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THE FUTURE OF GERMAN 
 INDUSTRIAL EXPORTS 
 
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 http://www.archive.org/details/futureofgermaninOOherzrich 
 
THE FUTURE OF GERMAN 
 INDUSTRIAL EXPORTS 
 
 Practical Suggestions for Safeguarding 
 
 the Growth of German Export 
 
 Activity in the Field of Man- 
 
 ufactures After the War 
 
 BY 
 S. HERZOG 
 
 CONSULTING ENGINEER 
 
 THE GERMAN PLAN TO DOMINATE THE TRADE OF 
 
 THE WORLD, DRAWN UP BY ONE OF 
 
 THEIR LEADING ENGINEERS 
 
 With an Introduction by 
 Herbert Hoover ^ Vernon Kellogg^ and Frederic C. Walcott 
 
 TRANSLATED FROM THE ORIGINAL GERMAN BY 
 
 M. L. TDRKENTINE 
 
 Garden City New York 
 
 DOUBLEDAY, PAGE & COMPANY 
 
 1918 
 

 w 
 
 COPYRIGHT, 19 1 8, BY 
 
 DOUBLEDAY, PAGE & COMPANY 
 
 ALL RIGHTS RESERVED, INCLUDING THAT Of 
 
 TRANSLATION INTO FOREIGN LANGUAGES, 
 
 INCLUDING THE SCANDINAVIAN 
 
PREFACE 
 
 Through many years of activity as an industrial 
 expert the author has gained an insight into the 
 conditions of German industry and into its export 
 activity. He has had an opportunity to compare 
 its development and efficiency with those of other 
 foreign industries. The War has created conditions 
 and will be followed by circumstances which will 
 shape and determine Germany's export trade in the 
 future. These conditions must be taken into ac- 
 count and suitable measures adopted in preparation. 
 New trails will have to be blazed if we are to over- 
 come the obstacles ahead. An enormous task, 
 worthy of the German people is to be performed. 
 The Author ventures to hope that the present work 
 may be able to contribute a little toward its accom- 
 plishment. 
 
 The Author. 
 Zurich, in the late summer of 1915. 
 
 382789 
 
GERMAN AUTHOR'S SYNOPSIS 
 
 PAGE 
 
 A. Introduction 4 
 
 B. Factors Influencing or Controlling Exports 34 
 
 1. Adaptability of the Export Industry . 34 
 
 2. Attitude of Foreign Countries . . 37 
 
 3 . Emigration of Domestic Industries . 50 
 
 4. Economic Compensations .... 96 
 
 5. State Protection 106 
 
 6. Industrial Protective Unions . . 116 
 
 7. Commercial Treaties 154 
 
 8. Ways of Denationalizing German 
 
 Goods 170 
 
 9. Competitive Ability • .... 184 
 10. Capital r* • 190 
 
CONTENTS 
 
 PAGE 
 
 Preface v 
 
 Author's Synopsis vi 
 
 Introduction xi 
 
 CHAPTER I 
 
 The Grand Strategy of the German Commercial 
 Offensive 4 
 
 All Commerce a War — ^The World a Battlefield— German System and 
 Organization Preparmg for the Campaign — Industrial Genius, the 
 "Terrible Weapon" of Germany — ^The World's Hatred as a Liability — 
 The Crime of Transplanting German Industries — ^The Suppression of 
 Scientific Intercourse. 
 
 CHAPTER II 
 Forging the Thunderbolt 18 
 
 Safeguarding Strategic Secrets — ^The "Shining Success" of "Un- 
 thinkable Authority" — Mobilizing the Scientists — Inventing Substi- 
 tutes for Allied Materials — Checkmating Nature — "Treaties," a 
 Temporary Expedient — Meeting the World's Prejudice with Guile — 
 Denationalization, a Commercial Masquerade — Soothing Propaganda 
 — Meeting the American Menace. 
 
 CHAPTER III 
 The Camouflage of Commerce .... 34 
 
 The Impenetrable Disguise of the Diisseldorf Drummer — Faking the 
 Appearance of Friendly Business — ^The High Art of Imitation — 
 Relentless Retribution Upon Allied Interference — "Defence Statistics," 
 the Barometer of the Battle — Strategic Use of the Boycott and the 
 "Corrective" Embargo. 
 
vui Contents 
 
 CHAPTER IV 
 "Indispensable Industries" 50 
 
 Imperial Military Control to Insure Exclusive Possession of Strategic 
 Industries — ^The German Plan to Eliminate the Freedom of Science 
 and Property — Potash a Prussian Monopoly — ^The Inimitable Dye- 
 stufFs and Chemicals — Principles of the Embargo Battle — Some 
 Definitions of "Indispensable''~The High Road to Technical Super- 
 iority — ^An Infallible Price-cutting Device. 
 
 CHAPTER V 
 
 The Golden Guarantee and the Discipline of 
 Labour 66 
 
 The Fusion of German Business and the German Army — ^The Benevo- 
 lence of State Supervision of Industry — Raw Material, the Tale of 
 Available Ammunition — Surplus Stocks, the "Reserves'* of the Trade 
 War — Subsidies and Compensations — Levying Contributions on All 
 Business — ^The Guarantee Fund — Cheap Materials — ^The Composi- 
 tion of the General Staff — Crushing "Unthinkable" Labour Disputes — 
 Stopping Leaks to the Blackhst. 
 
 CHAPTER VI 
 The Chinese Wall of Secrecy ... 82 
 
 Hounding Allied Money Out of Germany! — "Capital Does Not Exist 
 Independently of the State" — Prods to Speed Up "Progress'* — Com- 
 pulsory Reports of Discoveries — ^The Veil of Mystery to Enshroud 
 German Inventions — "Special Privileges'* for "Protective" Industries 
 — Drafting Labour for Life — Strict Exclusion of Foreigners from 
 Teuton Enterprises — ^The Ban on Entente Capital. 
 
 CHAPTER VII 
 
 Diplomacy, the Advance Guard of the Export 
 War 96 
 
 Private Advantage and Hidden Rebates, the Basis of German Business 
 — Obtaining Secret Privileges Abroad — Confidential Exchange of 
 "Compensations" — A Tempting Bargain in Rebates and Premiums 
 — ^The Prize Bait of the Prussian Ambassador. 
 
Contents ix 
 
 CHAPTER VIII 
 A Feudal System of Commerce .... io6 
 
 The Panacea of Arbitrary Power — ^The Unquestioned Command of 
 Supplies — Dispersing Workmen's Unions-^The Universal Levy on 
 Capital and Labour — -State Ownership of the Individual — ^Jurisdiction 
 Over the Minds of Scientists. 
 
 CHAPTER IX 
 Organization of the German Export Army ii6 
 
 The Army Corps of the Commercial Offensive— Industrial Divisions 
 in Action — The Board of Strategy — The General Staff — Tactics of the 
 Scientific Division — Drafting and Drilling the Inventors — ^Assembling 
 the Fruits of Genius — Capturing Foreign Inventions — ^The Industrial 
 Divisfion, the Compulsory Information Bureau. 
 
 CHAPTER X 
 The Export Army in Action. . . . . 132 
 
 The Ubiquitous Commercial Division — ^The Dictator of the World's 
 Pricps — In Charge of the War Chest — ^The Espionage Headquarters — ^ 
 The Men Behind the Guns — ^The Supreme Court of Creation — Launch- 
 ing Propaganda — The Listening Post of Kultur — ^The Automatic 
 Collection Agency — ^The Money Kings' Campaign. 
 
 CHAPTER XI 
 
 A Study in Scarlet. The Proposed Treaties i 54 
 
 Blood and Bombast — ^The Kaiser's "Minimum Demands" — ^The 
 Exclusive Favouritism of Germany — ^Unlimited Right to Take Allied 
 Materials — German Supervision in Allied Countries — Control of the 
 Allied' Freight Rates — Punishment of Hostile Boy cotters — Restoring 
 the "Stolen" Patents — Allied Guarantees Against "Insufferable 
 Discrimination" — ^A Warm Welcome for the "Federation." 
 
 CHAPTER XII 
 
 The Denationalization Dodge. An Antidote 
 TO Hatred 170 
 
 Commerce Incognito — The Stratagem of Deceit — Outwitting the Allied 
 P.iyers — ^A Severe Lesson in Customs Procedure — Propaganda Under 
 Cover — A Flank Movement Through Neutral Ground. 
 
X Contents 
 
 CHAPTER XIII 
 
 The Hereditary Workmen of Combined In- 
 dustries 184 
 
 The Ban on the Small Business Man — "Permanent" and Hereditary 
 Labour — ^The Crime of Incompetence — A Drastic Remedy for Bargain 
 Sales. 
 
 CHAPTER XIV 
 The Curb on Capital 190 
 
 The Kaiser*s Complaint: — ^The Predatory Allies Violate Private 
 Property! — ^The Evil Influences of Independence — ^The Blessings of 
 Financial Bondage — German Money for Germany — Relation of 
 Investments to Invasion. 
 
INTRODUCTION 
 
 **If there is anything to be gained by being hon- 
 est, let us be honest; if it is necessary to deceive, let 
 us deceive." Thus wrote Frederick the Great in the 
 middle of the i8th Century — the man who laid 
 the foundation of Pan-Germanism, which this 
 world war was expected to achieve. Not content 
 with dominion by force of arms, we find Germany 
 plotting for commercial supremacy, with that in- 
 solent disregard of the rights of others and that re- 
 sort to deception that has characterized all her 
 policies since Frederick the Great's reign. 
 
 The book of which this is a translation was written 
 by an eminent German engineer and economist, 
 and pubHshed in 191 5, during the second year of 
 the war. This book presents ingenious plans for 
 driving home commercial victories at the expense of 
 the trade of other countries. Like all of Germany's 
 plans aflFecting other nations, the entire conception 
 depends upon deceit and a superselfishness; not one 
 word touching upon reciprocity, not one word in 
 recognition of any international obligations. 
 
 It was obviously written exclusively for home 
 consumption, and not intended for those outside the 
 Iron Circle. It should be a warning to us. We 
 should study it with care, and keep our eyes and ears 
 
xii Introduction 
 
 alert for other warnings of this sort, that in peace 
 we may be prepared to meet this design of commer- 
 cial rapine, this crushing of the industries of other 
 countries. 
 
 For forty years the Germans have been plotting to 
 realize their dream of Pan-Germanism — eventual 
 world conquest and dominion. For two genera- 
 tions they have been thinking in terms unknown or 
 little understood by an innocent and unsuspecting 
 world. The Prussian philosophy that might makes 
 right, that the State is supreme, has completely 
 possessed the ruling and upper classes of Germany, 
 both miHtary and commercial, until deception and 
 fraud form the background of their most important 
 international relations and undertakings. They have 
 made Germany an inherently dishonest nation. 
 
 Their military plans were successfully concealed 
 for years, and when their dreams of conquest did 
 outcrop occasionally, there were few with an inti- 
 mate enough knowledge of the complete premedi- 
 tated and systematic degeneration of the German 
 official character to read the handwriting on the 
 wall. 
 
 Well organized and comprehensive espionage and 
 insidious German propaganda have been at work 
 for two generations to plan the success of German 
 victories. In the early 90's of the last century, the 
 German Volkschule was organized to teach the 
 masses absolute subserviency to the upper and gov- 
 erning classes, whose education diverged from that 
 of the lower classes at the age of seven or eight. 
 
Introduction xiii 
 
 The education of these two classes has been so di- 
 vergent for thirty years that the effects are now 
 clearly traceable in the younger men in the Army, as 
 contrasted with the members of the Landsturm 
 Army. The Landsturm men are much more hu- 
 mane, and have a restraining influence in the Army. 
 They have not been guilty of the excesses that are 
 chargeable to the younger men. The younger men, 
 schooled from infancy under the new system to obey 
 orders in a machine-like way, under Prussian leader- 
 ship, have become so ruthless, so cruel, that the en- 
 tire civilized world looks on aghast. 
 
 German rule means the breaking-down of all order, 
 the exchange of personal liberty and national free- 
 dom for force, of right for might, of justice for the 
 mailed fist. 
 
 The world should have been forewarned. Books 
 were written, maps constructed, by well known Ger- 
 man authorities for the enlightenment of the Ger- 
 man people, and these books reached the outside 
 world, but civiUzation, accustomed to the pursuits 
 of peace, turned a deaf ear, and is now paying the 
 penalty for refusing to see and hear. 
 
