 
 I. A better system of production, by means of which 
 production may above all things be assured an ordered 
 course, instead of the utterly irregular one which prevails 
 at present. Prevention of the employment of " economic 
 conjectures" by individuals at the expense of others; there- 
 fore, checks against speculation. More comprehensive 
 participation by the mass of the population, especially by 
 the working classes, but also by other people in humble 
 positions, in the material benefits and the blessings of civ- 
 ilization caused by the increase of the productive forces; 
 therefore, increase of wages both absolutely and relatively, 
 considered as a quota of the produce, assured employment, 
 restriction of the hours of labor, especially of daily labor, 
 to an extent called for by sanitary and moral considera- 
 tions, and suited to technical circumstances at any given 
 time, the term varying, of course, in different branches of 
 production; exclusion, as far as possible, of children from 
 paid employments, especially when the conditions are sani- 
 tarily and morally dangerous; similar restriction of female 
 work, especially in factories; adequate precautions against 
 accidents during employment and provision for their 
 consequences; insurance against sickness, incapacity, and 
 old age, with provision for widows and orphans. Conse- 
 quently, special development of all the legal maxims both 
 in public and civil law measures, and institutions which 
 are included in the catchwords " protection of the working- 
 man" and "industrial insurance," or "industrial insurance 
 legislation." 
 
 II. Inclusion in the administrative duties of the state, 
 the parish, and the other public bodies of such measures 
 as conduce to the moral, intellectual, sanitary, physical, 
 economic, and social advancement of the mass of the peo- 
 ple; so far as may seem necessary and expedient, the ex- 
 penditure of public money for these purposes, without fear
 
 LOOKING TOWARD THE FUTURE 141 
 
 of the "public communism" which would to some extent be 
 thereby encouraged. This implies the recognition of the 
 principle of state help legislative, administrative, and 
 financial for the lower classes conjointly with self-help 
 and the co-operative system. 
 
 III. Adjustment of financial arrangements in such man- 
 ner that a larger part of the national income, which now 
 falls, in the form of rent, interest, undertaker's profits, and 
 profits from "conjunctures" (profits due to speculation, 
 chance, spontaneous increase in values, etc.), to the class 
 possessing land and capital and carrying on private under- 
 takings, may be diverted into public channels. Transfer- 
 ence to the state, parish, etc., of such land, capital, and 
 undertakings as may economically and technically be well 
 managed in public hands, and such as most easily develop 
 in private hands into actual monopolies, peculiarly tend 
 to enterprise on a great scale, or even now are carried on 
 by public companies, a form of undertakership which in 
 its advantages and defects approximates to public enter- 
 prise both economically and technically. . . . [Here Wag- 
 ner proposes to place such undertakings and institutions 
 as means of communication and transport, the banking and 
 insurance systems, water and gas works, markets, etc., in 
 the hands of the state or the parish. His idea is that the 
 state and public bodies would and should deal more con- 
 siderately and generously with their officials and em- 
 ployees generally than private undertakers and capitalists, 
 and that their good example would be a social blessing.] 
 
 IV. Public revenue to be so raised as to allow of the 
 "communistic" character of public bodies, above described, 
 being developed wherever decided objections, consequent 
 upon the peculiar circumstances of the case, do not exist. 
 This "communistic" character to be strengthened in favor 
 of the poorer and socially weaker classes, with whom the
 
 142 MONARCHICAL SOCIALISM 
 
 economic and social struggle for existence and for social 
 advancement is severest, by means of a system of admin- 
 istrative measures calculated especially to benefit them, 
 yet the cost of which shall be defrayed by the general 
 revenue and taxes. But this "communistic" character of 
 state activity to be weaker where the interests of the 
 well-to-do and richer classes of society come especially or 
 exclusively into question. Here expenditure should be 
 rather covered by a just system of taxes including taxes 
 based on the principle of taxation according to benefit 
 than by the use of the general revenue. This implies the 
 regulation of the post, telegraph, and railway tariffs, 
 judicial charges, school fees, etc. 
 
 V. Taxation to be so adjusted that, besides fulfilling its 
 primary function, that of providing the revenue needed to 
 cover public requirements, it may as well as possible fulfil 
 a not less important indirect purpose, which is twofold: 
 (1) regulative interference with the distribution of the 
 income and wealth of private persons, so far as that dis- 
 tribution is the product of free economic intercourse 
 as by the medium of prices, wages, interest, and rent 
 with a view to counteracting the harshness, injustice, and 
 excessive privileges caused by the distribution obtaining 
 in this intercourse; (2) and at the same time regulative in- 
 terference, supported necessarily by further administrative 
 measures, and eventually by compulsion (as in the domain 
 of industrial insurance) in private consumption. This 
 latter can be done by making the lower classes provide 
 by means of direct and indirect taxes, especially indirect 
 (excise), which in this connection are often very suitable 
 the revenue necessary for administrative purposes calcu- 
 lated to benefit them, this being effected by diverting 
 income which they may be applying to improper, perhaps 
 injurious, or at least less necessary and wholesome, pur-
 
 LOOKING TOWARD THE FUTURE 143 
 
 poses (e. g., drink) to purposes more beneficial to society, 
 the class, or the individual. This two-sided policy of tax- 
 ation I call social. The second side here advanced ... is 
 based, as concerns the mass of the population, the lower 
 laboring classes, on the assumption that in the truest in- 
 terests of the nation a guardianship may and must be 
 exercised over the national consumption or over the ap- 
 plication of income to personal purposes. 
 
 The foregoing programme, in part or in whole, 
 amplified here or restricted there, has been 
 broadly the programme of economic teaching 
 in German universities and of dominant political 
 action during a generation. Although one can- 
 not assume that the monarchy has taken over 
 these conceptions in a block, they indicate the 
 general direction in which German statesman- 
 ship is headed. The Tightness of the ideas can 
 be determined by experience alone. They have 
 been slowly gathering a momentum in Germany 
 which nothing probably can stop except detri- 
 mental consequences. 
 
 The experience of the German people in test- 
 ing on a great scale certain social and economic 
 ideas must have significance for other peoples 
 whether that experience be favorable or un- 
 favorable.
 
 X 
 
 IT is not easy to leave these essays on eco- 
 nomic Germany without some further refer- 
 ence to Emperor William, upon whom more 
 than any other German rests the responsibility of 
 seeking to raise the whole people by a modified 
 socialism. The Emperor does his work under 
 intense criticism. His own people, the most 
 critical probably in the world, are his sharpest 
 and unkindest observers. 
 
 "Those who live under the strong hand," says 
 one anonymous pamphleteer, "may at least ob- 
 serve whether it is manicured or not." 
 
 The sneer, the derisive anecdote, the con- 
 temptuous remark are the natural means of po- 
 litical expression of even highly placed subjects 
 in a semi-autocratic monarchy. 
 
 The international situation in Europe is such 
 that every act and utterance of the Emperor is 
 studied abroad with the purpose of seeing some- 
 thing to his disadvantage. All the agencies of 
 detraction are at work both in and out of Ger- 
 
 144
 
 EMPEROR WILLIAM II 145 
 
 many to weaken and discredit the master of the 
 German commonwealth. The Emperor and the 
 ruling group near him are no doubt more sen- 
 sitive to criticism than they would be were they 
 elected by the people or responsible to parlia- 
 mentary majorities. 
 
 Yet, taking impressions about the Emperor 
 both within and outside his country, he has 
 grown in the respect and confidence of public 
 opinion during the twenty -five years of his reign. 
 One may even imagine the Emperor, already 
 gray, becoming venerable and admired for qual- 
 ities not appreciated during his more arduous 
 years. Take the Emperor's habit of frank 
 speech in public and in private. 
 
 "Bismarck told me," said the Emperor on one 
 occasion, tapping his breast with a forefinger, 
 " that every man has the scoundrel in here. You 
 may not see him but there he is ready to jump 
 out at you. Such a man was not a suitable ad- 
 viser for a sovereign. For in a sovereign, sus- 
 picion is ruin." 
 
 The Emperor did not mention when it was 
 that the chancellor whom he afterward dismissed 
 thus counselled him, but it may be supposed 
 as having been during the course of those lect- 
 ures on state-craft that the veteran gave the
 
 146 MONARCHICAL SOCIALISM 
 
 Emperor when he was heir presumptive. The 
 statesman who had said that the lie was the 
 seventh power in Europe must have discerned 
 that the young prince believed in mankind, that 
 he was one of the most open, one of the least 
 distrustful of men. 
 
 William II enjoys the give and take of con- 
 versation and probably finds therein something 
 of that contest on equal terms which as a sov- 
 ereign is denied him in affairs. He is gifted in 
 the after-dinner thrill, the surprising remark on a 
 foreign situation, the dramatic story of a per- 
 sonal experience, the latest disclosure in the news 
 of the day, or some thoughtful observation on 
 the meaning of things. His sense of humor is 
 unfailing. He follows up a story with one 
 equally good and pertinent. 
 
 The personal attributes that affect the Em- 
 peror's administration appear to be the every- 
 day virtues of clean living, hard work, and knowl- 
 edge. I call them every-day virtues, though in 
 the high degree in which they are combined in 
 the Emperor they are rare and distinguish him 
 from most of mankind. Like General Sherman, 
 the Emperor sleeps short hours; five or six keep 
 him refreshed and at his best. He has, there- 
 fore, two or three more hours in each day for
 
 EMPEROR WILLIAM II 147 
 
 other things year in and year out than most 
 men. The Emperor during the late spring and 
 the summer months is often on the drill-ground 
 at five or half-past in the morning, although he 
 had probably gone to bed later than any junior 
 lieutenant of the regiment. Thence, through a 
 long day of various public engagements, audi- 
 ences, social or semi-social, semi-political affairs, 
 he manages to put in from four to six hours desk 
 work examining reports and documents directly 
 concerning public business. His examination is 
 in no way formal or hasty. The ministerial ar- 
 chives contain simply thousands of papers 
 upon the broad margins of which the Emperor 
 has written suggestions, alterations, comments, 
 or questions vital to the subject. 
 