 Now another conception comes out of the heart 
 of Germany, that threatens the commercial interests 
 of unsuspecting nations — carefully thought out, with 
 characteristic German thoroughness, openly advo- 
 cating the breaking down of all business ethics, re- 
 lying upon trickery and circumvention to gain 
 their end. This promises to stoop at nothing, from 
 national dumping of goods to crush competition to 
 
XIV Introduction 
 
 false labels and disguise of the origin and the break- 
 ing of contracts that prove disadvantageous to the 
 German. 
 
 Let the manufacturing and banking interests and 
 the labouring and professional classes of all nations 
 be warned in time to devise antidotes and counter 
 attacks to the Machiavellian devices of a class gone 
 mad with lust of conquest, deliberately plotting to 
 fatten itself upon the life blood of other peoples even 
 after the war. Let us consider in making peace what 
 protection we can give to the commercial existence 
 of the freed nations. 
 
 Herbert Hoover 
 Vernon Kellogg 
 Frederic C. Walcott 
 U. S. Food Administration, 
 Washington, D. C. 
 
NOTE TO THE READER 
 
 The contents and interesting points are summar- 
 ized in one page preceding each chapter. By this 
 editorial note it is hoped to help the reader visualize 
 and more fully realize the significance of the text 
 written in true Teutonic style. 
 
 WW 
 
THE FUTURE OF GERMAN 
 INDUSTRIAL EXPORTS 
 
/N THIS chapter the author 
 blandly admits that after the 
 war the entire world will regard 
 the Germans with a hatred so bitter 
 that even the commercial treaties 
 they expect to dictate and write in 
 blood will not prevail to open a cor- 
 dial channel for their industrial 
 products. 
 
 Notwithstanding this the Germans 
 still plan and expect to dominate 
 the trade of the world. For trade 
 to them is simply another form of 
 combat to the death. And for this 
 they are organized and prepared. 
 
 Their export trade in its maximum 
 proportions is to be forced down the 
 throats of America and the Allies. 
 The invincible weapon is to be the 
 *' unsurpassable goods" produced by 
 ' 'indispensable Indus tries, ' ' — mo- 
 nopolies conducted under military 
 system, rigidly confined to German 
 soil, and guarded by an impene- 
 trable veil of secrecy. 
 
CHAPTER ONE 
 
 THE GRAND STRATEGY OF THE GERMAN 
 COMMERCIAL OFFENSIVE 
 
 All Commerce a War — ^The World a Battlefield — German Sys- 
 tem and Organization Preparing for the Campaign — Industrial 
 Genius, the "Terrible Weapon" of Germany — ^The World's 
 Hatred as a Liability — ^The Crime of Transplanting German 
 Industries — ^The Suppression of Scientific Intercourse. 
 
 A, Introduction 
 
 SUCCESS can only be obtained through sys- 
 tematic methods and thorough preparation. 
 The mihtary and economic accomplishments 
 of Germany form the clearest proof for this assertion. 
 The necessity for its application is evident wherever 
 results are to be obtained without waste of energy, 
 by the shortest route and with the least expenditure 
 of material, mental, and financial power. Eyes 
 wide open to the situation, and a mind intent on the 
 goal are essentials of success. Far-sightedness and 
 care form its foundations. The more carefully these 
 virtues are cultivated, the firmer becomes the foun- 
 dation, and more profitable the whole enterprise. 
 
 Nevertheless, the strongest buildings with the 
 firmest foundations are liable to give way before the 
 interference of outside forces, whose origin and pres- 
 
Strategy oj the German Commercial Offensive 5 
 
 ence could not be reckoned with during the con- 
 struction. In such cases the builder adopts the 
 quickest expedient possible, broadening and strength- 
 ening the foundations to support the props and 
 stays which will counteract the outside forces. A 
 manufacturer is invariably resourceful in perfecting 
 his own processes, but in the practice of economy he 
 is not, in spite of the fact that in the latter case as 
 in the former the same fundamental principles hold 
 good even if the nature of the expedients within 
 command is different. 
 
 INDUSTRIAL GENIUS, THE "TERRIBLE WEAPON'' OF 
 GERMANY 
 
 One of the strongest girders which has been 
 wrought into the fabric of the German Empire, 
 whose trustworthiness, though suspected by many, 
 has been recognized by the whole world only through 
 the fortunes of war, is Germany's genius in industry. 
 A nation which was once a leader, but which in the 
 course of time became backward, even in industry, 
 thought herself so threatened by the potency of 
 this economic weapon that she kindled the most 
 terrible and fearful of all world conflagrations. But 
 this genius has proven impregnable in the face of all 
 attacks. Its might and sharpness are now freely 
 admitted by the enemies who thought to shatter it. 
 Because the weapon is so terrible, because German 
 industrial genius is showing itself superior to all 
 opposition even in military affairs, hostile ingenuity 
 in the future will direct itself before all else toward 
 
6 The Future of German Industrial Exports 
 
 undermining this mighty bulwark of the German 
 pile. After all, we can not blame the enemy so 
 much for that, but we must make his mole-hill labour 
 thoroughly unpleasant for him and must prevent his 
 getting at the bulwark's foundation. Industrial 
 exportation, however, forms the most important part 
 of this foundation. German manufacturing skill, 
 which surely can not be accused of having lain 
 dormant in the last four decades, appears to the 
 world in the terrible times of War like a giant who 
 suddenly begins to stretch himself with unsuspected 
 vigour, after a long rest; like a mountain giant who 
 rends the massive rocks as he lifts himself to his full 
 height. The foundation must be broad and strong 
 if it is to permanently and safely carry the new 
 construction resting upon it. German skill in 
 industry and manufacture has developed within it- 
 self unexpected versatility and strength since the 
 outbreak of the war — new powers ever springing 
 magically from the old — and all built upon the same 
 foundation! To correspond with such a sudden ex- 
 pansion that foundation must be broadened and made 
 firm. The clue to this is offered by the Export Trade! 
 There lies in the air, there lies unexpressed on the 
 lips, there leaps constantly from mind to mind the 
 question : What of Germany^ s industrial exports after 
 the War ? 
 
 THE world's hatred AS A LIABILITY 
 
 For peace will come, yet hate will remain in the 
 hearts of those who have conjured up this bloody 
 
Strategy of the German Commercial Offensive J 
 
 struggle and who are inferior therein, morally, physic- 
 ally, and economically. Hate is the worst of all 
 competitors; for it can stop all purchasing of supplies 
 by denying itself even the most indispensable articles, 
 at least for the time being; and when there is at 
 length no other alternative, it will order what it 
 must have, even perhaps at ruinous prices, from every 
 other producer, rather than from the German, 
 "Study your neighbour and you can excuse his 
 faults"; that is the watchword for the future. Its 
 application will be elucidated farther on. To 
 overlook the self-love of another is always difficult, 
 for self-love is egoistic; to avoid offending the self- 
 love of hate, the greatest in the world (for it feeds 
 forever on a delusion), is a colossal task. Yet it 
 must and assuredly will be performed; (what must 
 be done the Germans can do; that is a lesson of this 
 war). To outline the nature and extent of this one 
 problem, among many which are to be discussed 
 farther on, will be a task of these observations. 
 
 The sages and histories teach that after the old 
 Germans made peace and buried their battle-axes, 
 they also prepared an enduring grave for their 
 hatred. In this custom as in other respects the 
 Germans of to-day have remained true to their 
 forefathers. But other nations feel differently. 
 Time is indeed the great healer, but German industry 
 has no time to wait. It must open up for its sud- 
 denly awakened powers new and greater fields of 
 activity; it can not fold its hands in its lap until a 
 new generation has grown up in the land of its 
 
8 The Future of German Industrial Exports 
 
 former opponents, a generation which knows only 
 from books the horrors and losses of war. For that 
 is how long it would take! Well is it said that the 
 nations of to-day can no longer get on without each 
 other, that they are interdependent. All the more 
 difficult will mutual intercourse become, for it will 
 be dictated by the force of circumstances, and coer- 
 cion only adds bitterness to the unbearable. He who 
 reckons without this factor in the future, reckons 
 amiss. Germany's export trade must gird itself to 
 cope with this condition. It must enter hatred as a 
 liability. In order to balance this entry it must have 
 at its command the asset of ever increasing material 
 and mental vigour and foresight. That will be 
 difficult. But difficulties only add zest to the accom- 
 plishment. 
 
 To the moot question of the future of German in- 
 dustrial exports, the stock solution offered every- 
 where is that: *'This must be left to the future 
 treaty of peace and to the commercial treaty then 
 dictated. '^ The answer was easy. Nevertheless the 
 solution is false, even apart from the fact that the 
 par value of treaties has reached nil and will not im- 
 mediately recover from its slump — using this word 
 in both a material and ethical sense. The most 
 recent past teaches that: "He who would keep 
 treaties does not need them, he who chances them — 
 takes his chances. '^ To be sure, economic questions 
 will play a great role in the peace negotiations. But 
 upon the new commercial treaties which will then 
 come, Germany's export trade can scarcely base its 
 
Strategy of the German Commercial Offensive 9 
 
 sole reliance. Commercial treaties will — ^perhaps — 
 open new paths; German industry itself must make 
 these practicable. Even the most favourable cus- 
 toms arrangements are of no value if for chauvinistic 
 or economic reasons the anticipated buyer will take 
 nothing from his former enemy. He will scarcely 
 listen to a ''Must'M 
 
 The experts preach: ^^International commerce 
 can not cease permanently; international exchange 
 of goods must begin again after the war." It will 
 probably be thus; yet who will guarantee that in 
 future Germany's manufactures will not be elimin- 
 ated or at least in the main excluded from inter- 
 national commerce through the passive resistance 
 of her present enemies, of whom there are, to be 
 sure, more than is necessary and profitable? This is 
 possible, in fact almost probable, wherever it can be 
 done! What was not attainable by force of arms 
 or by an unheard-of, even if vain, starvation policy 
 — the beating down of the Germans — ^will be at- 
 tempted by the slow poison of the unconfessed boy- 
 cotting of German products. Against that, also, 
 we must be forearmed, even at the risk of our 
 preparations proving unnecessary, because things 
 turn out better than can be anticipated. Optimists 
 will probably point out that the manufacturing in- 
 dustry of Germany can do things outside the capa- 
 city of any other country. As a classical example 
 in support of this assertion they will cite among 
 others, the case of the German chemical industry, 
 and the embarrassment in which her enemies found 
 
lo The Future of German Industrial Exports 
 
 themselves when no longer able to import certain 
 chemical products from Germany. In cases of su- 
 periority like this, measures may perhaps easily be 
 framed to meet the open or concealed attacks of her 
 enemies upon her export trade — measures, speaking 
 unambiguously, which will put the screws on them. 
 Compulsion can be exercised in war, never in peace, 
 otherwise it is not peace at all. Commerce which is 
 supported at the point of the bayonet can not be 
 maintained permanently; it is in its essence unsound. 
 Whoever reads a startling article in the leading 
 English technical magazine, discussing measures to 
 be used in future against German industry, will be 
 convinced that only with the making of peace will the 
 full conflict in the realm of manufacture break forth 
 — a conflict w^hose objective is the export trade of 
 Germany. In that paper, there was proclaimed an 
 economic warfare, based to a certain extent upon 
 science — a warfare to gain the mastery over German 
 industry. No German manufacturer will be dis- 
 turbed on this account. Rather he will see in it a 
 spur to increased intellectual activity. Neverthe- 
 less, this article has warned us to be on our guard, 
 especially since it centred above all else in a proposal 
 to transplant the fruits of German industry — in actual 
 practice — to English soil. Should this succeed, Ger- 
 man industrial exports would be severely hit. 
 
 THE CRIME OF TRANSPLANTING GERMAN INDUSTRIES 
 
 It is therefore essential for us to get clearly 
 before us measures which will knock the bottom out 
 
Strategy of the German Commercial Offensive 1 1 
 
 of the scheme of transplanting. It must be admitted 
 here and now that to transplant an invaluable in- 
 dustry IS possible, that it brings for the moment 
 great material advantages to employees from the 
 mother country who promote it, and to those who 
 place themselves in its service, and that if it succeeds 
 it can throttle the mother industry in her influence 
 upon the market of the country to which it has been 
 removed. Examples from recent years bring this 
 fact before us in startling fashion; merely call to 
 mind the transplanting of the watch, silk, and em- 
 broidery industries, due for the most part to the sel- 
 fishness of single individuals. The countries to 
 which they were removed had formerly supplied 
 themselves solely through importation; but there- 
 after, to the injury of the mother country from which 
 these industries came, they not only made them- 
 selves independent as far as their own needs were 
 concerned, but even became strenuous competitors 
 of the mother country. Farther on, we will discuss 
 ways of meeting such a situation. 
 
 The idea of economic ** compensations" has for the 
 first time reached practical realization on a large 
 scale through the war. The neutral powers in par- 
 ticular resorted to it in order to supply their vital 
 needs and maintain their economic existence. Com- 
 pensation has become a weapon in international 
 economic warfare and will probably remain after 
 the war in international commerce. It will become 
 effective to the degree that transplanting of industries 
 is prevented; for by transplanting compensation is 
 
12 The Future of German Industrial Exports 
 
 rendered futile. Farther on we will inquire into the 
 role which compensations — only those to be sure 
 whose value can be maintained undiminished for a 
 long time — ^will play in the future commercial treaties. 
 The possibility of their exerting a decisive influence 
 can scarcely be called in question in the light of 
 present experiences. 
 
 Experience teaches that state control — when it is 
 exercised as is the German in farsighted and in- 
 genuous fashion (a lesson we are learning from the 
 war) — becomes an armour, protecting our dom.estic 
 inventions and industrial achievements in such a 
 way that these acquire a value as compensations. 
 This state control will be exercised in a manner 
 adapted to peace times, and without the severity 
 which war doubtless requires. It will apply to 
 industries which have not yet been robbed of their 
 fruits by foreign countries. In this connection 
 what we are advocating is not a sort of state tutelage 
 or guardianship. This all too easily resolves into a 
 hindrance to development. But what is meant is 
 state protection, which takes care that what has 
 been sown on domestic soil is also reaped on domestic 
 soil. The question of primary importance here is 
 not what protective principle is to be chosen, but 
 what parties are to be entrusted with estabhshing it. 
 That these parties must be taken from the industries 
 in question, is evident, and also that expert and dis- 
 interested government officials must be associated 
 with them in order to forestall any selfish policies 
 which could be harmful to the common welfare. 
 
Strategy of the German Commercial Offensive 13 
 
 This protection essential to industry will extend 
 not only to the materials with which industry works 
 and to the intelligence which devised its processes, 
 but also to the proprietor of the materials, and to 
 the brain workers or hand labourers. It is clear 
 also that coercion must be used where benevolent 
 protection is not sufficient. For the transplanting 
 of domestic industries, which have been hitherto 
 beyond the grasp of foreign countries, must be 
 prevented for the general good, even if private 
 interests suffer on that account. The damage thus 
 caused will ordinarily be only a matter of dollars 
 and cents to private individuals, and without doubt 
 will remain within easily supportable limits. The 
 demand for a police-state (the outworn cure-all for 
 every ill) finds no support nor echo in these dis- 
 cussions; that should be especially emphasized. 
 
 THE SUPPRESSION OF SCIENTIFIC INTERCOURSE 
 
 Some one may raise the objection that by measures 
 of this sort the scientific intercourse which took place 
 between the nations before the war will be suppressed, 
 to the detriment of science and progress. Such a 
 reproach is scarcely justified, for exchange of ideas 
 of a scientific nature can never be stopped, primarily 
 — ^to tell the honest truth — because its universal 
 source is selfishness, the natural impulse to enrich 
 oneself, to out-do one*s fellow men, to work ahead 
 and push upward. The form of international scien- 
 tific intercourse and exchange may perhaps be 
 altered, in fact that is even probable; its, essential 
 
14 The Future of German Industrial Exports 
 
 nature and purpose will remain the same. The 
 international scientific congresses which lapsed more 
 and more into festivities will probably be discarded 
 for a considerable time, at least so far as the holding 
 of conventions goes. This ought not to be any 
 cause for regret, for the actual scientific work was 
 always done long before the congresses and merely 
 found in them its external evidence. Exchange of 
 ideas and opinions, though limited and constrained 
 because of the feelings of the times, will go on. It 
 may take place only in writing, but such correspon- 
 dence was conducted in the past anyivay, notwith- 
 standing the verbal intercourse which preceded it. 
 Where scientific conventions of an international 
 nature have the unconfessed purpose of prying into 
 the secrets of others, they must be stamped as dan- 
 gerous, if there is involved any question of industrial 
 improvements, whose value as compensations is 
 clearly evident. The just historian must in any 
 event record that the breaking of international scien- 
 tific unity, which unity reached its height and found 
 outward expression in the scientific academies in 
 various countries, did not take place through the 
 Germans. It was earlier believed that science is 
 elevated above the emotions of the nations. The 
 immediate past teaches that the emotions are 
 mightier than science, that they brusquely and 
 trivially break the bonds which have been joined by 
 science in the course of centuries (presumably for 
 eternity). In the face of such events as this, which 
 were once thought impossible, mistaken sentimen- 
 
Strategy of the German Commercial Offensive 1 5 
 
 tality is soon silenced. Refinements of feeling be- 
 tween different countries have a way of vanishing 
 into thin air, especially where they are forced and 
 unnatural. Necessity stands above desirability; 
 maintenance of the value of compensations under 
 certain circumstances can be a necessity before which 
 everything else must give way. 
 
To BE invincible, ''the unsur^ 
 passable goods/' by the lack of 
 which Germany is to strangle 
 us into swallowing the whole out" 
 put of their factories, must be in- 
 dependent of nature's materials 
 found in Alabama, New Mexico, 
 Chile, and other ^'prejudiced'' 
 countries. Well, they have this 
 planned also, as this chapter shows. 
 Mobilized and drilled, the scientists 
 of the Empire will be incorporated 
 into the export army and under dis- 
 cipline are to produce Prussian sub- 
 stitutes for all such necessary raw 
 materials. 
 
 The Germans propose to take 
 drastic action to meet what they 
 call the menace of great stores of 
 surplus capital which America has 
 accumulated through what they 
 term the regardless and barbarous 
 manufacture of murderous war 
 supplies. One of the principal 
 manoeuvres will be the adoption 
 and improvement of the American 
 system of standardizing manu- 
 factures. 
 
CHAPTER TWO 
 
 FORGING THE THUNDERBOLT 
 
 Safeguarding Strategic Secrets — ^The ''Shining Success" of 
 ** Unthinkable Authority" — Mobilizing the Scientists — Invent- 
 ing Substitutes for Allied Materials — Checkmating Nature — 
 ** Treaties/* a Temporary Expedient — Meeting the World's 
 Prejudice with Guile — Denationalization, a Commercial Masque- 
 rade — Soothing Propaganda — Meeting the American Menace. 
 
 THE protection of compensation values will very 
 often amount to the protection of manufacture 
 ing secrets. It must be confessed that up 
 to the present time much remains to be desired in 
 this respect. Lack of organization is most of all to 
 blame. As a consequence too many are initiated 
 into the secrets. Financial shortsightedness is 
 also a cause. The protection of manufacturing 
 secrets is the best safeguard against transplanting, 
 provided of course that the possessor of the secrets 
 of manufacture, whether he be the rightful one or 
 not, does not wish a transplanting. If the financial 
 returns remain within satisfactory limits the desire 
 to migrate will not arise; in other cases measures such 
 as will be discussed farther on are necessary. 
 
 The state protection which will eventually become 
 necessary can be prepared for in a<n effective way by 
 the formation of certain associations that will take 
 
 i8 
 
Forging the Thunderbolt 19 
 
 protective measures in the interest of their own 
 members. Such measures will have the purpose 
 of preventing a transfer of valuable industries to 
 foreign countries. Upon the degree of protection 
 afforded by such associations of the industries con- 
 cerned, will depend whether state protection can 
 be regarded as superfluous or not, and whether the 
 association in a certain degree acquires a standing as 
 an organization representing the State, or is officially 
 recognized. 
 
 THE "shining success" OF "UNTHINKABLE AUTHORITY" 
 
 War conditions have caused organizations for the 
 purchase, sale, and distribution of material to spring 
 up in our economic life, the possibility of whose for- 
 mation everyone would have doubted before the 
 outbreak of war — economic organizations with for- 
 merly unthinkable authority, and operating, perhaps 
 for this very reason, with shining success. Smooth 
 off their rough edges, which are the result of hasty 
 formation and the exigencies of war — though in 
 no case, as the present shows, has this crudity been 
 unbearable — and you can easily imagine similar 
 bodies in times of peace. Since there will then be 
 no pressing haste, they can be still better organized, 
 and designed primarily to keep certain superior in- 
 dustries located exclusively in this country. They 
 may also create and maintain or receive valuable 
 compensations. 
 
 Similar bodies might also be given the duty of 
 cooperating with the Government in providing 
 
20 The Future of German Industrial Exports 
 
 against any possible shortage of certain raw materials. 
 These could be collected or manufactured directly 
 by such bodies, or indirectly at their order. Just as 
 little as foreign countries, notwithstanding all com- 
 mercial treaties, can be compelled to buy German 
 products, so little can those which remain entirely 
 self-supporting be induced to supply German in- 
 dustries with raw materials which are not procurable 
 in our own land in the necessary amount and quality. 
 
 It must be admitted that Germany's export trade 
 — at least in certain products — can be stopped if the 
 procuring of raw materials be rendered difficult or 
 cut off entirely. Remembering the rings which in 
 the past have brought under their thumb the control 
 of certain raw materials in order to be able to manipu- 
 late prices at will, one can just as easily imagine rings 
 able to buy up particular raw materials because of 
 their correspondingly strong financial resources 
 (perhaps even with the concealed support of the 
 State). They will then bring pressure to bear upon 
 the industry of another country, to extort certain 
 concessions which will be detrimental or even fatal 
 to the latter's industry or export trade. Where the 
 weapons of war could accomplish nothing, duplicity 
 will step in and continue the conflict under the token 
 of the olive branch of peace. [Germany's export trade 
 will have to reckon with obstacles altogether beyond 
 calculation at the present: it must therefore be pre- 
 pared at every point. 
 
 Associations which can effectively oppose foreign 
 rings of the nature mentioned above must be gotten 
 
Forging the Thunderbolt 21 
 
 well under way in advance. These associations will 
 be able to do their work all the more vigorously, 
 in proportion to the firmness of the cement, which, 
 in future, must bind together all German industries of 
 whatever kind they may be, A state of commerce 
 has always been in a certain sense a state of war — a 
 peaceful state of war, if one may use the word, which 
 served peaceful ends as long as peace lasted, but 
 which always lent itself to warlike designs, whether 
 there was a war or not. To be prepared means to 
 have at one's disposal reserve energies sufficient for 
 any emergency. German industry must have at its 
 command invincible powers of resistance if it is 
 to guide its export trade into safe paths and protect 
 it against treacherous surprises and assaults. An 
 assured supply of every kind and amount of raw 
 material needed from foreign countries is one of the 
 preHminary necessities for the future development of 
 Germany's trade. 
 
 MOBILIZING THE SCIENTISTS 
 
 Where, however, a buyer finds chauvinism blocking 
 him when he tries to purchase raw materials, he will 
 often get the worst of the deal, no matter how great 
 his capital. Chauvinism is a sort of deluded blind- 
 ness, and when light is wanting, even the gleam of 
 gold loses its influence. Where purchasing power 
 or inducements of other sorts become ineffective; 
 where stubborn malice, to its own detriment, gets 
 the better of reason; there German science and 
 German intellectual resourcefulness must turn the 
 
22 ' The Future of German Industrial Exports 
 
 scales, and, if necessary, bring forth the requisite 
 materials from nothing at all. (A reminder of the 
 preparation of fat and saltpetre by Germany in the 
 present war will suffice to throw light upon this sen- 
 tence.) The power of the intellect is supreme and 
 invincible; in comparison with it, the power of money 
 fades into insignificance. The "Research Com- 
 panies'^ — a German invention — and the numerous 
 research departments and laboratories in individual 
 companies can be looked upon as guides in forming 
 associations, the purpose of which will be to furnish 
 Germany's export industries with raw material 
 when commercial treaties and capital fail to bring it 
 within reach, in spite of abundant supplies. These 
 associations must develop artificial substitutes for 
 natural raw materials, when the latter might possibly 
 be cut off from German industries. They must 
 use the resources of science to bring about indepen- 
 dence from foreign materials. This is no Utopian 
 dream; it is a probability of the immediate future, 
 and can be brought to pass just as soon as all special 
 interests are pushed aside and all activity (as at 
 present) directed toward serving the country — 
 toward increasing its might and strengthening its 
 power. Independence from foreign material is, then, 
 another factor strengthening the export trade. We 
 will discuss it at greater length farther on. 
 