 The Emperor is a man greedy for ideas. In his 
 great position they come pouring in upon him 
 from every quarter and he goes out to seek them 
 whenever he thinks that a man or an object can 
 supply them. His interest in life and in every 
 variety of it is extraordinarily sustained. Mem- 
 bers of his entourage feel a certain exhaustion 
 after having been with him. Their minds and 
 spirits fail to keep up with his rapid vitality. 
 Others simply like to gather and purvey thought 
 to the sovereign. Another kind of man agree-
 
 148 MONARCHICAL SOCIALISM 
 
 able to him is the large, slow individual, not too 
 rich in ideas, whose presence is restful and whose 
 chief merit as a courtier is the habit of calm 
 listening. The Emperor has the power to draw 
 out of a man the best in him. In those summer 
 cruises to the northern seas he will take as his 
 guests twenty, thirty, or even forty of the most 
 vigorous minds and active, driving men in Ger- 
 many for his mental recreation. Probably no 
 man knows as much of the new things in the 
 world and the expectancies of life as he. Orville 
 Wright found his knowledge of aerial mechanics 
 singularly complete and his intelligence at work 
 upon precisely the sides of the problem that 
 ought to be solved next. 
 
 A bureaucracy endeavors to take more and 
 more power into its own hands. Hence the 
 functionaries of state surrounding the sovereign, 
 even though selected by him, regard jealously 
 any word or public act of his that they have not 
 advised and which has not been spoken or done 
 through them. Some of the protest at home 
 against the Emperor's utterances has been en- 
 couraged secretly by members of the govern- 
 ment. They have looked with a certain satis- 
 faction also upon the effects abroad of some 
 things the Emperor has said, their constant ef-
 
 EMPEROR WILLIAM II 149 
 
 fort being to limit his prerogatives except when 
 exercised through them. The Chancellor and 
 his ministers, having the public responsibility of 
 representing the Emperor in governing, do not 
 wish him to be taking counsel outside their cir- 
 cle, or to say things unexpectedly which they 
 must explain and support officially. 
 
 The late Baron Fritz von Holstein, for sixteen 
 years the guiding mind of the Foreign Office, 
 once remarked of the Emperor: 
 
 "His Majesty takes a dramatic result for a 
 political success." The Emperor, von Holstein 
 added, was therefore often delighted when some 
 speech or conversation caused agitated com- 
 ment. 
 
 Is the Emperor equal to his immense work as 
 the permanent executive of the German union of 
 states? or one might ask, Could any man be equal 
 to the task? With his powers under the German 
 constitution and his larger powers as the King 
 of Prussia, Emperor William is incomparably 
 the strongest political force moving the German 
 people. How has he met these enormous re- 
 sponsibilities? The government of Prussia and 
 of Germany is the reply. To understand that 
 reply would require an earnest examination of 
 the Emperor's part in all the German history of
 
 150 MONARCHICAL SOCIALISM 
 
 the period. Yet a wide glance at general results 
 seems to reveal the Emperor as a great and ca- 
 pable administrator. He has chosen, as he must, 
 all his chancellors and ministers since Bismarck. 
 He has decided promotions for the higher grades 
 of every division of the national service during 
 his reign, now (1913) in the twenty-sixth year: 
 ambassadors abroad, educators, army and navy 
 commanders, judges of appeal, the supervisors 
 of the Lutheran Church, and the thousand other 
 appointees in the higher levels of the public ser- 
 vices. The government official of Germany ap- 
 pears incorruptible, trained, efficient, progres- 
 sive. He usually does his work amazingly well. 
 Being the deciding voice in political matters in 
 Germany, the Emperor has been related directly 
 with all imperial and Prussian policies which 
 have made the German people powerful in this 
 quarter-century. Had he been indolent, in the 
 hands of unscrupulous favorites, cynical, or stub- 
 bornly wrong-headed, he could have hindered, 
 possibly wrecked, the national progress. He has 
 had to resist the military party at various crises, 
 the ultra-conservative representations of able 
 advisers in domestic politics, and the intrigues 
 of ambitious statesmen who have sought to un- 
 dermine the premier ministers. The Emperor's
 
 EMPEROR WILLIAM II 151 
 
 intelligence, his love of honest dealing, and the 
 restraint of his personal habits have saved him 
 from many a danger. No one who has observed 
 the way in which any important public question 
 is decided in Germany can doubt that he is the 
 ruler and that his mastery is not nominal merely, 
 but actual. 
 
 It is difficult to detach a man from his setting 
 and estimate him from what he would appear 
 to be as an isolated unit. Such an examination 
 would overlook indeed the meanings that are to 
 be discerned in functions and relationships. One 
 sees the German Emperor in a splendid setting, 
 the first citizen in one of the three or four most 
 powerful societies of the earth, using his political 
 leadership for the well-being of masses yet con- 
 tending valiantly for the principle of monarchy 
 against the deep currents of the age. The com- 
 mon judgment of men who have met him, when 
 they have discussed him privately, is that quite 
 incognito the German sovereign would be taken 
 for an individual of remarkable force and charm, 
 whether one met him casually in a parlor-car 
 going west, in the club smoking-room, catching 
 trout along a country stream, or in a sitting of 
 geographers discussing polar exploration. The 
 constant effort of the Emperor's visitors is to
 
 152 MONARCHICAL SOCIALISM 
 
 conceive what he would have been in private 
 life without vast inherited opportunities. Meas- 
 ured by his aptitude for knowledge and work he 
 would probably have been distinguished in any 
 calling that he might have entered, that of the 
 sea, engineering, forestry, or any line of public 
 service.
 
 XI 
 
 SOME REFLECTIONS ON THE GROWTH 
 OF THE GERMAN NAVY 
 
 GERMANY has philosophers and lovers of 
 mankind who, believing in the unity of 
 the race, would that nations should ar- 
 range a permanent peace and accept in a spirit 
 of fair play decisions of umpires when govern- 
 ments do not interpret alike the principles of in- 
 ternational justice. The idea of war, because 
 the military organization of the country directly 
 affects every home and family, is more distress- 
 ing in Germany probably than in the United 
 States or in Great Britain. England has not 
 been invaded in force during eight and a half cen- 
 turies. Merely the historic memory of Napo- 
 leon's preparations for invasion causes a feeling 
 of relief and thankfulness that they failed. Ger- 
 many has had a different and a terrible national 
 experience, which is ever in the background of 
 consciousness when war and policies pertaining 
 to war are discussed. The child in school can- 
 not avoid learning from the primer history that 
 
 153
 
 154 MONARCHICAL SOCIALISM 
 
 the population during the Thirty Years' War 
 sank from 22,000,000 to 6,000,000. From times 
 that were remote when Columbus discovered 
 America, war has swept Germany during nearly 
 every generation excepting the periods following 
 the military revival of Prussia, which contrib- 
 uted to the overthrow of Napoleon, and during 
 the forty-two years of peace since the end of 
 the French war and the unity of the German 
 states. German cities have been sacked within 
 a century. 
 
 Grimmelshausen's classic "Simplicius Sim- 
 plicissimus," a romantic narrative of the Thirty 
 Years' War, of the brutalities, insensate cruelties, 
 plunderings, and ravishings of the period, has 
 sunk into German sensibilities as deeply as did 
 "Uncle Tom's Cabin" into the feelings of the 
 North before the Civil War. The Germans of 
 to-day bear a weight of armaments to escape the 
 vivid terrors of the past and to feel that fine 
 sense of security unknown to their ancestors. 
 The thought and the immense labors bestowed 
 upon preparedness for war are reactions from the 
 sufferings of the past. 
 
 Preparations for war, in the spirit in which 
 the German looks upon them, grow in what 
 seems a human and a reasonable manner from a
 
 GROWTH OF THE GERMAN NAVY 155 
 
 body of political thinking derived from the na- 
 tional experience, and not essentially different 
 in regard to the use of force from that of other 
 great civilized peoples. 
 
 Emperor William decided during the period 
 following the Kriiger telegram that Germany 
 ought to have a navy of evident power if the 
 country were to be secure from foreign resent- 
 ment and threats out of proportion, in the Ger- 
 man view, to the cause of offence. It is not 
 necessary to determine the political wisdom of 
 the Kriiger telegram or whether the reception 
 of it in England was justified by its contents. 
 It does seem essential, however, to understand 
 in outline an event in which is to be found the 
 seed of the great efforts Germany has put forth 
 to create a navy and which she continues to put 
 forth. 
 
 The German Foreign Office, on the eve of the 
 Jameson raid, had received a petition by cable 
 from German residents hi Pretoria for a guard 
 from a German war-ship at Delagoa Bay to be 
 sent to Pretoria for their protection. President 
 Kriiger some time previously had asked German 
 promises for aid against Great Britain should 
 there be war and he had been refused, although 
 unquestionably the German people took the
 
 156 MONARCHICAL SOCIALISM 
 
 Boer side of the controversy. The news that 
 the Transvaal Government had engaged and de- 
 feated the Jameson raiders gave the Emperor 
 occasion to send President Kriiger the subjoined 
 despatch published in The Imperial Gazette of 
 January 3, 1897: 
 
 "I express to you my sincere congratulations 
 that, without appealing to the help of friendly 
 powers, you and your people have succeeded in 
 repelling with your own forces the armed bands 
 which have broken into your country, and in 
 maintaining the independence of your country 
 against foreign aggression." 
 
 The Times correspondent, in telegraphing the 
 news, said: 
 
 "This telegram must not, however, be taken 
 as merely an expression of the Emperor's per- 
 sonal feeling. It was drawn up at the Chancel- 
 lor's palace where the Secretary of State for For- 
 eign Affairs Baron von Marschall, the Secretary 
 of the Imperial Navy Admiral Hollman, and 
 others had been summoned by Prince Hohen- 
 lohe to confer with the Emperor. It assumes, 
 therefore, the character of a state document of 
 the highest importance, the more so as it con- 
 tains an unqualified recognition of the inde- 
 pendence of the South African Republic."
 