 "treaties,'' a temporary expedient 
 
 Associations of the above-mentioned kinds ought 
 even now to be in process of formation, so that they 
 
Forging the Thunderbolt 23 
 
 can perform good, timely service of an economic 
 nature in the peace negotiations. At the time when 
 future commercial treaties are being drawn up, they 
 can render invaluable assistance by seeing to it that 
 German industry is placed on an equal footing with 
 that of other countries and by getting obstacles out 
 of the way beforehand, which later will be difl&cult 
 or altogether impossible to remove. 
 
 The word *^ treaty'' has acquired such a bitter 
 connotation in the course of the months which have 
 gone^by since the outbreak of the war that people no 
 longer take much stock in it. Sentimental con- 
 siderations, however, have no place in the hard world 
 of business. Commercial treaties will come again 
 like other international agreements and probably 
 will also be broken again. They must be couched 
 in such terms that they bring advantages to the 
 export trade as long as they are kept, and do not 
 threaten its existence when, for a little variety, they 
 are arbitrarily abrogated. That is to say, a purely 
 economic (not military) suppression of the export 
 trade, through the general breaking of commercial 
 treaties, must be impossible in the future. German 
 industry must build its export trade upon such a 
 foundation that it can enlarge unimpeded, and that 
 interruptions in its work can be suppressed im- 
 mediately — independently of the outside world. 
 Commercial treaties can prevent impediments from 
 arising, if the parties so desire; but not otherwise. 
 
 The export trade may be embarrassed and im- 
 peded also by the fact that its goods are oi German 
 
24 The Future of German Industrial Exports 
 
 origin, and bear the German trademark, and that the 
 manufacturer is located in Germany and ships from 
 there. 
 
 DENATIONALIZATION, A COMMERCIAL MASQUERADE 
 
 All these obstacles can perhaps be removed, but 
 the most diflScult are those through which the Ger- 
 man character of the export product is visibly and 
 immediately recognized by foreigners in general. 
 Let there be no misunderstanding on this point. 
 German goods can never belie their origin to the 
 expert user, because an ineradicable stamp has been 
 impressed upon them by their two chief peculiarities 
 — "care in manufacture,'' and "complete fitness, 
 economically, for the use to which they are to be put." 
 This stamp is an automatic result of the manufac- 
 turing process and sets them well above the products 
 of foreign competitors in spite of similiarty in other 
 respects. The far-sighted manufacturer does not, 
 of course, content himself with the advertisement 
 thus afforded, since it reaches only the man who 
 already uses the goods. He endeavours to make his 
 goods known to a broader circle through special 
 means — propaganda — in order to win more cus- 
 tomers. 
 
 The usual way of accomplishing this is to call] at- 
 tention to the name of the firm, its location, and its 
 trademark. Such advertising, so far as can be 
 judged to-day, will have anything but a commenda- 
 tory effect among the formerly hostile nations, at 
 least for a considerable time after the conclusion of 
 
Forging the Thunderbolt 25 
 
 peace. The mere fact that the goods were shipped 
 from Germany will be a drawback if it is made 
 known. We will, of course, cease to give conspicu- 
 ousness to the German character of export products; 
 judging, however, by various indications in hostile 
 newspapers, we must reckon upon the use of appar- 
 ently harmless, but actually malicious tricks, to 
 discriminate against German goods. For instance: 
 foreign customs officers may stamp upon them the 
 country of their origin, etc. The purpose is easy to 
 discover. Even if the first man to receive the goods 
 — for instance, the wholesaler — ^wishes, for evident 
 reasons, to conceal the place of origin from his chau- 
 vinistic customers, to do so is to be made difficult 
 or impossible for him by the marks impressed by the 
 native customs officials. To meet this it will be 
 difficult to do anything so long as the goods are 
 shipped directly from Germany, by a short and 
 uninterrupted route, to save on freight charges. 
 In the course of time small unpleasantnesses of this 
 kind may also disappear on account of their triv- 
 iality. Should the damage done by them become 
 unbearable in the long run, then denationalization 
 of goodsy though it will eventually raise the gross 
 expenses, should not be avoided; for the alternative 
 expedient — of having the foreign customer take over 
 these products at the place of manufacture, and 
 transport them at his cost and risk — ^would scarcely 
 obviate the trouble in the final result. What method 
 of denationalization will be feasible we shall discuss 
 farther on. 
 
26 The Future of German Industrial Exports 
 
 The objection might be made here that in a certain 
 sense we are giving opportunity for a game of **Hide 
 and Seek/* which would be incompatible with Ger- 
 man character. In reaHty this is not the case be- 
 cause, for one thing, as has already been said, Ger- 
 man products bear within them their stamp of origin 
 which is as clear as day to the experienced user; 
 then again, because it is not the German exporter 
 but rather the foreign customer, who must look out 
 that the place of origin is kept secret, to avoid loss 
 at the hands of his own countrymen. Undue em- 
 phasis must not be placed at first upon the fact that 
 even back in times of peace a great many foreign 
 products were made in Germany, and that sentimen- 
 tal considerations can find no place in mercantile life. 
 
 The question of trade-marks will be somewhat more 
 difficult to handle because it involves property rights 
 which for evident reasons it is not permissible to 
 conceal. It will be hard to enforce these rights in 
 formerly hostile countries. Yet even in this case 
 a way can be found to accomplish whatever is essen- 
 tial, without much loss. Of this, more later. 
 
 SOOTHING PROPAGANDA 
 
 Now in all these cases there arises at once the ques- 
 tion: *^What becomes of that absolute essential of 
 the present day — the propaganda on behalf of Ger- 
 man goods?'' The answer is: The propaganda is 
 to be carried out in increased measure even if in a 
 form different from before, in a form which will not 
 irritate the feelings of past enemies — a form which 
 
Forging the Thunderbolt 27 
 
 takes these feelings into account in determining fu- 
 ture activity. We must not forget that, at the 
 worst, we are only dealing with a period of transition. 
 After it has passed, "doUars-and-cents" reasoning 
 will again be superior to the dictates of emotion. 
 He who allows himself to be guided exclusively by 
 his feelings must pay for it dearly and in comparison 
 with a more hard-headed business man, finds himself 
 left out in the cold. Sad as it is, " dollars-and-cents " 
 policies get the last word after all (as is to be seen 
 in many cases even in war — often against the in- 
 terests of one's own country — and much more often 
 in peace). More will be said later about ways of 
 recasting the propaganda hitherto carried on in 
 fortign countries. 
 
 In looking back over Germany's export trade 
 during the last decade, one can discern a decided ten- 
 dency toward founding branch companies instead 
 of having some other firm or agent represent the 
 home concern. Whether this was, and whether it 
 still continues to be, the best safeguard for our export 
 trade, are questions which have been much disputed. 
 The prevailing factor behind this tendency was, 
 primarily, the eflFort to divert the intermediate profits 
 of the earlier representatives directly into the hands 
 of the parent firm and secondarily, the centralization 
 attained by uniting former competitors into one 
 great firm. This consolidation made it unnecessary 
 to have a large number of individual representatives. 
 An influential role was played by the endeavour to 
 unify and standardize manufacturing processes, and 
 
28 The Future of German Industrial Exports 
 
 thereby eliminate the practice of catering to the 
 buyer's individual fancies — a practice which had 
 flourished under the old system of many agents work- 
 ing independently of each other. In those days 
 they went farther — they sailed officially under the 
 flag of foreign countries, and founded "daughter- 
 companies'' under the laws and citizenship of those 
 countries. 
 
 It is well known that since the beginning of the war 
 legal restraints have been placed upon these com- 
 panies, a proof that their loyalty was always looked 
 upon as specious. Even after the removal of the 
 restraints the odium of "hostile" will cling to these 
 branch companies — provided of course that they 
 weather the storm of troubles at all — and this odium 
 will be a burden to their activity even if it does 
 not make it impossible. Business, when actually 
 conducted in foreign countries will, therefore, be 
 forced to assume other forms — perhaps such as have 
 been used and discarded in the past. Consciously 
 to court chauvinistic opposition over and above the 
 industrial and economic difficulties of competition 
 would be unthinkable. 
 
 Nor must we overlook the fact that industrial 
 and economic competition after the war will become 
 distinctly more gruelling. The eyes of foreign coun- 
 tries will without doubt have opened to the perfection 
 and efficiency of the articles and appliances made in 
 Germany. Foreign countries have been shaken 
 into new life — something which is doubtless to be 
 welcomed in the interest of mechanical improvement 
 
Forging the Thunderbolt 29 
 
 and invention. They will make every effort, as is 
 evident from the above-mentioned article in the 
 English trade-journal, not only to emancipate them- 
 selves from German industry, but also to overtake it. 
 Whether they will succeed, may be left for the future 
 to decide; certain it is that such a thing would be 
 possible, if the tireless energy of the Germans, who 
 understand how to combine science and practical 
 application, should take root in foreign countries. 
 However, it takes time for other peoples to undergo 
 such a transformation, which is equivalent to a com- 
 plete alteration of the national character. This 
 time must be used by German industry, in the in- 
 terest of its export trade, to make such swift and vi- 
 gorous progress, that in a purely industrial way no 
 overtaking by a competitor will be possible. In 
 order to overcome the habit of unnecessarily com- 
 plicating manufacturing processes and thus of in- 
 creasing costs, we must pay more attention in certain 
 respects to American methods. They waste no 
 energy on the individual hobbies of the consumer, 
 but teach him to choose from among a few types the 
 one best suited for him. Hand in hand with increas- 
 ing scientific progress and invention must go broad 
 and intelligent standardization. 
 
 Economic competition, particularly in the question 
 of price-superiority, will then shape itself so that 
 German goods will have clear sailing, and the export 
 trade can resume its former triumphal progress, fully 
 armoured and unafraid. Quality and price com- 
 bined are two factors which in a short time will over- 
 
30 The Future of German Industrial Exports 
 
 come all opposition — even that of a chauvinistic 
 nature. 
 
 MEETING THE AMERICAN MENACE 
 
 We must not conceal the fact that the ability of 
 Germany to undersell the products of other countries 
 will not be so easy to maintain in the future, as far 
 as the American competitor is concerned. For the 
 enormous profits which the American factories reap 
 through their unscrupulous production of war ma- 
 terials enable them to wipe out liabilities in a way 
 hitherto considered impossible. These profits con- 
 stitute reserves which they can fall back upon with 
 full assurance, when striving to outbid others. To 
 meet this situation, organized action will be just as 
 necessary as was protective action, in the case of 
 raw materials supplied from other countries. New 
 rules will have to be formulated here and brought 
 into effect — rules which will treat the question not 
 only from the commercio-political standpoint, but 
 from the standpoint of industry and industrial 
 tariffs also. This latter aspect of the question will 
 therefore demand thorough study. We must like- 
 wise see whether tariflf bills can not be framed so as 
 to facilitate the rapid growth of the export trade. 
 It is not improbable that we may even have to dip 
 into the question of export premiums in this con* 
 nection. 
 
 Especial consideration must be devoted to capital 
 in its relation to the export trade. It can give sup- 
 port both from the outside and from within. In the 
 
Forging the Thunderbolt 3 1 
 
 last analysis, our domestic capital ought only to go 
 abroad when we are sure to keep on indefinitely 
 shipping goods to the country where the capital is 
 invested, in quantities corresponding to the amount 
 of that capital. The every-day practice among 
 capitalists is to impose only the condition that the 
 level of the so-called "first shipments'^ be main- 
 tained. This commonly represents only the capacity 
 of the plant at the start. 
 
 Such demands are shortsighted. The capitalists 
 at home ought to insure close contact between the 
 domestic producers with whom they have relations, 
 and the promoters, especially those in the foreign 
 countries. The export trade must be backed effec- 
 tively not only by the State and the unselfish exer- 
 tions of German industry, but also by capital. And 
 this capital, it should be noted, ought if possible to 
 come entirely from German sources; or at the very 
 least, German capital should hold a controUing in- 
 terest. In so far as it participates in those enter- 
 prises which advance the interests of our export 
 trade, German capital should maintain its individ- 
 uality. It must prepare the ground and then add 
 strength and support; it must form the foundation 
 for a new era in the growth of industrial exports. 
 To enlist capital in this work is a task of prime im- 
 portance. 
 
 The foregoing discussion shows, in brief, that: 
 The growth and security of the export trade after the 
 conclusion of peace will be dependent on and influenced 
 by the following factors: 
 
 I 
 
32 The Future of German Industrial Exports 
 
 1. Adaptability of the export industry. 
 
 2. Attitude of foreign countries. 
 
 3. Emigration of domestic industry. 
 
 4. Economic compensations. 
 
 5. State protection. 
 
 6. Industrial protective unions. 
 
 7. Commercial treaties. 
 
 8. Ways of denationalizing German goods. 
 
 9. Competitive ability. 
 10. Capital. 
 
 These factors as a whole will bring about a satis- 
 factory result only if they are brought into relation- 
 ship by skilful organization in such a way that they 
 form a smoothly running mechanism. 
 