 GROWTH OF THE GERMAN NAVY 157 
 
 The publication of the telegram moved the 
 people of Great Britain far more deeply than did 
 the Venezuelan message of President Cleveland 
 a few weeks earlier. The British Government 
 began instant preparations for war. The Times 
 of January 8 published under triple head-lines 
 an unusual device in those days nearly a col- 
 umn announcement, beginning as follows: 
 
 "NAVAL PREPARATIONS 
 
 A FLYING SQUADRON FORMED 
 SHIPS OBDEBED TO DELAGOA BAY 
 
 "Orders have been sent to Portsmouth, Dev- 
 onport, and Chatham for the immediate commis- 
 sioning of six ships to form a flying squadron, 
 and it is understood that the captains to com- 
 mand these ships have already been chosen. 
 The object of this move is obviously to have an 
 additional squadron ready to go anywhere which 
 may either reinforce a fleet already in commis- 
 sion, if thought desirable, or may constitute a 
 separate force to be sent in any direction where 
 danger may exist." 
 
 The Times began a column editorial on the 
 subject with: "The country will learn with satis- 
 faction that the augmented naval preparations
 
 158 MONARCHICAL SOCIALISM 
 
 t 
 which we advocated yesterday have been taken 
 
 in hand with vigor and promptitude." The edi- 
 torial concluded with a reference to the "preten- 
 sion of the German Emperor to tear up our 
 treaties at his pleasure." The Times on the fol- 
 lowing day announced that special preparations 
 were in progress for mobilizing a portion of the 
 reserve fleet, and that pressing orders had been 
 issued to hurry the refitting of other ships. 
 Emergency military preparations also had been 
 ordered by the government. Commenting on 
 explanations and the avowals in Berlin that no 
 unfriendly act had been meant by the Kriiger 
 telegram The Times said: 
 
 "The official and semi-official press of Ger- 
 many, which a week ago could not find language 
 picturesque enough to reach the height of its 
 great resolves, is now roaring as gently as any 
 sucking dove." 
 
 The British Government's naval preparations 
 continued. A special flotilla of torpedo-boat de- 
 stroyers for service with the Channel and fly- 
 ing squadrons had been placed in commission. 
 The attaching of destroyers to the squadron indi- 
 cated, were such indication necessary, that they 
 were to be employed within short cruising dis- 
 tances. Two thousand men were working extra
 
 GROWTH OF THE GERMAN NAVY 159 
 
 time at Portsmouth, and the activity in the 
 Chatham dock-yards was described as "unprec- 
 edented." 
 
 The foregoing gives something of the British 
 Government's dispositions to resent by arms the 
 action of the German Government, or, if that 
 were not designed, to impress upon Germans their 
 helplessness on the sea in the presence of British 
 hostility. The attitude of the German Govern- 
 ment within twenty-four hours after the Kriiger 
 telegram was to explain to England and the 
 world that no offence had been meant. Such 
 explanations were conveyed officially and elab- 
 orated upon in the German press. The Brit- 
 ish preparations were regarded with consider- 
 able astonishment, then with apprehension, and 
 finally with a sense of abasement. The British 
 admiralty's activity continued for some days 
 after Mr. Balfour had announced in the House of 
 Commons on January 16 that no foreign power 
 disputed the British view of the relations with 
 the Transvaal. 
 
 The conviction in Germany was that the 
 British Government had taken an opportunity to 
 humiliate the German sovereign and the German 
 people. The naval preparations were regarded 
 as in no other light than a threatening demonstra- 
 tion out of proportion to the significance of the
 
 160 MONARCHICAL SOCIALISM 
 
 telegram sent to Kriiger. Had good-will been 
 applied to the interpretation of the despatch it 
 might have been taken as an ill-judged, though 
 harmless, expression of sympathy. The Ger- 
 man feeling was that, had Germany been a sea 
 power and in a position to engage Great Britain 
 even on unequal terms the British way of 
 receiving'the telegram would have been different, 
 and that, instead of flying squadrons and special 
 flotillas of torpedo-boat destroyers for service 
 with the flying and the Channel squadrons, there 
 would have been an acceptance of German as- 
 surance that no ill-will had been intended. Ger- 
 many had in that year something more than 
 1,500,000 tons of ocean-going shipping. Her in- 
 vestments abroad amounted to $3,000,000,000. 
 Her trade extended to most parts of the world, 
 and her ambition for an expansion of her foreign 
 commerce and her dividends from undertakings 
 in foreign countries was limitless, The govern- 
 ment saw this fabric of foreign enterprise exposed 
 to destruction. Political writers in Germany had 
 treated of Germany's need for a navy since the 
 empire had been formed. The strategists in the 
 general staff under the initiative of Field-marshal 
 von Moltke had prepared theoretical jstudies of 
 the correlation of land and sea forces in war. In 
 a war with Russia the great neighbor whose
 
 GROWTH OF THE GERMAN NAVY 161 
 
 immense potentialities rested heavily upon the 
 imagination of the Germans until the Russo- 
 Japanese war the fleet could be employed 
 with advantage in closing the Russian Baltic 
 ports, in landing troops in great force either near 
 Saint Petersburg or at any intermediate point 
 whereby operations threatening the rear of Rus- 
 sian armies on the German frontier could be 
 executed. 
 
 The Emperor had read and had been impressed 
 by Captain Mahan's "The Influence of Sea 
 Power on History." A naval officer of distinc- 
 tion has told me that Captain Mahan's book 
 had as much to do with the building of the Ger- 
 man navy as any other single influence. Cer- 
 tainly it was evident that the power of Germany 
 could not be used beyond where German troops 
 could march unless a navy of considerable 
 strength existed. The exposed position of Ger- 
 man commerce, the problem studies of the co- 
 operation of the land and sea forces in war, the 
 Emperor's personal convictions on the subject 
 of a navy, were the latent forces released into full 
 activity by the consequences in England of the 
 Kriiger telegram. The United States, Italy, 
 and France had begun from five to fifteen years 
 earlier to expand their navies.
 
 The first German naval programme was ready 
 by November 10 of the same year, 1897, and 
 was adopted by the Reichstag the next spring. 
 The strategists, however, were convinced that a 
 small navy was scarcely better than no navy, 
 that any navy must be sufficiently large to be 
 taken into account by Great Britain or any other 
 power as a serious adversary, were war to take 
 place. 
 
 While these discussions were going on, the 
 German mail steamer Bundesrath was seized by 
 a British cruiser off the East African coast on 
 suspicion of carrying contraband. The seizure 
 caused high feeling in Germany and was the oc- 
 casion of a good deal of arrogant talk in England, 
 where German sympathy for the Boers was re- 
 sented. The Bundesrath was presently released. 
 The incident and the feeling it provoked on both 
 sides of the North Sea gave the second push to 
 the German navy. The programme of 1900 was 
 resolved upon. The key idea as set forth in the 
 preamble is that "Germany must possess a 
 battle-fleet so strong that a war with her would, 
 even for the greatest naval power, be accom- 
 panied with such dangers as would render that 
 power's position doubtful." 
 
 While the German naval promoters have never
 
 GROWTH OF THE GERMAN NAVY 163 
 
 planned for a navy equal to that of Great Britain, 
 they do work for a navy that would make the 
 British Government hesitate to attack Germany 
 under avoidable circumstances and that would 
 suggest a civil attitude should the two govern- 
 ments have different policies upon a subject of 
 mutual interest. German naval plans leave to 
 Britain superiority on the sea, but not such a 
 superiority as leaves German shipping, the 
 sprinkling of German colonies, and immense 
 German investments in other countries defence- 
 less. Instead of a proportion of seven to one, 
 which represented the ratio of naval strength on 
 the morning the Kriiger telegram was sent, the 
 proportion when the German projects are com- 
 pleted is likely to be about three to two in favor 
 of Great Britain. Although the British position 
 on the sea is immensely changed thereby, the 
 security of the British Islands can hardly be en- 
 dangered. Should Great Britain consider that 
 the national security requires more ships, she 
 will probably build them. She cannot retain an 
 overwhelming superiority upon the sea without 
 building ships. The weakness of the suggestions 
 for limitation by agreement made in England is, 
 that they always imply that Great Britain would 
 be willing to enter into an arrangement with Ger- 
 many on the permanent principle of British naval
 
 policy that Great Britain shall have a navy as 
 large as any two other powers. Englishmen ask 
 that Germany should undertake to confirm by 
 treaty Britain's supreme position on the sea. 
 The impossibility of a nationally young, grow- 
 ing, ardent, self-confident people such as the 
 Germans entering into an agreement of that 
 kind makes the suggestion seem queer when 
 looked at from the Continent. No British states- 
 man has ever mentioned a willingness to consider 
 a limitation of armaments except upon the fun- 
 damental idea that Britain retain her existing 
 vast preponderance on the sea. The discussion 
 of limitation upon that basis does not seem a 
 futility in England; in Germany it is regarded 
 as verging upon impudence. 
 
 The elder Pitt, in the middle of the eighteenth 
 century, laid down the principle that the safety 
 and prestige of Great Britain lay in a balance of 
 power on the Continent, that England could not 
 suffer any power to become paramount on the 
 mainland. Therefore France, the great military 
 power on the Continent, was the enemy of Eng- 
 land. Pitt made headway against France by 
 alliances on the Continent, crippled her through 
 the aid of Frederick of Prussia on the land, de- 
 feated her at sea, and added the French colonies 
 in India and North America to those of Britain.
 
 GROWTH OF THE GERMAN NAVY 165 
 
 France was again the enemy of England when 
 Napoleon rose to supremacy on the Continent. 
 For a century and a half the first aim of British 
 foreign policy has been to promote an equilib- 
 rium on the Continent so that contentions there 
 should leave her free in other parts of the world 
 and should keep all powers in Europe seeking 
 for the favor of England. Since the reduction 
 of the Russian position in the Japanese war, Ger- 
 many has become the predominant military state 
 on the Continent. The aim of the British Gov- 
 ernment has been to arrange a system of en- 
 tentes and alliances sufficient to hold Germany 
 in check. Doubtful success has resulted. The 
 first endeavor, to give Morocco to France without 
 consulting Germany or trading with her, failed. 
 The joint British and Russian efforts against 
 Germany and Austria in the Bosnian-Herze- 
 govinian annexations failed. Great Britain is 
 being gradually excluded from a deciding influ- 
 ence on the Continent. If Germany had never 
 built a ship nor sold a yard of cloth abroad, the 
 political genius of British statesmen would have 
 singled her out as the enemy of England because 
 of Germany's immense and growing position on 
 the Continent. The political policies of Great 
 Britain are the ones that drive her into hostility
 
 166 MONARCHICAL SOCIALISM 
 
 against Germany. Added to these are the trade 
 competition, usually much exaggerated, and the 
 rise of the German navy. Relatively British 
 trade has not expanded so fast as that of Ger- 
 many, but it is good and profitable, making the 
 financial position of the United Kingdom still the 
 first in Europe, 
 
 The German navy is serious for Great Britain, 
 not because the safety of the British Isles is en- 
 dangered nor because Germany has any aggres- 
 sive policy against her, but because the British 
 political position throughout the world will be 
 reduced by reason of the existence of the navy. 
 That position has already been greatly changed 
 by the rise of Japan in the Far East, of the 
 United States in the Western hemisphere, of 
 Germany on the continent of Europe. The 
 British fleets in the East, on both shores of North 
 and South America, and in the Mediterranean 
 have been lessened to strengthen the fleets in 
 home waters, so that Lord Roberts said in Octo- 
 ber, 1912, that the only sea on which the Brit- 
 ish fleet was master was the North Sea. The 
 British naval forces will become further concen- 
 trated in ratio to the German construction. The 
 prevailing strategical doctrine will require Great 
 Britain to have at home a naval power sufficient
 
 GROWTH OF THE GERMAN NAVY 167 
 
 to engage on more than equal terms a fleet of 
 41 battle-ships and 20 large cruisers within one 
 day's sail of her coasts. 
 
 The "relations" between Great Britain and 
 Germany are in continuous discussion, that rises 
 to a certain intensity when the British naval 
 budget is debated in Parliament or when some 
 European question bubbles. These "relations" 
 are likely to sharpen in international importance 
 until the German navy reaches its programme de- 
 velopment, which will be between 1916 and 1918. 
 I venture into the difficult field of conjecture as 
 to the probable course of events. Ethical con- 
 siderations will prevent the small war party in 
 Great Britain from provoking war while the 
 German navy is building. When the German 
 navy has reached its programme maximum and 
 nothing happens, because Germany will not 
 throw her inferior navy against Britain, a long 
 peace will probably follow in which suspicions 
 and animosities will diminish. The British 
 people will become accustomed to a certain 
 diminution of their international position, but 
 with an immense place in the world, a place 
 constantly maintained, perhaps constantly in- 
 creased, through their spiritual and intellectual 
 contributions to mankind.
 
 XII 
 THE PLAY INSTINCT IN GERMANY 1 
 
 ONE of the first notions the foreign ob- 
 server takes of the German at home is 
 that he isn't much of a person to play. 
 Tourists do not think of Berlin as a pleasure 
 city. The recreative, the sportive, is not obvi- 
 ous. The theatre is for education. Music is for 
 the cultivation of the emotions. Sport is for 
 physical development. The constant note is the 
 utility of the thing and its relation to the other 
 parts of life. This is a consequence of the enor- 
 mous trust the German puts in order, system, 
 preparation, minute arrangements for doing 
 things. 
 
 Life is a difficult business for most Germans. 
 The thin soils, the crowded populations, the hard 
 past of war and suffering which has left an entail 
 upon the present, make the problems of a liveli- 
 hood and of rising in the world more difficult 
 than in France, England, or Italy. The pervad- 
 ing melancholy, the pessimistic suggestion, the 
 
 1 Reprinted from Collier's Weekly by permission of the editor. 
 168
 
 PLAY INSTINCT IN GERMANY 169 
 
 subtle critical faculty of the highly educated, 
 press upon the elemental play instinct and ques- 
 tion its right to existence in a world wherein is 
 so much to do and yet so little worth while. 
 The urgency of the dominant practical spirit 
 seizes on the disposition to play and harnesses 
 it up to some form of social discipline or per- 
 sonal improvement. Philosophy gets into the 
 games and even romping must be done thought- 
 fully. 
 
 The children at school are taught how to play. 
 An instructor on the grounds during the recrea- 
 tion hour defines how the game of the moment 
 should be played, corrects the manners of the 
 overboisterous, and stimulates the weaker or 
 more timid players into greater exertions. If a 
 motion at play is not according to rule, it must 
 be repeated correctly. That is, at least, the 
 instructor's objective. 
 
 While watching the girls on a school-ground 
 one of the first fine days of spring, I saw some- 
 thing of the German method of regulating youth- 
 ful impulses. The busiest figure on the grounds 
 was the young woman overseer. 
 
 "No, not that way, Trudchen!" exclaimed the 
 instructress; "not that way. You must hold 
 your hands so and be careful not to step on the
 
 170 MONARCHICAL SOCIALISM 
 
 heels of Ottilie." Trudchen was a new-comer in 
 the class, and was being taught how to play the 
 German equivalent of "London Bridge is falling 
 down." 
 
 As it seemed rather absurd to carry the spirit 
 of the school-room into the smooth gravelled en- 
 closure with its rectangles of trimmed grass and 
 flower-beds on the margins, I said to the young 
 woman, with whom, presently, I was talking: 
 
 "Why shouldn't children like these be free to 
 do just as they please in the playground? Why 
 should they be bothered, I might say cramped, 
 by endeavors to train them at play?" 
 
 "I might reply," said the teacher cheerfully, 
 "that my work in the play-yard is provided for 
 in the regulations of the ministry of education, 
 and that it is no affair of mine to question those 
 regulations, but to carry them out. Yet the 
 theory of supervision and instruction at play is, 
 I believe, that anything worth doing at all is 
 worth doing properly, and that the habit of 
 learning the right way of doing a thing, even the 
 way to play a game, leaves a beneficial impres- 
 sion on the receptive youth." 
 
 "Not much chance left for spontaneity or the 
 unexpected." 
 
 "The unexpected usually means some rudeness
 
 PLAY INSTINCT IN GERMANY 171 
 
 or thoughtlessness. The playground may be a 
 place for teaching children right attitudes to- 
 ward one another, of decency in language, and in 
 unconsciously cultivating the conviction that 
 there is a choice before every act of a correct or 
 an injudicious way of performing it." 
 
 Probably a sound reply. One, at least, that 
 is in the Prussian spirit, the spirit that has made 
 modern Germany and that dominates the im- 
 mense progressive organism that seems to be 
 doing so much more collectively than the in- 
 dividuals appear capable of doing. The sys- 
 tem, as a whole, seeks to fit the individual to his 
 place like a brick in a wall. Only in the first 
 two years at the university does the "system" 
 provide for doing as the young man pleases, for 
 the indulgence of impulse and the unchecked 
 expression of the sporadic. 
 
 But the resilience of the human, the reaction 
 against the fine-webbed social process, gives the 
 German a fine power of enjoyment when his 
 duty has been done. He gives himself fully to 
 the pleasure of the hour without that self-con- 
 sciousness that often makes the American feel 
 that he is acting foolishly if he abandons himself 
 to the spirit of a jolly occasion. It does the 
 Anglo-Saxon good, or ought to, to see the Ger-
 
 172 MONARCHICAL SOCIALISM 
 
 man professor out for an evening. The sub- 
 jective and the critical are quite switched off, 
 and the surrender to simple good-fellowship and 
 play is complete. The emotional height to 
 which Germans go in the appreciation of music 
 is a release from the pervading orderliness of 
 life. 
 
 The passion of the town-dweller for the coun- 
 try, the town-dweller of modest income, causes 
 the large towns and cities to be encircled with 
 what look like the shanties of squatters in the 
 West. Around Berlin are zones of open fields 
 divided into tens of thousands of plots of fifteen 
 to twenty yards square, often larger, which are 
 let for the summer to people of the city. 
 
 Each rectangle is a miniature country-place. 
 The skilled workman, the small storekeeper, the 
 professional man of moderate income rents one 
 of these little farms and builds a tiny house 
 upon it. He is expected to build this house 
 himself, and it is considered bad form to call in 
 carpenters or professional help. The materials, 
 it is true, are usually bought with the frames 
 joined and the various parts ready to be put to- 
 gether. Acquaintances and friends often have 
 adjoining estates, and they help each other 
 in house-building, pioneer fashion. The design
 
 PLAY INSTINCT IN GERMANY 173 
 
 and creation of these odd structures is often 
 studied by architects of reputation for sug- 
 gestions in originality and beauty. Since the 
 shanties are the expression of minds usually 
 ignorant of conventional architecture, they are 
 unconstrained and have the adaptation to ends 
 that serve as the seed ideas for greater designs. 
 Two hundred dollars spent on a house would be 
 extravagant, and the building, with spring re- 
 pairs, lasts for years. 
 
 The mother or the maid takes out the children 
 in the morning or after the mid-day meal. The 
 father joins the family as early as he can leave 
 his work. They have a cold supper with tea or 
 coffee or beer, and spend the long twilights of 
 the northern parallels in the open air. The little 
 plantation will have a vegetable patch, a flower- 
 bed, and perhaps a swing or a doll-house. 
 