 Its motive force must be the fixed determination 
 to raise the export trade to the highest pitch of suc- 
 cess in spite of all obstacles, and there to maintain 
 it indefinitely. 
 
THE Germans, as the following 
 chapter shows, expect impen" 
 etrable disguise to be a leading 
 feature in renewing their oversea 
 business. Their salesmen will be 
 trained to correctly imitate the as- 
 pect, intonation, idiom, and ' 'pro- 
 vincialities" of their customers, and 
 cleverly to copy their business 
 methods and their style of making 
 packages and shipments. 
 
 Allied countries that refrain from 
 interference (although '^hypercri^ 
 ticaV), Germany intends to reward 
 — with her matchless goods. Those 
 that refuse to be duped are to meet 
 * 'relen tless re trib u tion ." A General 
 Staff having determined by means 
 of infallible '* defence statistics' ' that 
 America or some other culprit is 
 neglecting to take its allotted Ger- 
 man exports, will order the ''indis- 
 pensable industries,'' subsidized by 
 "economic compensations" to boy- 
 cott the victim, and it will seal the 
 command with a, "corrective em- 
 bargo." 
 
CHAPTER THREE 
 
 THE CAMOUFLAGE OF COMMERCE 
 
 The Impenetrable Disguise of the Diisseldorf Drummer — Faking 
 the Appearance of Friendly Business — ^The High Art of Imita- 
 tion — Relentless Retribution Upon Allied Interference — "Defence 
 Statistics," the Barometer of the Battle — Strategic Use of the 
 Boycott and the "Corrective" Embargo. 
 
 B. Factors Influencing or Controlling 
 Exports 
 
 I. Adaptability of the Export Industry 
 
 THE Germans have always made it their busi- 
 ness to learn the languages of other nations. 
 In this respect, however, they are surpassed 
 by the Swiss, who go so far as to master not only the 
 language itself but also its peculiarities to a point 
 eliminating every foreign element in their intonation 
 and manner smacking of their mother tongue. A 
 German speaks foreign languages correctly, yet in 
 such a way that his German extraction at once be- 
 trays itself. 
 
 In the immediate future the presence of anything 
 *' German" among formerly hostile nations will 
 evoke emotions which are not advantageous for the 
 advancement of commercial relationships. Of this 
 there can be no doubt. Germans will certainly be 
 
 34- 
 
The Camouflage of Commerce 35 
 
 more careful than ever not to give offense. But in 
 this they will be successful only if they take as a 
 pattern the Swiss method in linguistics. Men in 
 manufacture and industry must take care in future 
 to use foreign languages in the native way. Atten- 
 tion should also be paid to this subject in the 
 schools. Hand in hand with increased proficiency 
 in this direction must go a comprehension of foreign 
 ways and of foreign nature, in order to obviate as far 
 as possible all reminders of the past. We need not 
 fear that Germanism will suffer because of this; in 
 spite of their perfection in language technique the 
 Swiss never cease to be good Swiss. 
 
 A fundamental requisite for personal intercourse 
 with customers^ in the interest of the export trade^ is the 
 use of foreign languages in the manner and idiom of 
 the people who speak them, 
 
 FAKING THE APPEARANCES OF FRIENDLY BUSINESS 
 
 Correspondence in future is to be carried on in the 
 foreign tongue, even if the correspondent commands 
 the German language, in order to insure him from 
 the very beginning against unpleasantnesses which 
 might arise with third parties from chauvinistic 
 reasons. 
 
 More than ever there will be necessary a wide- 
 spread adaptation to foreign methods of book-keeping 
 and calculation in order to increase exports. Stan- 
 dardization in industry must not be carried out ex- 
 clusively from a German point of view; an inter- 
 mediate way, adapted to accounting purposes, must 
 
36 The Future of German Industrial Exports 
 
 be found, conforming to domestic and foreign stand- 
 ards. This will be of a special importance where 
 for the same object other units of measure are in 
 use in a foreign country, and where methods of as- 
 sembling, packing, and make-up do not harmonize 
 with German custom. In our ability to conform 
 lies the secret of success; conformity in the realm of 
 manufacture without loss of profits is indeed difficult 
 but not impossible. 
 
 Adaptation to foreign customs in business and in^ 
 dustry is a help to the export trade. 
 
 THE HIGH ART OF IMITATION 
 
 German character and habits must not be altered 
 in their essence by this procedure, still a foreign 
 exterior is necessary for purposes of protection, just 
 as the style and cut of clothing are adjusted to the 
 taste of the wearer. Stiff-necked observance of old 
 principles would have a harmful effect. 
 
 A complete knowledge of the special requirements 
 in foreign industries, mutual elimination of which 
 was well on its way before the outbreak of the war, 
 is more than ever necessary, for it is to be feared 
 that an unpleasant interruption will take place for a 
 considerable time in these efforts toward interna- 
 tionalization. If we succeed in avoiding disagree- 
 ments and disputes after goods have been shipped 
 to the consumer, it will be due to the careful observ- 
 ance of foreign requirements, which is impossible 
 without a thorough knowledge of them. For the 
 present we dare not count upon the healing influence 
 
The Camouflage of Commerce 37 
 
 of time. The common aim of all export activity 
 must be to make the foreign customer so satisfied in 
 every respect that, in spite of hatred of Germany, 
 German manufactures give the best satisfaction. 
 
 If everything distasteful or unpleasant to the for- 
 eign customer is eliminated, then, with time, trade 
 will grow better and more pleasant for the German 
 producer also. Every effort must be directed toward 
 allaying the passive resistance which must be looked 
 for from our customers. Victory with the means 
 of peace must follow victory with bloody weapons, 
 otherwise the latter would be purposeless. German 
 efficiency must link itself with a conformabiHty not 
 hitherto exercised everjrwhere, a conformability 
 which meets the new circumstances brought about 
 by War and Peace. The ultimate purpose is always 
 the first consideration, it decides the form. 
 
 2. Attitude of Foreign Countries 
 
 Every hostile move can be arrested by an equiva- 
 lent counter move and may possibly be prevented 
 in future. This principle always holds good in war, 
 not always in commerce. It may be very useful in 
 war, in commerce it often is the opposite. For these 
 reasons measures of a hostile nature, or which can be 
 considered as such, are to be avoided so far as possi- 
 ble. Since, however, long-suffering is commonly 
 construed as weakness, it has only conditional and 
 temporary justification in the struggle. If, for the 
 sake of our export trade after the war, we resolve 
 for our part to avoid everything which could possibly 
 
38 The Future of German Industrial Exports 
 
 ofFend the feelings of our former enemies, we must 
 nevertheless not overlook the fact that in the im- 
 mediate future it will be absolutely necessary to stand 
 with weapons at our side in order to give a good 
 account of ourselves when the necessity arises. 
 
 RELENTLESS RETRIBUTION UPON ALLIED 
 INTERFERENCE 
 
 Whatever be the self-discipline practised, formerly 
 hostile States with which we are entering into com- 
 mercial relationship — either by treaties (in which 
 case they are problematical) or by actual trade — 
 must be given clearly to understand that every open 
 or concealed injury to our export trade will be re- 
 venged. Either unclouded commercial peace or 
 none at all. Manufacturers and men of industry will 
 have to apply all their strength to make good what 
 the fury of war has destroyed. They will, therefore, 
 have no time to interrupt the intensive work before 
 them by petty warfare and by combating annoyances 
 and chicanery. We are justified in assuming that 
 even in formerly hostile countries, industrial circles 
 will again yearn for peace and for the well-ordered 
 relationships which make success possible, yet it is 
 more than questionable whether they will be strong 
 enough to hold their ground against professional 
 politicians and graftseekers. 
 
 In future intercourse of a commercio-political 
 nature, as in its rehabilitation and regulation 
 in general, we must observe the fundamental prin- 
 ciple that commercial treaties are not weapons for 
 
The Camouflage of Commerce 39 
 
 strengthening one's own export trade at the cost of 
 foreign import trade, but that in these treaties are 
 to be found ways of opening broad, safe paths for 
 mutual commerce. This point of view must of 
 course be shared by both parties. 
 
 The attitude of a foreign country toward our ex- 
 port trade may be either of an official, semi-official, 
 or private nature, depending upon how frank it is in 
 reference to the reasons for its attitude. Or the 
 Government may make common cause with private 
 individuals, and may systematically avoid revealing 
 its reasons, so as to give Germany as little basis as 
 possible on which to frame retaliatory measures. 
 The nature of the attitude of foreign countries will 
 determine the course which industry, and the govern- 
 mental authorities of Germany who protect it, will 
 have to adopt. 
 
 The most favourable case, one which for the time 
 immediately succeeding the conclusion of peace is 
 scarcely to be expected, would be one in which 
 foreign countries endeavour, in the interest of their 
 own industry, to give a free hand to German export 
 trade. This is more than the greatest optimist dares 
 to hope. Anything better than it is certainly out 
 of the question. Germany, for its part, will of course 
 do everything in its power to reward such an attitude 
 on the part of foreign countries, though the latter 
 are naturally inspired only by the most practical 
 considerations. In the discussion of commercial 
 treaties there will be more to be said on this point. 
 
 However, since pessimism is a safer policy than 
 
40 The Future of German Industrial Exports 
 
 optimism, in mercantile connections, it is well to 
 consider those cases in which resistance will have to 
 be reckoned with. 
 
 A very simple, though hardly probable case might 
 be this; that the formerly hostile countries officially 
 stopped all German exporting business within their 
 borders by preventing the importation of German 
 goods. This case need not be taken into account for 
 the reason that the future treaty of peace will surely 
 be founded upon economic grounds also, because it 
 could not be agreed to unless official guarantees'^of a 
 free hand for our export trade were given. A jealous 
 and invidious economic policy on the part of foreign 
 countries was the cause of the war; it can only be 
 ended by correcting that policy. The watchword 
 will have to be: '* Hands off German export trade 
 and an open door to it in every direction." A com- 
 plete end must be made of false economy with its 
 ominous special favouritism clauses when these are 
 directed against the German export trade. 
 
 Safeguards for Germany^ s export trade must form 
 an indispensable \part of the treaty of peace. The 
 latter must eliminate all special favouritism clauses 
 that could possibly be injurious, 
 
 A foreign state can very easily set up obstacles to 
 our trade in a semi-official way, especially in award- 
 ing government contracts. By its action in such 
 cases it of course furnishes private business with a 
 cue not easily misunderstood. We can imagine 
 such a ruling as that no foreign goods at all may be 
 used in filling government contracts. Technically, 
 
The Camouflage of Commerce 41 
 
 regulations of this sort would present many difficul- 
 ties and would be scarcely enforceable. Merely 
 recall among other instances those industries which 
 have to pay tribute to the German chemical industry 
 and those which could scarcely have succeeded with- 
 out Germany's delicate instruments. Such regula- 
 tions would be so stringent for the industries of the 
 countries in question that we are safe in assuming 
 that the State would wink at their circumvention. 
 
 This, however, does not settle the question; Ger- 
 man industry could not rest content with such a 
 tacit evasion of foreign laws. Openness was always 
 a goal of the Germans, one which has made them 
 great. It must also have effect here. In the interest 
 of its own industry every state will prescribe that 
 in state contracts preference must be given to domes- 
 tic articles in so far as such are at hand, even if foreign 
 products could be had more cheaply (equal quality 
 assumed). German industrial circles could not, 
 however, countenance further restrictions such as 
 that in manufacturing these articles no raw material 
 might be used whose origin is to be traced back to 
 countries with which the foreign state had been at war. 
 
 As a measure of retaliation we might forbid the 
 exportation of materials which that state found 
 absolutely indispensable, thus cutting off both its 
 direct or indirect supply. In this connection it is, 
 of course, always presumed that a transplanting of 
 such industries to foreign states will be hindered by 
 all means at our command (a matter which will be 
 gone into farther on). It must be admitted that such 
 
42 The Future of German Industrial Exports 
 
 regulations could cause considerable loss to individual 
 parties here at home, yet here also the common good 
 must be given precedence over individual interest. 
 Special state indemnities can go far toward making 
 good such losses, all the more since retaliatory meas- 
 ures of this kind could scarcely be of long duration 
 because they would become unbearable for the hostile 
 state. 
 