 I know nothing like this in other countries. 
 There must be a hundred thousand of these im- 
 provised villas in the environs of Berlin, each 
 the fresh-air base of a family, plot set on plot 
 with footways between, in groupings called arbor 
 colonies. It is said as a political pleasantry that 
 these are the only successful colonization proj- 
 ects of the empire. 
 
 The people who cannot go away for long to the
 
 174 MONARCHICAL SOCIALISM 
 
 sea-shore or to the mountains find in these day- 
 light settlements that contact with green things 
 and sunshine and air mean health of spirit and 
 reconciliation to the arid life of the city. The 
 jangled spirits of the factory or shop-driven em- 
 ployee are quieted and rested and tonicked up 
 for the battle of the next day. The mental ef- 
 fects on the grown people are as obvious as the 
 health and fun that the children get. 
 
 The German nature-cult apart from sport has 
 a deeper influence probably upon the whole na- 
 tion than among any other people. School-chil- 
 dren are taken into the country one or two days 
 every week by one of the teachers and taught 
 the names and the meaning of things they see. 
 Troops of boys and girls, each with a lunch-box 
 or knapsack, walk for miles into the country, 
 through the public forests, learning the names of 
 the plants, the animals, and the birds, how they 
 grow, the simple outlines of mineralogy, and the 
 components of the earth. The children have a 
 fine day in the open air, and gradually learn to 
 understand and to love the fields and the woods. 
 
 The habits last through life. The American 
 motorist in Germany comes across the adult 
 everywhere on the tramping excursion. The Ger- 
 man fifty years old, often of stout figure, will do
 
 PLAY INSTINCT IN GERMANY 175 
 
 his thirty or forty miles a day walking and think 
 nothing of it. 
 
 The walking honeymoon is a custom. Young 
 couples who prefer to keep their money or who 
 haven't any for a wedding trip by train, swing 
 knapsacks over their shoulders on the wedding 
 day and set out for a week's tramp, stopping 
 overnight at the roadside tavern. A story is 
 told in the Bavarian Alps of the gloomy young 
 man whose extreme melancholy at the village 
 inn caused sympathetic inquiries. He confessed 
 that he had been married the day before to the 
 belle of the village and, as they didn't have 
 means for both of them to take a wedding trip, 
 he had been obliged to tramp alone. 
 
 The principle of utility in training the youth 
 into material for a good soldier and into a sub- 
 ject who will be qualified to contribute to the 
 collective good of the state, inspires the German 
 gymnastic system, the system which Ameri- 
 can turners at the great Frankfort tournament 
 three years ago found to be unconquerable. The 
 American or the English athlete, because of the 
 development of his individuality under different 
 school and social conditions, will not surrender 
 himself unreservedly into the hands of the in- 
 structor. He thinks he knows better how the
 
 176 MONARCHICAL SOCIALISM 
 
 exercise should be taken and the feat performed 
 than the instructor, that the instructor's method 
 is all very well for other persons or very good for 
 the average pupil, but that he knows better how 
 he should do the thing. The German does the 
 exercise as he is taught, machine-like possibly, 
 but with highly trained precision. The team 
 work is excellent. Germany, outside the schools, 
 has 8,000 gymnastic clubs with 902,000 men in 
 them. 
 
 The ^cherry trees are now in bloom at 
 Werder, a village and district about ten miles 
 from Berlin. The newspapers have been pub- 
 lishing bulletins for days regarding the progress 
 of the buds and speculating on thfe* days they 
 would be at their perfection with somewhat the 
 same earnestness as the betting chances on the 
 Futurity are calculated. The Emperor and the 
 Empress have been to see them, and on the same 
 day there were probably a quarter of a million 
 Berliners.
 
 APPENDICES
 
 APPENDIX A 
 
 THE systems of imperial insurance in operation since 
 1884 had their origin in the famous rescripts of Emperor 
 William I of November 17, 1881, and April 14, 1883. 
 All legislation on the subject, with many additions and 
 modifications, was codified into a single statute, that of 
 July 11, 1911. It is the most voluminous law of the Ger- 
 man Empire, with the exception of the civil code, and is 
 set forth in 1805 numbered paragraphs, some of them 
 pages long and grouped into six books or chapters. This 
 act extended invalid insurance to widows and orphans and 
 increased the payments to beneficiaries by raising the 
 weekly contributions. The Socialists had criticised pre- 
 vious laws chiefly on the ground that they did not yield 
 sufficient results to make them worth while. 
 
 The insurance is developed in three ways, according to 
 whether the insured is (a) temporarily ill, (6) injured by 
 accident, or (c) enduring prolonged incapacity or old age. 
 The work in all these varieties of insurance goes far be- 
 yond the payment of money to the persons eligible. Nu- 
 merous hospitals are built, particularly homes for the cure 
 of consumption in the earlier stages. Physicians, medi- 
 cines, and dentists are provided. Inebriates are placed in 
 institutions. Extraordinary progress has been made in 
 
 179
 
 180 APPENDIX A 
 
 the treatment of injuries by surgeons studying under the 
 insuring authorities. These authorities are more directly 
 co-operative societies or companies. Both forms of organi- 
 zation are under government control. The managers are 
 chosen for four years by employers and employed on a 
 basis of proportional voting. Women are entitled to vote 
 and to be elected to the management. Membership on the 
 managing boards may not be declined except for certain 
 specific reasons. No salaries are paid. The expenses of 
 members while discharging duties are allowed and claims 
 for lost wages are considered. The managers and boards 
 for localities work under the branches of the imperial in- 
 surance office. This supreme authority consists of 32 
 permanent or so-called standing members and 32 others. 
 The standing members are appointed by the chancellor. 
 The president and other officers are named by the Em- 
 peror. Of the non-standing members the federal council 
 elects 8, 6 of whom must be members of the federal coun- 
 cil, the representatives of the insured 12, and the repre- 
 sentatives of the employers 12. The 64 members of the 
 imperial insurance office work through committees or 
 senates composed of 7 members when deciding insurance 
 controversies, or 5 members when disposing of other busi- 
 ness. Claims for insurance are lodged first with the co- 
 operative or the insuring company, then, if denied, upon 
 appeal to the local branch of the imperial insurance office. 
 In the case of an injured workman, the employer makes 
 application for insurance. An investigation follows. If 
 the decision is adverse or the workman is dissatisfied with 
 the indemnity, he may appeal. 
 
 (1) Sick insurance is obligatory upon all persons work- 
 ing for wages of not more than twenty-five hundred marks 
 a year. The law of 1911 extended the application to la- 
 borers working on irregular or short contracts in agri-
 
 APPENDIX A 181 
 
 culture, migratory workmen, workers at home, and unpaid 
 apprentices. Payments to or for the sick are graded ac- 
 cording to wages. Help during illness is given during a 
 maximum of 26 weeks, whereafter, should the illness con- 
 tinue, the charge is taken over by the invalid department. 
 Insurance aid consists of medical treatment, medicines, 
 minor requisites, and, from the fourth day of incapacity, 
 a money payment equal to one-half the wages previously 
 earned. Treatment in hospital may be substituted by 
 the authorities for money payments, although in that case 
 hah* the wages in cash may be paid to the dependents of 
 the head of the family. Payments for lying-in are limited 
 to from four to eight weeks. Twentyfold the daily wage 
 is paid for burial expenses on the death of the insured 
 person. 
 
 The premiums are percentages of wages earned. They 
 do not, as a rule, exceed four and one-half per cent. 
 The insured pays two-thirds and the employer one-third. 
 The employer must see that the payments are kept up; 
 and if he pays them, he may deduct from the wages of the 
 employee the percentage due from him. 
 
 (2) Accident insurance is divided into three classifica- 
 tions industrial, agricultural, and marine. There was 
 a special class for the building trades, but the new law 
 incorporated them with the industrial. 
 
 (a) Industrial. The sphere of this class was extended 
 by the new law to take in callings not hitherto included. 
 A factory, in the sense of the law, is any manufacturing 
 concern with a minimum of ten employees. Workmen in 
 every manufactory earning five thousand marks a year or 
 less must be insured. The limits are now drawn widely 
 to take in government enterprises, such as the postal, 
 the telegraph, and the railway services; chimney sweeps, 
 butchers, bath-house attendants; livery-stable, street-car,
 
 182 APPENDIX A 
 
 and other transportation employees; apothecaries, timber- 
 cutters, raftsmen, and all persons engaged in establish- 
 ments with steam, electrical, or other mechanical power. 
 Artisans working for themselves are admitted, and sub- 
 managers earning less than five thousand marks a year. 
 
 The insurance covers losses through accident or death. 
 Claims are not valid for injuries incurred intentionally or 
 in the commission of punishable offences. Accident insur- 
 ance begins with the fourteenth week after injury. Pre- 
 vious to that time the patient is a charge upon the sick 
 insurance. Assistance is in the form of medical treat- 
 ment and an annuity during the period of incapacity. 
 Treatment may be given in a hospital or in a convales- 
 cents' home. The annuity amounts to two-thirds of the 
 yearly earnings in case of total disability, graded d-f n- 
 ward from that according to the degree of incapacity. In 
 some cases of total disability the annuity may be raised 
 to the full amount of the wages received at the time 
 disability began. Where the insured is killed, his widow 
 and orphans (including illegitimate children) receive one- 
 fifteenth of his yearly earnings, cash down, for burial ex- 
 penses, and each dependant receives an annuity of one- 
 fifth of his wages, but all of them together may not receive 
 more than three-fifths of his wages. 
 
 The premiums are paid by the employers, the charge 
 being pro-rated upon the wages earned. The associations 
 of employers, formed under provisions of the law, arrange 
 a tariff among themselves, under government supervision, 
 calculating the danger risks in different sorts of work. 
 The premiums paid by the employers are assessed accord- 
 ingly. The imperial insurance office appoints technical 
 inspectors whose duty it is to see that all regulations 
 protecting workingmen from danger are enforced. The 
 insurance office also appoints experts with the right to
 
 APPENDIX A 183 
 
 examine the books of employers in order to ascertain 
 how wages are paid and the amounts. 
 
 (6) Agricultural. Employees in this class are not farm 
 hands only in a narrow sense, but also gardeners, foresters, 
 workers in land-improvement operations, repairers of 
 buildings, and employees in all callings subsidiary to agri- 
 culture. The employers pay the premiums under some- 
 what the same regulations as those controlling employers 
 in industrial enterprises. The payments in some states, 
 such as Prussia, are collected along with the ordinary 
 taxes. 
 
 (c) Marine. The payments in this class are paid by 
 employers according to the monthly average wages, not 
 yearly, as in the other classes. All persons are compul- 
 sorily insured sailing the high seas or employed upon 
 shore or near-shore duty, such as piloting, fishing, wreck- 
 ing, life-saving, and docking. 
 
 (3) Invalid and widows' and orphans' insurance under 
 the law of 1911 is paid, one-half by the imperial govern- 
 ment, one-quarter by the insured, and one-quarter by the 
 employers. The funds are so handled that they are suffi- 
 cient to pay pensions to invalids, to persons beyond the age 
 of seventy, and to widows and orphans of insured heads 
 of families. A feature of the new law that causes strong 
 opposition in sections of Germany where there is the 
 greatest prosperity and the highest wages is that hah* of 
 the sums collected in premiums are diverted into a general 
 fund, the revenues of which are applied evenly throughout 
 the empire. 
 
 All persons more than fifteen years old receiving wages 
 must be insured, including master-workmen, druggists, 
 members of theatrical troops and orchestras, teachers and 
 tutors, whose earnings do not exceed two thousand marks 
 a year. Insurance is optional with persons receiving more
 
 184 APPENDIX A 
 
 than two thousand and up to three thousand marks. Ser- 
 vants of the empire or of any state are excluded from this 
 insurance, as they are provided for under the government- 
 pension system for civil servants. The pension of a widow 
 is cancelled if she remarries. 
 
 Insurees are divided into five wage classes and the 
 weekly contribution amounts to 16, 24, 32, 40, and 48 
 pfennigs respectively, divided between the employers and 
 employees, the empire adding an amount equal to that 
 paid by both employers and employees. The insuree 
 pastes stamps upon a card each week. He may at any 
 time add on his own account an additional stamp of one 
 mark. These supplementary payments draw interest at 
 two per cent and the revenues are added to the insuree's 
 ultimate pension. 
 
 An additional system of insurance is provided by a law 
 of December 20, 1911, for insuring employees of all kinds 
 not included in the systems already described receiving 
 salaries up to five thousand marks yearly. This law is 
 designed to take care of office employees, clerks, and a 
 variety of minor help in enterprises of every kind who 
 could not be classified under the workingmen's insurance. 
 Pensions under this law for old age begin at sixty-five and 
 annuities are paid to widows and orphans after payment 
 for ten years by men and five years by women. The in- 
 surees are classified in nine grades, according to the sala- 
 ries received, and the monthly contributions range from 
 1.60 marks to 26.60 marks. The premiums are paid half 
 and hah* by insuree and employer.
 
 APPENDIX B 
 
 PROGRAMME OF THE SOCIAL-DEMOCRATIC 
 PARTY 
 
 The subjoined declaration of principles, adopted at the 
 National Convention of the Social-Democratic party at 
 Erfurt in 1891, has remained unchanged; 
 
 The economical development of the monied class brings 
 as a natural consequence the ruin of the small industries 
 which are based on the possession by the workman of the 
 implements necessary for production. It deprives the 
 craftsman of his implements of production and transforms 
 him into a person without property whilst the implements 
 of production become the monopoly of a comparatively 
 small number of capitalists and great land-owners. 
 
 Hand in hand with such a monopolization of the imple- 
 ments of production we see the supplanting of the small 
 scattered industries by huge industrial establishments, the 
 development of the tool into the machine, and a gigantic 
 increase in the productive capacity of human labor. But 
 all the advantages of such a transformation are monopo- 
 lized by capitalists and great land-owners. For the labor- 
 ing classes and the declining middle class for citizens 
 and farmers it means an ever growing uncertainty as 
 regards their existence, ever increasing misery, oppression, 
 slavery, abasement, and grinding down. 
 
 Ever larger grows the laboring population, ever larger 
 the army of the unemployed, ever deeper the abyss be- 
 tween those who exploit and those who are exploited, ever 
 more bitter the struggle between the classes which sepa- 
 
 185
 
 186 APPENDIX B 
 
 rates modern society into two hostile armies, that of the 
 capitalists and that of the laboring classes, and which is a 
 characteristic of all manufacturing countries. 
 
 The chasm between the proprietors and the working 
 class those who possess and those who are deprived of all 
 means being still more widened by the crises resulting 
 from the very nature of the capitalist's methods of produc- 
 tion, these crises grow persistently more extensive and 
 more destructive, raising the general uncertainty to the 
 rank of a normal condition of society and proving that 
 the productive forces have outgrown modern society and 
 that private possession of the means of production has 
 become incompatible with their appropriate use and full 
 development. 
 
 Private possession of the implements of production, 
 which was formerly a means of assuring to the producer the 
 ownership of his produce, has now become a means of ex- 
 propriating farmers, artisans, and small tradesmen and put- 
 ting the non-working capitalists and great land-owners 
 in possession of that which is produced by the workers. 
 Only by transforming capitalized private possession of the 
 means of production such as land, mines, raw materials, 
 tools, means of communication into collective posses- 
 sion and by making the production of goods a socialistic 
 production carried on for and by society can it be possible 
 to bring about a change whereby the big industry and the 
 ever growing productive capacity of co-operative labor 
 can become the possession of the classes hitherto exploited, 
 and be transformed from a source of misery and oppression 
 into a source of the utmost prosperity and all-round har- 
 monious improvement. 
 
 Such a social reform means not only the liberation of the 
 laboring classes but that of the whole human race, which 
 suffers under the present conditions. But this reform
 
 APPENDIX B 187 
 
 can only be undertaken by the working class, because the 
 other classes, in spite of their competing interests, all 
 stand on the ground of private possession of the means 
 of production, under which plan the maintenance of the 
 bases of present society is of great importance. 
 
 The struggle of the working class against capitalist ex- 
 ploitation is necessarily a political struggle. The work- 
 ing class cannot carry on its economical struggle and de- 
 velop its economical organization without political rights. 
 It cannot transfer the means of production from the few to 
 the possession of the whole of society without having 
 obtained political power. 
 
 To give unity to this struggle of the working class, to 
 cause it to be realized, and to point out its natural and 
 inevitable goal such is the task of the Social-Demo- 
 cratic party. 
 
 The interests of the working classes are identical in 
 every country which has capitalistic methods of produc- 
 tion. With the extension of the world's market, the posi- 
 tion of the workmen in each country is constantly growing 
 more dependent on the position of the workmen in other 
 countries. The liberation of the workmen is therefore an 
 undertaking in which the workmen of all civilized coun- 
 tries have an equal interest. Knowing this, the Social- 
 Democratic party of Germany feels and declares itself to 
 be at one with all workmen loyal to their class in other 
 countries. 
 
 The Social-Democratic party of Germany struggles, 
 therefore, not for the acquisition of new class privileges 
 and prerogatives, but for the abolition of the supremacy 
 of classes, as well as of the classes themselves, and for 
 equal rights and duties for all without distinction of sex 
 or birth. Starting from this point of view, the party com- 
 bats in the present society not only the exploitation and
 
 188 APPENDIX B 
 
 oppression of the salaried workers, but also every other 
 kind of exploitation and oppression, be it of a class, a 
 party, a sex, or a race. 
 
 Starting from these principles the Social-Democratic 
 party of Germany demands, first of all: 
 
 (1) A general and direct right to elect and vote with the 
 secret ballot, for every member of the empire over 20 years 
 of age irrespective of sex, for all elections and ballots. A 
 proportional electoral system; and, until the introduction 
 of that, a new legal division of the election district after 
 every census. Legislative periods of two years' duration. 
 Elections and ballots to be held on legal holidays. Sal- 
 aries for elected representatives. Abolition of every re- 
 striction of political rights except in the case of loss of civil 
 rights. 
 
 (2) Direct legislation by the nation by means of the 
 right of proposal and of rejection. Self-government of the 
 nation in empire, state, province, and municipal body. 
 Election of authorities by the people; responsibility of the 
 authorities. Annual tax assessments. 
 
 (3) General preparation for bearing arms. Militia in 
 place of permanent armies. War and peace to be decided 
 by the representatives of the nation. Settling of all inter- 
 national conflicts through arbitration. 
 
 (4) Abolition of all laws restricting or suppressing the 
 free expression of opinion and the right of association and 
 meeting. 
 
 (5) Abolition of all laws which prejudice woman's pub- 
 lic or private rights as compared with man's. 
 
 (6) Religion to be declared a personal matter. Aboli- 
 tion of all expenses out of public funds for religious or 
 church purposes. Church and religious bodies to be con- 
 sidered as private associations having absolutely inde- 
 pendent control of their affairs.
 
 APPENDIX B 189 
 
 (7) Secularization of the schools. Compulsory attend- 
 ance at the public common schools (Volksschulen). In- 
 struction, books, and food in public common schools, as 
 well as in the higher-education establishments for those 
 pupils, both male and female, whose capacity proves them 
 worthy of further education, to be gratuitous. 
 
 (8) Proceedings at law and legal assistance to be gratu- 
 itous. Judgment by judges elected by the nation. Ap- 
 peal in criminal cases. Indemnification for those who, 
 being innocent, are accused, arrested, or condemned. 
 Abolition of capital punishment. 
 
 (9) Gratuitous medical help, including midwifery and 
 medicine. Gratuitous burial expenses. 
 
 (10) Graduated increasing revenue and estate taxes for 
 payment of public expenses, in so far as the latter can be 
 covered by taxes. Graduated inheritance tax propor- 
 tioned to the amount of inherited property and the degree 
 of relationship. Abolition of all indirect taxes, custom 
 duties, and other similar measures by means of which the 
 interests of the mass are sacrificed to the interests of a 
 privileged minority. 
 