 Rules of foreign states^ forbidding the use of material 
 of German origin in state contracts^ and aiming 
 against the German export trade^ must be assured a 
 swift and sudden doom. Effective precautionary meas- 
 ures for this purpose can not show favour to individual 
 interests, 
 
 "defence statistics," the barometer of the 
 
 BATTLE 
 
 It will be necessary to create a special branch 
 of statistics, which will indicate the comparative 
 amounts of German products (both natural and 
 manufactured) exported in normal times. By those 
 statistics we can tell whether, and in what degree, 
 the proportionate amounts are being altered by the 
 open or concealed attacks of foreign countries, 
 to the detriment of one product or another. These 
 statistics must show at once, at all times, whether 
 certain products are being discriminated against by 
 foreign countries in favour of other foreign products 
 (coming from an ally) while, at the same time, no 
 obstacles are placed in the way of trade in other 
 German products. By the kind and amounts of 
 
The Camouflage of Commerce 43 
 
 the various products listed, it will be easy to decide 
 from these statistics which German products foreign 
 countries can not do without, and for which others 
 they substitute (openly or secretly) the products of 
 other countries. From such knowledge the possi- 
 bility readily arises of putting a stop to our exporta- 
 tion of products or materials which are indispensable 
 to the foreign country in question and which must, 
 in the main, be drawn from Germany, until our 
 other industries, hitherto in certain measure boy- 
 cotted, are returned to their rights. The export 
 statistics for the German Empire, always compiled 
 so exemplarily in the past, must be somewhat ex- 
 tended according to the proportional system in 
 order to have ready at all times effective means of 
 defence for the protection of all branches of our ex- 
 port trade. 
 
 The uniting of ^'defence statistics y^ compiled accord- 
 ing to the proportional system^ with the export statistics^ 
 is a necessary measure for safeguarding the export trade. 
 
 Without going into so broad a question, it may 
 merely be pointed out that imports also can offer 
 effective expedients against hostile actions. 
 
 By defensive measures, such as embargoes, certain 
 of our industries which foreign countries have been 
 compelled by necessity to favour rather than hinder, 
 may find their foreign trade for a time cut down; 
 in other words, they suffer actual and material loss 
 in order to make possible the free export development 
 of other industries. It will, therefore, be only just 
 if the latter, which have been protected at another^s 
 
44 The Future oj German Industrial Exports 
 
 expense, pay an indemnity to the industry injured 
 by the embargo, as soon as the normal development 
 of their export trade to the foreign country in ques- 
 tion is again restored. (The "defence statistics" 
 are the means of determining this.) This amount of 
 the compensation will be determined from the 
 comparative figures given by the "defence statistics." 
 There must accordingly be created a ready coopera- 
 tion between individual industries in such a fashion 
 that, in the case of a depletion of one industry's 
 export trade which can be traced back to hostile 
 measures, the outflow of other manufactured pro- 
 ducts desired by the same foreign country will be 
 throttled to the disadvantage of that country until a 
 state of equilibrium — recognized by means of the 
 "defence statistics'*- — is arrived at; the assets (of a 
 material nature) lost in this way by the throttled 
 industry must be replaced by the industry which 
 has been benefited. 
 
 The various German industries must he "brought into 
 compulsory cooperation for the purpose of keeping all 
 hinds of industrial exports on a basis of equality. 
 
 Economic and industrial unions are already suffi- 
 ciently numerous in Germany. Where it has not 
 already been done, they must be centralized in order 
 to aid the State in whatever defensive strategy may 
 prove necessary. This aid can probably be rendered 
 most eff'ectively by the independent compilation of 
 similar "defence statistics," for which the basic 
 data might be supplied by the chambers of industry 
 and commerce. Both kinds of statistics — one of 
 
The Camouflage of Commerce 45 
 
 which, naturally, will present a more bureaucratic 
 stamp, the other a more mercantile — ^will advantage- 
 ously and automatically complete each other, and 
 will be suited to prevent uncalled-for action which 
 could injure the general system of control. Such 
 action will almost always be traceable to special 
 interests which can be shown their place only by the 
 authority of the entire body. To the directing com- 
 mittee of such a union will be reserved the right" of 
 investigating the justification of complaints, of 
 formulating and proposing to the Government such 
 measures as are in the interest of industry in general, 
 and of deciding the future indemnity quotas which 
 are to be valid for the industries specially involved — 
 both those asking protection and those affording it. 
 From this union there will come a cementing of the 
 individual industries, which will bind them closer 
 to one another for the good of the whole export trade, 
 and which will hold all the more firmly because it 
 promotes the material interest of every single form 
 of industry. At the same time this union can form 
 the foundation and the centre of the protective 
 federations to be discussed later. 
 
 State and industry must mutually supplement each 
 other in providing ways to extend and apply the 
 ^^ defence statistics J*^ 
 
 strategic use of the boycott and the 
 ** corrective'* embargo 
 
 To the union in question still another special 
 problem will now fall, one which can not and ought 
 
46 The Future of German Industrial Exports 
 
 not to be left to the State for solution because it 
 might give occasion for diplomatic complications in 
 a sphere in which industry can help itself most 
 safely and best (it being assumed that industry pro- 
 ceeds with sincerity and determination and per- 
 manently places the general good above special 
 interests.) This problem can and will probably 
 present itself in some such case as the following: 
 A foreign government avoids officially and semi- 
 officially every stand against Germany's manufactur- 
 ing export trade (an assumption in no case justified 
 at present) ; but the industry of that country takes a 
 hostile attitude and only orders from Germany what 
 it absolutely has to, taking everything else from 
 foreign competitors. Let us now narrow the matter 
 down to an individual case, such as will always be 
 easy to find, and simple though it is, it will give a 
 clue toward handling any complication. 
 
 A foreign manufacturer needs in his business two 
 principal kinds of raw materials: One he can obtain 
 only from Germany and the other he can get from 
 other countries, the hypothesis presupposing equal 
 quality and price. In purchasing the former he 
 carefully overlooks the German origin; in the latter 
 he becomes patriotic and rejects every German pro- 
 duct. It will be the task of the rejected industries 
 to collect all grounds which can prove such a proce- 
 dure beyond question. If upon examining these 
 grounds the officers of the union find that there can 
 be no doubt about the manufacturer being guilty of 
 boycotting, he will be prevented by the union from 
 
The Camouflage of Commerce 47 
 
 getting the German materials indispensable to him, 
 even if he tries indirect ways such as through similar 
 industries of his own country. Such control is readily 
 possible, because a sudden increase in the demand 
 for these indispensable products on the part of a 
 compatriot manufacturer who is acting as a go- 
 between gives proof that he is helping his friend. 
 He would then fall a victim to the same fate, as 
 would the whole foreign industrial association in 
 question, the destruction of which in this way would 
 not be difficult. 
 
 The same procedure is to be recommended when a 
 foreign industry which is not dependent upon Ger- 
 man manufactures persists in boycotting German 
 goods. In this case a closely allied industry which 
 supplies it — or is supplied by it, as the case may be — 
 will have to feel the eff'ects of an embargo unless the 
 closely allied industry makes redress in some internal 
 way and brings the hostile industry to its senses. 
 The battle will again be fought out according to the 
 approved German fashion on foreign soil, only with 
 the diff'erence, nevertheless worthy of notice, that 
 both contesting parties must be furnished by foreign 
 countries. Such measures can be more easily carried 
 out by industrial unions than by the State, because 
 individual conditions are often met with, which can 
 be remedied more readily by private parties. The 
 State's embargo mentioned above always remains 
 ready as a powerful reserve for the attack, whenever 
 petty warfare degenerates into a general conflict. 
 
 Foreign manufacturers who persistently reject Ger- 
 
48 The Future of German Industrial Exports 
 
 man goods of one sort can under no circumstances be 
 permitted to get German goods of another sort zvhich are 
 indispensable to them. 
 
 The necessary control can perhaps be made 
 easier if this principle is observed, namely: that all 
 foreign payment for German goods received must 
 be made only in German exchanges. This will 
 probably become an essential stipulation in the im- 
 mediate future, since the action of the hostile govern- 
 ments toward German credits will not be forgotten at 
 once. Manufacturers and banks can here render 
 each other mutual and effective support. 
 
TIHJB German sets forth in 
 Chapter IV by what process he 
 proposes to blackmail the world 
 with his'* Indispensable Industries/* 
 For this purpose he intends to 
 maintain exclusive control of them 
 by a rigid and despotic ''state 
 sovereignty^^ expressly adopted to 
 limit "the freedom of the Individ" 
 ual, science, and property,'* 
 
 These strategic industries will 
 embrace such natural monopolies as 
 potash, such results of the German 
 system as dyestuffs and carbolic 
 acid, chemicals, steels of special 
 value and gelatine, which they 
 believe inimitable. Beyond these, 
 such products as they have or can 
 render irreplaceable, technically 
 superior and infinitely cheaper, 
 of a nature to cause great econ- 
 omic suffering by their lack, and 
 which can be made exclusively of 
 materials obtainable always in Ger- 
 many, will be selected to constitute 
 the "Prussian Guard'' of their 
 industrial invasion, and to be put 
 under the invigorating husbandry of 
 the Military Regime. 
 
CHAPTER FOUR 
 
 "INDISPENSABLE INDUSTRIES" 
 
 Imperial Military Control to Insure Exclusive Possession of 
 Strategic Industries — ^The German Plan to Eliminate the Free- 
 dom of Science and Property — Potash a Prussian Monopoly — 
 The Inimitable DyestufFs and Chemicals — Principles of the 
 Embargo Battle — Some Definitions of "Indispensable** — ^Th^ 
 High Road to Technical Superiority — ^An Infallible Price-cutting 
 Device. 
 
 3. Emigration of Domestic Industries 
 
 ALTHOUGH this protection of Germany's 
 /J^ export trade as a whole can probably be 
 -*- -^ attained by the methods suggested, and with 
 honest effort, yet it will be permanent and effectual 
 only if the weapons of protection remain exclusively 
 in the possession of German manufacture. This 
 stipulation is much more difficult to fulfil than ap- 
 pears at first glance, since in so doing the legal 
 freedom of the private individual, of science, and of 
 property, although eventually guaranteed and safe- 
 guarded, is liable to be compromised, as, likewise, is 
 the right of capital and trade to move about at will. 
 In other directions nothing stands in the way of 
 the fulfilment of this condition provided that the 
 war-forged watchword "Our country first of all!" 
 retains, in peace times also, the same importance 
 
 50 
 
^^Indispensable Industries'^ 51 
 
 and general recognition which it now commands. 
 When put into practical application this means: 
 The State must possess the right — even against the 
 personal and material interest of individuals, com- 
 panies, and organized businesses — to prevent emi- 
 gration of those industries whose exclusive continua- 
 tion at home is necessary in order to remove obstacles 
 which could oppose the export trade of other German 
 industries. This right must be established by law. 
 This law must define the position of the State toward 
 these industries and its rights and duties toward 
 them just as precisely as the rights and duties which 
 these industries have toward the State. This in- 
 dispensable law must be given a retroactive power 
 and authority which naturally will extend also to 
 industries not yet in existence and its fundamental 
 outlines be worked out now, since they might per- 
 haps have a guiding influence on the economic terms 
 of the coming treaty of peace. 
 
 The emigration of industries whose continuation at 
 home exclusively is essential to the security of the export 
 trade of other industries must he prevented* A law 
 governing this question is a necessity. 
 
 For preventing the transplanting of such industries 
 to foreign countries the following topics are sugges- 
 tive: 
 
 1. A statement pointing out the distinguishing 
 pecuHarities of those industries which are to be sub- 
 jected to the State's rights of special sovereignty. 
 
 2. Definition of these rights. 
 
 3. Control of the operation of such industries. 
 
52 The 'Future of German Industrial Exports 
 
 4. Their rights of exemption of a technical nature. 
 
 5. State guarantees for their manufacturing ne- 
 cessities (machines and materials), to be eventually 
 at the expense of other native industries in return 
 for equivalent services. 
 
 6. A law requiring the reporting and registration 
 of new improvements and inventions. 
 
 7. The drawing*^ up of industrial lists in which the 
 proprietors of such industries, and the mechanics, 
 foremen, and labourers employed in them, are 
 named. 
 
 8. Measures to be taken in case of the transition 
 of these industries into other hands or in case of a 
 change in their business form. 
 
 9. A voice in regulating the exports of these in- 
 dustries. 
 
 10. Safeguarding the business- and manufacturing- 
 secrets, from an industrial and economic point of 
 view. 
 
 11. Regulation of wages and conditions of labour. 
 
 12. Regulation of the participation of such indus- 
 tries in foreign industries of the same or related 
 kinds (industries turning out manufactured or im- 
 proved articles, and branch offices of German com- 
 panies). 
 