 For the protection of the working class the Social- 
 Democratic party demands, first of all, the follow- 
 ing: 
 
 (1) An effective national and international legislation 
 for the protection of workmen on the following bases : 
 
 (a) The establishing of a working-day of 8 hours' max- 
 imum duration. 
 
 (6) Prohibition of trades labor for children under the 
 age of 14. 
 
 (c) Prohibition of night work except in such branches 
 of industry the very nature of which, either for technical 
 reasons or reasons of common welfare, necessitates night 
 work.
 
 190 APPENDIX B 
 
 (d) An uninterrupted rest of at least thirty-six hours in 
 every week for every workman. 
 
 (e) Prohibition of the truck system. 
 
 (2) Supervision of all industrial establishments, study 
 and regulation of the conditions of work in town and coun- 
 try by a national labor bureau, district labor offices, and 
 labor chambers. Thorough industrial hygiene. 
 
 (3) Legal equality of country laborers and servants with 
 industrial laborers; removal of regulations concerning ser- 
 vants. 
 
 (4) Security of the right of coalition. 
 
 (5) Transfer of the entire workmen's insurance to the 
 state under effective co-operation of the workmen in the 
 management.
 
 APPENDIX C 
 WILLIAM II AND AMERICANS 
 
 SOMETHING responsive in the American temperament, 
 something uncalculating and light-hearted, appears to at- 
 tract a monarch living in a hot-house atmosphere, served 
 by the solicitous courtier, meeting usually, when he does 
 meet foreigners, diplomatists and statesmen who do not 
 lay aside the mask even with so candid a personality as 
 the Emperor, and with him perhaps least of all because 
 they are deep in the great political manoeuvres of the 
 Continent, futile and yet so absorbing. The American 
 seems to bring fresh air and thoughts less worn than 
 those commonly served up to him by the experienced in 
 dealing with kings. He finds refreshment in turning aside 
 from the preoccupations of administration and politics 
 and seeing how old questions look to the transatlantic ob- 
 server remote from the divisions of German thought, who 
 can expect nothing except an interesting hour. 
 
 The only American of distinction who has been refused 
 an audience with the Emperor is Mr. William J. Bryan. 
 This came about through Herr von Tschirschky, then for- 
 eign secretary, now ambassador at Vienna. The Emperor 
 probably never knew of the refusal. Herr von Tschirschky 
 was informed by the American ambassador that political 
 rivalries in the United States did not extend to social rela- 
 tions, and that, instead of being annoyed should the Em- 
 peror receive Mr. Bryan, the President would no doubt be 
 pleased. But Herr von Tschirschky would not take the 
 
 191
 
 192 APPENDIX C 
 
 risk of recommending to his Majesty an opponent of the 
 President's. The episode indicates the way a European 
 statesman looks upon opposition to the administration. 
 Herr von Tschirschkyonce rather complainingly remarked: 
 
 "It seems to me that most Americans who come to 
 Berlin want to talk with the Emperor." 
 
 "Yes, of course they do," replied the American ambas- 
 sador. " Every American feels that the Emperor belongs 
 partly to him." 
 
 It has been often something like a game between the 
 Emperor and his own appointees, the Emperor desiring 
 to meet interesting people freely and those around him 
 raising difficulties. 
 
 When the Emperor talks of American things he does 
 so with a full knowledge of the country, its government, 
 population, topography, railways, and political and social 
 perplexities. He idealizes all and sees the United States 
 in their potentialities as Americans do. This ardor of ap- 
 preciation in so convinced a monarchist indicates the men- 
 tal breadth of the Emperor as a man and his faculty of 
 projecting himself with sympathetic insight into a na- 
 tional system so sharply different from that of Germany. 
 The Emperor, in an endeavor to realize his conviction 
 that Germany and the United States may learn more 
 from each other than from other countries, has caused the 
 government to send about eighty representatives of the 
 public services to America to study specific questions, such 
 as cotton culture in the South, railway organization, edu- 
 cation, factory efficiency, and horse-breeding. 
 
 Since the unfortunate incident in Manila harbor between 
 Admirals Dewey and Diederich, the German Government, 
 and that is to say the Emperor, in general foreign policy 
 has taken the initiative in acts of good-will toward the 
 United States. This has not precluded the gentlemen of
 
 APPENDIX C 193 
 
 the foreign service from being tenacious negotiators when- 
 ever differences concerning trade have arisen between Ber- 
 lin and Washington, but they are presumed to bear in 
 mind always the Emperor's determination to allow no con- 
 troversy that might stir national passion to disturb rela- 
 tions which are meant to grow into something much more 
 than "correct." Various thought-out considerations sup- 
 port this consistent attitude. They may be mentioned in 
 what seems to be their order of importance. 
 
 First. The imposing strength and detached position of 
 the United States recognized by all powers, though some- 
 what more clearly perhaps by Germany than by any 
 other except Britain. 
 
 Second. The desire of British statesmen since the early 
 nineties to have a cordial co-operative understanding with 
 the United States. This desire in England has grown 
 stronger gradually and steadily and has been taken into 
 account by German statesmen. They believe that the 
 American people would be as ready as any other to form 
 an alliance for a temporary object should the need arise. 
 The German Government does not expect to form an alli- 
 ance with the United States as an instrument in European 
 politics, but it is of decisive importance to Germany that 
 the United States and Great Britain should not form a 
 close political understanding. Germany would, therefore, 
 hesitate to the last degree before taking an open positive 
 position against the United States in China, in South or 
 Central America, in Liberia, or in any part of the world. 
 The only possibility of her doing so would be some com- 
 pelling reason in Europe, and such a contingency appears 
 beyond probability. The European equilibrium must con- 
 stantly occupy the thoughts of German statesmen. Ger- 
 many is strong, but she has two powerful enemies and 
 even her friends and allies are jealous of her. Conse-
 
 194 APPENDIX C 
 
 quently she has no strength to employ in distant parts of 
 the world. Even the diversion of three or four army 
 corps in some South American adventure, might place her 
 in deadly danger. She must keep her strength on sea and 
 land intact for use in Europe, while her diplomacy must 
 contrive to prevent isolation. Germany simply expects 
 from the United States that they shall remain aloof from 
 the controversies of Europe, and that the American people 
 shall have openness of mind toward Germany, so that they 
 would judge neutrally the merits of any dispute in which 
 Germany might be engaged in Europe. 
 
 Third. The United States might join in the financial 
 mobilization of Germany. The United States is reckoned 
 upon to share in financing the great war in expectation, 
 always, of course, for a profit. Should Germany be at war 
 with England and France the money markets of London 
 and Paris would be closed against her. Neither Vienna, 
 nor Rome, nor Saint Petersburg has much money to lend, 
 and the nations of which those cities are capitals might also 
 be allies of one side or the other in the war. Germany would 
 have against her two of the richest peoples in the world. 
 The only other rich people are the Americans, looked upon 
 as bold investors and speculators. They would be ex- 
 pected to grasp the financial bargains the Germans would 
 be able to offer them. They would take them all the 
 more readily if they had good-will toward Germany and 
 confidence in German character and German soundness.
 
 INDEX
 
 INDEX 
 
 Allgemeine ElektricitSts-Gesell- 
 
 schaft, 92. 
 
 Alsace-Lorraine, 19, 99. 
 Altenburg, 75. 
 Anhalt, 99. 
 Artisans, training of, 49, 52; future 
 
 of, 55, 56. 
 Austria, 50, 165. 
 
 Baden, its navigation lines, 7; rail- 
 ways of, 19. 
 
 Balfour, Mr. Arthur, 159. 
 
 Banks, the Dresdner, 5; the Deut- 
 sche and other banks, 91. 
 
 Bavaria, 3, 19, 37, 84. 
 
 Berlin, continuation schools in, 43, 
 45; its labor exchange, 62-65; 
 banks, 91; land values in, 113; 
 academy of the Social Demo- 
 crats at, 125; elective values in, 
 129; its miniature country- 
 places, 172-174. 
 
 Berlin Labor Exchange, 62-68. 
 
 Bethmann-Hollweg, Herr von, 114. 
 
 Bismarck, Prince, on the doctrine 
 of the right to work, 11; on state 
 ownership of railways, 12, 13; 
 quoted, 22; on emigration, 54- 
 56; his schemes of government 
 supervision, 56-58; his views on 
 socialism, 117-119, 136; his ad- 
 vice to the Emperor, 145. 
 
 Bosnian - Herzegovinian annexa- 
 tions, 165. 
 
 Bremen, 24, 113. 
 
 Bryce, Mr. James, 16. 
 
 Bulow, Prince, 122. 
 
 Bundesrat, on railway rates, 19, 21. 
 
 Bundesraih, the, 162. 
 Bureaucracy, the German, 14, 
 16. 
 
 Carlyle, Thomas, 41. 
 
 Cassel, 75. 
 
 Charlottenburg, 59, 85. 
 
 China, 18. 
 
 Civil service, 14-16, 121; caste 
 spirit of, 127. 
 
 Cleveland, President, 157. 
 
 Collective ownership, 2, 7, 8, 12. 
 
 Cologne, unemployment insurance 
 in, 75-78. 
 
 Continuation schools, S3; growth 
 of, 41, 42; compulsory attend- 
 ance at, 43, 44, 47, 48. 
 
 Dawson, W. H., 119; quoted, on 
 
 Wagner, 138-143. 
 Delagoa Bay, 155, 157. 
 Delbrueck, Herr, on syndicates, 
 
 97,98. 
 
 Dietrich, Herr, 110. 
 Dortmund, 113. 
 Dresden, 75. 
 Dusseldorf. 60, 75, 80, 113. 
 
 Elberfeld, 75. 
 Erlangen, 75. 
 Emigration, 54; Bismarck on, 55, 
 
 56. 
 