 13. Participation of foreign capital in such indus- 
 tries and the composition of their controlling bodies. 
 
 In stating the characteristics of industries which 
 must be safeguarded against injurious transplanta- 
 tion, the following are the principal considerations: 
 
 Nature of the manufactured article: Degree to 
 which other things can be substituted for it; Degree 
 of its perfection; Possibility of imitation; Degree 
 of its usefulness and indispensability; Amount 
 manufactured; Demand for it; Height of selling price; 
 
^'Indispensable Industries'^ 53 
 
 Dependence upon — or, as the case may be, indepen- 
 dence — of foreign raw materials; Nature and amount 
 of foreign competition. 
 
 In classifying an article we should notice whether 
 it is a raw or a finished product; whether it is used 
 in agriculture or industry, or in the metal, textile, 
 chemical, or, particularly, the war industry; whether 
 it is rapidly worn out or more durable, and whether 
 it is manufactured in bulk or by the piece. 
 
 The raw product may be of animal, vegetable, or 
 mineral nature. The first sort need scarcely be 
 taken into consideration. The second sort may, 
 perhaps, be considered conditionally in cases in 
 which are involved vegetable materials which form 
 the foundation of special industries and which are 
 handled in colonial business. 
 
 POTASH A PRUSSIAN MONOPOLY 
 
 Among mineral raw materials, the most important 
 will be certain salts necessary in agriculture. After 
 them come certain kinds of iron, bronze, and coal, 
 in connection with specific countries. The impor- 
 tance of controlling the latter may perhaps be in- 
 fluenced by future territorial settlements. Those 
 raw products which are obtained by the use of 
 chemicals, however, will be of very special importance. 
 Thanks to the marvellous development of German 
 science, they assure a monopoly to German industry 
 — a monopoly the use of which is of great importance. 
 The experiences of the war, thus far, have given 
 in this very connection an incontrovertible proof of 
 
'54 The Future of German Industrial Exports 
 
 r 
 
 the absolute dependence of the foreign countries upon 
 Germany. To make this dependency permanent and 
 certain will be one of the most important problems 
 connected with the prevention of transplantings. 
 
 In protecting our export trade^ raw products of 
 German origin^ which are indispensable for the foreign 
 countries in question^ are to he made use of. These 
 raw products must he placed under State control through 
 its rights of special sovereignty. 
 
 THE INIMITABLE DYE-STUFFS AND CHEMICALS 
 
 The classification of finished products will be 
 somewhat more difficult, since, with few exceptions, 
 the dependency of foreign countries upon them is 
 not always easy to prove. In these exceptions are 
 included, briefly, certain dye-stuff^s and chemicals 
 of an industrial and pharmaceutical nature; certain 
 steels of especial value; also some kinds of gelatin. 
 The dependency of foreign countries can, of course, 
 be only a conditional one, resting upon their in- 
 ability to turn out goods of equally high value. This 
 is especially true in reference to machines and ma- 
 chine parts, which enjoy the protection of special 
 patents. The objection that foreign countries, 
 in such cases, simply would either not regard the 
 patent right or else entirely extinguish it, is scarcely 
 justified, since without doubt recourse would be had 
 to reprisals in the matter of patent rights and these 
 reprisals would, of course, be made where the foreign 
 industry would suflFer in an especially vulnerable spot. 
 Observe that an embargo on raw products can be 
 
'' Indispensable Industries'^ 55 
 
 of effect on either an agricultural or an industrial 
 connection; an embargo on finished products will 
 generally be of effect only in an industrial connection. 
 
 Finished products of German origin are considered 
 for purposes of protecting the export trade — primarily^ 
 if they are absolutely indispensable for the foreign 
 country in question; secondarily^ if they are partially 
 indispensable, 
 
 PRINCIPLES OF THE EMBARGO BATTLE 
 
 What kind of article is to be chosen in arranging 
 protection for certain exports depends upon the 
 industry which is the predominant and prevailing 
 factor in the economic life of the country in question. 
 Manufactures that wear out rapidly will be less 
 adapted for protective uses than those of a permanent 
 nature. An embargo on perishable articles is more 
 or less equivalent to a sudden crippling of the indus- 
 try, and like every unforeseen business cessation is 
 attended with heavy economic sacrifice; and there is 
 also danger that the embargoed goods, to an amount 
 corresponding to previous export, will spoil in 
 default of sale. An embargo on durable articles 
 will only very rarely be followed by serious economic 
 loss. The plant can continue operation at full 
 capacity and its output stored as a surplus, and 
 the longer the embargo lasts, the greater will be the 
 demand when it is lifted. 
 
 Perishable articles are inferior to durable articles in 
 respect to their protective value \ manufactures in bulk 
 are superior to piece manufactures. 
 
56 The Future of German Industrial Exports 
 
 A presupposition in the case of all raw materials 
 and articles which are used in protecting exports is 
 their irreplaceability in a material and qualitative 
 connection. Chemical and mechanical composition 
 is an important factor here, as well as physical, 
 chemical, and mechanical peculiarities, such as their 
 action when combined with other substances. Up 
 to a certain limit of effectiveness all raw materials 
 and manufactured articles can be replaced by others; 
 the relative height of this limit, from an economic 
 standpoint, determines the possibility of substitu- 
 tion. When this limit is ascertained, we have a 
 clue to the value of the raw material or manufac- 
 tured article as a means of protection for exports. 
 But this limit of effectiveness, measured indepen- 
 dently, is not the determining factor. The principal 
 element is the item of price. There are substitutes 
 for the regular materials which are only half as 
 efficient, but which are four times as cheap. Such 
 substitute-materials give the foreign country suffi- 
 cient superiority to rob the normal material of its 
 protective properties. Raw materials and manu- 
 factured articles, accordingly, are to be considered 
 as irreplaceable whose physical, chemical, and 
 mechanical properties — independent of other con- 
 siderations — can not be rivalled by substitutes at all; 
 secondly, those which can not be rivalled in the 
 matter of price; and finally, those which, when 
 measured from the standpoint of economics, show a 
 superiority not to be overtaken. 
 
 Protective means for the export trade can only be 
 
^^Indispensable Industries^' 57 
 
 raw materials whose degree of effectiveness — absolute 
 and relative — can not be rivalled by substitutes, 
 
 SOME DEFINITIONS OF "INDISPENSABLE*' 
 
 The degree of excellence can come into question 
 only in the case of improved raw products — ^which 
 in the broader sense of the word, represent manu- 
 factured articles — and in actual articles of manufac- 
 ture. At that it is only a relative matter and depends 
 upon the degree of excellence attained by the 
 products of the competing foreign country. The 
 more our products surpass the latter, the greater will 
 be their protective value. In estimating the degree 
 of excellence of an article, we consider first, of course, 
 its good qualities. Then we consider the readiness 
 with which it can be put into service, and finally its 
 total efficiency. The less the deterioration (in 
 actual manufactures), the greater the productivity 
 (in improved raw products), the longer the duration, 
 the more versatile the application, the higher will be 
 the degree of excellence which represents the sum 
 total of these properties. This degree of excellence 
 determines at the same time the degree of usefulness. 
 
 Protective materials for the export trade must show a 
 superior degree of excellence and usefulness. 
 
 Special make, irreplaceability, perfection, and 
 usefulness of (raw materials or) manufactured arti- 
 cles are of no avail, if there is a reasonable probability 
 that, with all these peculiarities, they could be imi- 
 tated in a comparatively short time. On account 
 of the constant advance of technical skill and indus- 
 
58 The Future oj German Industrial Exports 
 
 trial resourcefulness therewith, there is no use talking 
 about the "impossibility'* of practical or equivalent 
 imitation. Inventions overtake each other more 
 quickly^than they can be perfected. Merely theoreti- 
 cal imitation of course holds no terrors for us. For 
 from theoretical imitation to practical performance, 
 under the conditions of competition, is a far cry, 
 and demands hardly less time and money than were 
 required for the development of the original article. 
 
 Here also there can accordingly take place only a 
 relative valuation of our articles for export pro- 
 tection. The chief criterion will not be of a financial 
 but of a temporal nature, and the possibility of an 
 imitation being turned out will always be presup- 
 posed. This presupposition must be retained and 
 must influence the selection, even if for the instant 
 there is no such possibihty evident. To deny it 
 would be to call mechanical improvement an im- 
 possibility. Capital can always be provided, even 
 in advance, in case of assured profit. Mechanical 
 improvement can almost always be obtained where 
 broad and alluring advantages are offered in return. 
 When time is short, it must be used up wherever a 
 minute can be found. The greater the element of 
 time, the smaller becomes the economic success 
 of an imitation, and the larger the protective value 
 of the manufacture which is to be imitated. The 
 time necessary for imitation assures the original 
 article an economic and commercial start which puts 
 it out of subsequent danger. Then too, this respite 
 can be used in perfecting the original article still 
 
"Indispensable Industries'' 59 
 
 more, further handicapping the imitation in the 
 economic race. 
 
 In determining the protective value of a manufactured 
 article in respect to the possibility of its being imitatedy 
 the deciding factor is the time required for contriving 
 the imitation. 
 
 Raw materials and manufactured articles which 
 are dispensable under favourable economic circum- 
 stances are not considered as protective means for 
 industrial exports. If to do without them causes 
 economic loss to the country in question, then these 
 raw materials and manufactured articles are truly 
 indispensable. 
 
 It is self-evident that, as protective means for the 
 manufacturing export trade, only such raw materials 
 and manufactured articles can be used, the demand 
 for which and the corresponding output of which 
 form a very considerable proportion of the entire 
 consumption of the foreign country to which they 
 are shipped. 
 
 Here there should be noticed a still further limita- 
 tion, namely: a large manufacturing output or foreign 
 demand represents an influential economic factor 
 only when the selling price of the unit of goods is as 
 high as it should be, considering the amount of 
 I output. Expressed in other words that means: 
 The product given by multiplying the output shipped 
 abroad by the selling price must be a figure which 
 is larger than a certain percentage of the entire 
 value of the exports to the foreign country in 
 question. This deciding percentage will be diflPer- 
 
66 The Future of German Industrial Exports 
 
 ent for each foreign country for it is dependent upon 
 the other exports. In one case it will have to be 
 very large before admitting of protective measures 
 without injury to the rest of the export; in another 
 case it can be comparatively small. It must always, 
 however, be adjusted so as to leave such an amount as 
 will allow other industries which may in time be- 
 come involved, to be maintained without loss. 
 
 Protective value can he attributed only to those raw 
 materials and articles whose output jor foreign countries^ 
 and whose selling price amount to a figure of consider- 
 able importance in the total export statistics for those 
 countries. 
 
 To manufacture certain articles in Germany, we 
 shall have to have foreign raw materials; for certain 
 others, we shall not. Manufactures which are de- 
 pendent upon a supply of foreign raw materials 
 (German over-seas colonies taken as part of the 
 mother country), can be considered as means of 
 protection only in two cases, namely: when the land 
 of supply is well disposed toward us (a case upon 
 which we dare not count too strongly, as experience 
 teaches), or when it is possible to manufacture un- 
 surpassable products from these raw materials in 
 Germany alone. 
 
 The deciding factors here will be: working methods, 
 secret processes, and also groups of employees whose 
 trade is handed down from father to son, and who 
 are certain not to be transferred to other countries. 
 The above-mentioned limitations will closely limit 
 this class of protective articles, and will make it 
 
^^Indispensable Industries'^ 6i 
 
 smaller than that of manufactured articles indepen- 
 dent of foreign raw materials. The importance of 
 the latter is evident without further discussion. 
 The chemical industry and the metal industry will 
 here stand in the first place. Next to them will 
 come the manufacture of deUcate instruments, a 
 field where science is continually progressing. 
 
 Manufactures independent of foreign raw materials 
 have a higher productive value than those dependent 
 upon them, 
 
 THE HIGH ROAD TO TECHNICAL SUPERIORITY 
 
 Finally, the amount and kind of foreign compe- 
 tition is a factor determining protective value. The 
 greatest protective value is afforded by those raw 
 materials and manufactures which are superior to 
 the foreign, both in quality and quantity. By su- 
 periority in quaUty we are to understand technical 
 superiority (good quaUties, durabiUty, efficiency, 
 productivity, etc.) as well as price superiority (cheap- 
 ness, taken absolutely and also in proportion to 
 technical superiority). For this reason, all imagin- 
 able measures are to be taken to increase technical 
 and price superiority, not only on behalf of manu- 
 facturers but much more still for the sake of increas- 
 ing protective value. 
 