 Emperor, the (see William II). 
 Empress of Germany, her interest 
 
 in domestic work, 40, 41. 
 England, 24, 39, 123, 133, 153, 163, 
 
 164, 168. 
 Essen, 60, 113. 
 
 197
 
 198 
 
 INDEX 
 
 Fiacus, the Prussian, 57, 99. 
 
 France, 8, 9, 33, 51, 70, 161, 164, 
 165, 168. 
 
 Frankfort, 104, 175. 
 
 Franklin, Benjamin, 39, 40. 
 
 Frederick the Great, 14, 16. 
 
 Frederick William II, 10 (see Prus- 
 sian common law). 
 
 Fuhrmann, Herr, 110. 
 
 Gamp, Baron von, 110. 
 
 Germany, 3, 6, 7, 8; civil service 
 in, 14, 15; spirit of, 41; immi- 
 grants and emigrants, 53-56; in- 
 dustrial and commercial expan- 
 sion, 54, 56, 57; the unemployed 
 in, 69; influence of society and 
 wealth on the government, 121; 
 change of institutions in, 133; 
 idea of war distressing to, 153, 
 154; its military prominence, 
 165; development of its navy, 
 155-167. 
 
 Geyer, Heir, 110. 
 
 Great Britain, 8, 34, 51, 153, 155, 
 157, 163, 164, 165, 166, 167. 
 
 Grimmelshausen, 154. 
 
 Gymnastic system, German, 175, 
 176. 
 
 Hamburg, 24, 113. 
 Hanover, 45. 
 
 Hatzfeld, Prince von, 110. 
 Hesse-Nassau, 45. 
 Hohenlohe, Prince, 156. 
 Hohenzollerns, 9, 14, 40, 116. 
 Hollman, Admiral, 156. 
 Holstein, Baron Fritz von, 149. 
 Honeymoon, the walking, 175. 
 
 Immigration, 53, 54. 
 
 Imperial Gazette, The, Kriiger tele- 
 gram, 156. 
 
 Industrial and commercial expan- 
 sion, 56. 
 
 Institutions, German, changes in, 
 
 133, 135. 
 Italy, 50, 161, 168. 
 
 Jameson raid, the, 155. 
 
 Japan, 166. 
 
 Jastrow, Herr Dr., 85, 86. 
 
 Karlsruhe, 75. 
 
 Kerschensteiner, Dr., 38. 
 
 Kiel, 113. 
 
 Kingsley, Charles, 41. 
 
 Koenigsberg, 113. 
 
 KrUger, President, 155; despatch 
 
 from Emperor William, 156. 
 Krflger telegram, the, 155. 
 Krupp gun and armor works, 92. 
 
 Labor exchanges, 58; at Berlin and 
 other cities, 59, 60; use of public 
 funds, 61; at Berlin, 62-65. 
 
 Laborers, foreign agricultural, 49, 
 50. 
 
 Land, increased value of, 109; pro- 
 posed tax on, 110-114. 
 
 Lanz Machinery Company, Mann- 
 heim, its system of insurance, 81, 
 82. 
 
 Lassalle, Ferdinand, 56, 137. 
 
 Leipsic, 78. 
 
 Levant, the, 17; railway rates in, 
 28. 
 
 Liibeck, 24, 75. 
 
 Magdeburg, 60, 75. 
 
 Mahan, Captain, his " Influence of 
 Sea Power on History," 161. 
 
 Marschall, Baron von, 156. 
 
 Marx, 137. 
 
 Mayence, 75. 
 
 Mecklinburg-Strelitz, 3, 7. 
 
 Moeller, Herr, quoted, on syndi- 
 cates, 96, 98. 
 
 Moltke, von, 160. 
 
 Momseu, Herr, 110.
 
 INDEX 
 
 199 
 
 Morocco, 18, 165. 
 Muller-Meiningen, Dr., 110. 
 Munich, 38, 39, 75. 80. 
 
 Nachtasyl, 71. 
 
 Napoleon, 153, 165. 
 
 Nature-cult, the German, 174, 175. 
 
 Navy, the German, one argument 
 for, 18; effect of the Kriiger tele- 
 gram on, 155; need of, 160, 161; 
 seizure of the Bundesrath, 162; 
 Great Britain affected by, 166, 
 167. 
 
 Nehbel, Herr, 110. 
 
 Oldenburg, 3. 
 
 Paasche, Dr., 110. 
 
 Persia, 18. 
 
 Pitt, the elder, 164. 
 
 Poland, 50. 
 
 Posadowsky-Wehner, Count, on 
 unemployment insurance, 83; on 
 syndicates, 95, 96. 
 
 Posen, 45. 
 
 Pretoria, 155. 
 
 Prussia, state incomes of, 3-5; its 
 policy toward state ownership, 
 4-6; common law of, 9-11; rail- 
 way administration, 13, 20, 21; 
 continuation schools in, 44; atti- 
 tude toward syndicates, 97, 98; 
 electoral power in, 130. 
 
 Prussian Ministry of Commerce, 
 its view on manual training, 38, 
 44. 
 
 Quedlinburg, 75. 
 
 Railway systems, German, state, 
 13-15; the government's use of 
 private and state-owned, 18-32; 
 exceptional rates, 22-25; rail 
 and sea rates, 26-28; dividends 
 of, 29, 30. 
 
 Reichstag, the, 54; unemployment 
 insurance, 82; increased land 
 values, 109-115; criticism of 
 Emperor, 122; Social-Democrat 
 elections, 131, 133; adopted 
 naval programme, 162. 
 
 Reinickendorf, 112. 
 
 Rendsburg, 59. 
 
 Reuss, the elder, 3. 
 
 Rheinbaben, Baron von, 89. 
 
 Roberts, Lord, 166. 
 
 Rodbertus, 137. 
 
 Roesike, Herr, 110. 
 
 Rostock, 75. 
 
 Ruskin, 41. 
 
 Russia, 16, 24, 50, 132, 160, 165. 
 
 Saxony, 3, 7, 19. 
 
 Schaeffle, 137. 
 
 Schaumberg-Lippe, 3. 
 
 Schmoller, Gustav, 8; on syndi- 
 cates, 98, 99, 102; economic 
 philosophy of, 119, 136, 137. 
 
 Schoenberg, 137. 
 
 Schwarzburg-Rudolstadt, 3. 
 
 Schwarzburg-Sonderhausen, 8. 
 
 Schwerin-Loewitz, Count von, 110. 
 
 Sieg, Herr, 110. 
 
 "Simplicius Simplicissimus" (see 
 Grimmelshausen), 154. 
 
 Skarzynski, Dr. von, 110. 
 
 Socialism, monarchical enterprises, 
 1-7; and Bismarck's plans for, 
 56; and progress of, 117; and 
 strength, 128; principles of, 137; 
 aristocratic, 122, 127; working- 
 men's, 123; two schools, 132. 
 
 Social-Democratic party, 1, 2; on 
 compulsory school attendance, 
 43; on syndicates, 104-106; 
 "social offence" of its members, 
 122; power of, 123; its organ- 
 ization, 124-126; agitations of, 
 128, 129; election results, 131; 
 programme of, 131, 132.
 
 200 
 
 INDEX 
 
 South Africa, the German in com- 
 petition in, 17; rate-books, 28. 
 
 South America, Germans in, 13. 
 
 Spahn, Dr., 110. 
 
 Stettin, 113. 
 
 Strasburg, 75, 79. 
 
 Stucklen, Herr, 110. 
 
 Sudekum, Dr., 110. 
 
 Syndicates, German, coal and iron, 
 5, 93; friendly attitude of the 
 government toward, 18; their 
 extent, 90; participation in of 
 banks, 90, 91; contracts, 92, 93; 
 industries controlled by, 94; 
 state and imperial government 
 members of, 97; forced combina- 
 tion of potash-mine owners, 99, 
 100; creation of government, 
 101-104; good-will of various 
 interests, 107. 
 
 Thuringia, 112. 
 Times, The, 41, 156, 157, 158. 
 Trade policy, national, 17-19. 
 Trade competition, 166. 
 Trade-schools, 33; pupils' fitness 
 
 for, 35-37. 
 Trades-unions, insurance schemes, 
 
 78-80; group-consciousness, 126. 
 Transvaal, the, 156, 159. 
 Turkey, 18. 
 
 Unemployment insurance, govern- 
 ment policy toward, 73-75; 
 cities where it is in operation, 75- 
 80; Lanz Machinery Company 
 
 system of, 81, 82; action of the 
 Reichstag, 82; Bavaria's com- 
 mission on, 84. 
 
 United States, 5, 8, 15, 28, 32, 34, 
 51, 70, 92, 106, 123, 133, 153, 
 161, 166. 
 
 Viktoria, 40. 
 
 Wagner, Adolph, 8, 102; economic 
 philosophy of, 119, 120, 136, 137; 
 his programme for political ac- 
 tion, 140-143. 
 
 Weber, Dr., 110. 
 
 Werder, cherry-trees at, 176. 
 
 Wermuth, Herr von, on taxing the 
 increase in land values, 109-115. 
 
 Wernigerode, 75. 
 
 Westphalia, 60. 
 
 Wiemer, Dr., 110. 
 
 Wiesbaden, 59, 60. 
 
 William I, 120, 136. 
 
 William II, on the right of the 
 state to take over mines, 4, 5; 
 his passion for efficiency, 16; his 
 book-binding, 40; democrat and 
 monarchist, 116; monarchical 
 socialist, 119-121; his frankness, 
 145; his attention to duties, 146, 
 147; great vitality of, 148, 149; 
 his administration, 149-151 ; im- 
 pressed by Captain Mahan's 
 "Influence of Sea Power on His- 
 tory," 161. 
 
 Wright, Orville, 148. 
 
 WUrtemburg, 3, 7, 19.
 
 HC
 
 ji " "," "" Mi ^ ii ii 111 ii 111 ii ill II Hill mi [|