 Technical superiority finds advancement through 
 state scientific institutions, schools, research organiz- 
 ations, prizes offered for perfected articles and im- 
 provements. It finds it in a larger share of profit 
 for the inventor in comparison with the head of the 
 
62 The Future of German Industrial Exports 
 
 business; reduction of the cost of government tests 
 in order to bring them within the reach even of in- 
 dustries weak financially, research work done without 
 charge when circumstances warrant it, state aid to 
 private institutions for research and experimental 
 laboratories under certain restrictions, state encour- 
 agement of private inventive activity by financial 
 support, state benefit and support for professional 
 unions, and through these unions themselves. Spec- 
 ial value is to be placed upon the continued main- 
 tenance of vital contact between scientific investigation 
 and practical application; in other words, scientific 
 improvements ought to be made accessible to indus- 
 try as a whole not only through private trade- 
 literature, but also through hterature under state 
 patronage. 
 
 AN INFALLIBLE PRICE-CUTTING DEVICE 
 
 Price superiority is increased by safeguarding 
 general labour conditions with reference to relations 
 between employer and employee, as well as to raw 
 materials (pre-manufactures) and machinery. Un- 
 reasonable advances in the prices of raw materials 
 (pre-manufactures) due to rings and special interests, 
 must be prevented by state measures, where they 
 might endanger the protective value of manufactures. 
 The present times are showing that state interference 
 of this sort is possible and can be successfully carried 
 out. The experiences of to-day in this connection, 
 ought to bear fruit in peace times also. There must 
 be no hesitation about applying compulsion in cases 
 
^^Indispensable Industries^' 63 
 
 where selfish interests of individuals or groups could 
 injure the German export trade or parts of it. Ac- 
 cordingly, it is plain that certain raw materials and 
 pre-manufactures, which are closely related to export 
 articles having a protective value, must be subject 
 to state supervision at least so far as price goes. 
 
 Many industries and industrial enterprisers fall 
 behind the times in the matter of price (to a certain 
 degree often in construction also), because their 
 momentary financial situation makes it impossible 
 to procure more efficient machinery. This condition 
 will be especially annoying in the time immediately 
 following the making of peace. It might well be a 
 subject study, whether, with state assistance — no 
 matter whether this benefited the enterpriser directly, 
 or the trade association to which he belonged — ^ways 
 could not be found to remedy this evil, perhaps 
 through replacing the machinery in return for certain 
 obligations which would be payable in cash or in 
 output. This assistance will be particularly neces- 
 sary where eflFective protective value can not be 
 gained until the industry in question maintains 
 a certain minimum efficiency in the amount of output. 
 
 Industries, whose products are to have a protective 
 value which will benefit the German export trade, 
 must be and remain superior to the corresponding 
 foreign industries in the matter of machanical con- 
 structiony price, and capacity. 
 
/N ORDER to strangle any pos- 
 sible competition by the United 
 States and her Allies in the pro- 
 duction of those ''unsurpassable 
 goods'^ with which she is to throttle 
 us eventually, the Germans are to 
 incorporate all their export Indus- 
 tries into a "union" under] military 
 control. And this union will levy 
 contributions from all its members 
 for a ''guarantee fund." The Guar- 
 antee Fund will "insure" that these 
 strategic goods undersell all possible 
 competitors. For while the State 
 provides the constant supply of raw 
 materials, below cost, the fund Hows 
 in to reimburse the miner, and fi- 
 nance the hiatus caused by the "piti- 
 less embargo" and maintain the 
 surplus stocks for future offensive 
 manoeuvres. Besides, the indispens- 
 able industries will never be ham- 
 pered, as ours are, by the demands 
 of labour. Strikeis, the writer here 
 says, are "unthinkable" in thiscam- 
 paign, and will be met by swift and 
 terrible retribution. 
 
CHAPTER FIVE 
 
 THE GOLDEN GUARANTEE AND THE 
 DISCIPLINE OF LABOUR 
 
 The Fusion of German Business and the German Army — ^The 
 Benevolence of State Supervision of Industry— Raw Material, the 
 Tale of Available Ammunition — Surplus Stocks, the "Reserves" 
 of the Trade War — Subsidies and Compensations — Levying 
 Contributions on All Business — ^The Guarantee Fund — Cheap 
 Materials — ^The Composition of the General Staff — Crushing 
 "Unthinkable'' Labour Disputes — Stopping Leaks to the 
 Blacklist. 
 
 IT WILL now be the duty of the state officials in 
 charge of the welfare of the export trade to sep- 
 arate the individual German industries, on the 
 basis of detailed studies and deliberations, into those 
 with direct protective value, and those with indirect 
 protective value, and to issue for the benefit of those 
 industries and their service to our export trade 
 administrative regulations, the guiding lines of 
 which have been given in the foregoing discussion. 
 The special industries must recognize that they work 
 not only on their own account but for the general 
 good, that their own interest must give way to the 
 protection of the whole German export trade. 
 
 Certain special rights must be given the State by 
 law to prevent industries of special protective value 
 
 66 
 
The Golden Guarantee and Discipline of Labour 67 
 
 from being transplanted into foreign countries, 
 when such a transfer would impair or destroy their 
 protective value. These rights can be defined by 
 law only in a general way; they must furnish the 
 guiding lines for the decisions to be issued in the 
 form of rules and regulations. They must on 
 the other hand be so worded that a gag or check 
 upon industrial development or upon the indispen- 
 sable opportunity for free expansion is just as com- 
 pletely precluded as a "bureaucratizing'^ in the 
 damaging sense of the word. In no circumstances 
 may fetters be laid upon industry; the state's rights 
 of special sovereignty should have the end of promot- 
 ing industry in greater measure than previously. 
 Claims to such special help can be made only by 
 industries which are suited to protect the entire 
 export trade against outside hostility of every 
 sort. State surveillance is not to be called upon, 
 but state protection. The State must have the 
 right of cooperating with industry, not of interfering 
 with it. What we need is not a favouring of special 
 industries but a safeguarding of industry as a whole 
 against the special interests of individual industries 
 which could only be satisfied to the detriment of 
 industry in general and therewith of the whole 
 export trade. 
 
 BENEVOLENCE OF STATE SUPERVISION 
 
 According to earlier explanations certain categories 
 of industries are to be subjected to state protection. 
 This carries with it a state right of supervision which 
 
68 The Future of German Industrial Exports 
 
 should be carefully defined, and which can be en- 
 larged in certain important cases to give the State 
 a voice in the industry's dehberations. At the 
 same time, however, it assures to the industry in 
 question special certain privileges which will be dis- 
 cussed farther on. With the cooperation of com- 
 petent industrial and technical associations it will 
 not be difficult to find a middle path, which giv^^s 
 to the State all the rights necessary for the protection 
 and profit of industry as a whole, and which gives 
 to industry that freedom of development without 
 which it can not continue, and without which an 
 increase in efficiency is unthinkable. The war times 
 have lent a rejuvenating impulse to an ofttimes 
 somewhat cumbrous bureaucracy, an impulse origin-* 
 ating from industry; the latter itself, in cooperating 
 with government authorities has learned to under- 
 stand their way of thinking and their good purposes. 
 A mutual evening-up of opinions has taken place 
 between officials and practical men of affairs, whose 
 views could not always be harmonized in the past. 
 
 This, as experience teaches, gives promise of splen- 
 did results. Such an assimilation was necessary, and 
 was the best imaginable preparation for the coming 
 work of peace and for the future of industrial exports. 
 The times are now past when officials on the one side, 
 and men of industry on the other insisted selfishly 
 on their prerogatives and were unwilling to listen 
 to the other side of the question. Under the stress of 
 circumstances both have learned to understand each 
 other and have seen that only in tolerant cooperation 
 
The Golden Guarantee and Discipline of Labour 69 
 
 can they arrive at what has made Germany so great, 
 to the terror of her opponents. Two forces, once 
 divergent, have been welded and transformed into 
 one unconquerable and ever-increasing power. Its 
 goal is the enduring security of the country *s future. 
 Hence there is no ground for the plea that these plans 
 call for police oppression of industry. Rather do they 
 call for a firm cementing of two mighty powers. 
 
 Industries which have protective value for the export 
 trade are to be given State protection. 
 
 RAW MATERIAL — THE TALE OF AVAILABLE 
 AMMUNITION 
 
 In [order that the State may at all times take a 
 stand against eflPorts hostile to its export trade, it 
 should be fully aware of the means at its disposal. 
 It must accordingly be kept well posted concerning 
 the regular output of the industries which have pro- 
 tective value. The within-defined control of amounts 
 of yield from raw materials, and of amounts of out- 
 put in the case of improved materials and manufac- 
 tured articles, will be most easily made possible by 
 «- the rendering of periodic production- and manufac- 
 turing-reports. The State must know what amounts 
 of a manufacture or of a material it has at its dis- 
 posal if it is to take its measures quickly. It has 
 already been indicated that some action against 
 domestic exploitation might also become necessary. 
 Price advancing can easily be prevented for the pro- 
 tection of other industries concerned in export, if 
 the quantities on hand are exactly known. Measures 
 
70 The Future of German Industrial Exports 
 
 against foreign countries will be attended by success 
 only if the State can count upon assured quantities. 
 Assurance in all cases presupposes control. 
 
 State protection places upon industries of protective 
 value the duty of reporting their amounts of production. 
 
 SURPLUS STOCKS, THE " RESERVES" OF THE TRADE 
 
 WAR 
 
 It has been explained that the size of output can 
 influence the protective value of the products in 
 favourable or unfavourable fashion. The mainten- 
 ance of protective value unimpaired demands a 
 certain minimum output. Therefore, in times of 
 strong market, but still more in times of a bad market 
 we must take care that a certain supply is on hand 
 which can be thrown into the balance at a given 
 instant. Out of this consideration arises the ne- 
 cessity of certain industries maintaining a surplus 
 stock above the normal needs of trade. The amount 
 of surplus required will be determined by the statis- 
 tics. Since work upon surplus stock is attended by 
 financial sacrifice for industry at many periods of 
 time, the State must make a corresponding return 
 for this. For it does not wish to give up the weapon 
 represented by the surplus stock, and yet the in- 
 dustry is to be protected from loss. The industrial 
 enterpriser will understand how to turn out the sur- 
 plus stock to the amount demanded by the State 
 without further directions, if the State gives him the 
 necessary guarantees of sale, and assists him finan- 
 cially by granting advances of money, when neces- 
 
The Golden Guarantee and Discipline oj Labour 71 
 
 sary, upon the amount of surplus stock. By these 
 advances the resources of the State will not be taxed, 
 for the surplus demanded as a reserve results in 
 safeguarding the trade of other forms of industry 
 whose export would be impossible without the pro- 
 tection of the State. The guarantees — through 
 state channels — are therefore to be furnished by the 
 industries given protection, for they form an insur- 
 ance of these industries. Moreover, they are not 
 actually paid out. For after the embargo is raised 
 the industries affording the protection can again dis- 
 pose of their stock and pay, back the advances they 
 have received. These advances then flow back — again 
 through state channels — to the protected industries. 
 
 The Statey relying for funds upon the industries 
 needing protection^ ought to set aside a guarantee fund. 
 The purpose of the latter would be to make temporary 
 compensation for the loss {for instance through keeping 
 a stock-surplus^ sustained by industries which exercise 
 protective influence in the interests of industries needing 
 protection. 
 
 SUBSIDIES AND COMPENSATIONS 
 
 It has been pointed out heretofore that protective 
 value increases the more the products can compete 
 in the matter of price, this is especially vital in pre- 
 venting cheap substitutes at the disposal of foreign 
 countries from coming into competition. It follows 
 that the State must take care that a reduction in 
 price is possible. It would not only have the duty 
 of stepping in when firms combine to boost the 
 
72 The Future of German Industrial Exports 
 
 prices of raw materials in their own interests alone, 
 but it would also have to attend to the establishment 
 or the expansion of such concerns as bring about a 
 cheapening of products having protective value. 
 Effective measures can here be taken either by the 
 erection of state plants or by state contributions to 
 private ones. In either case the outlay should be 
 gradually refunded, without hindering the prosperity 
 of the new industry. With such plants it is not a 
 matter of prime importance that their work be 
 directly profit-bearing, but rather that they furnish 
 to the industries having protective value the neces- 
 sary raw material at prices which enable them to 
 stand at all times in the forefront so far as price is 
 concerned. These auxiliary industrial plants must 
 of course also yield profits. Supposing that they 
 deliver materials at cost, they will then earn a profit 
 by a percentage share in the net earnings of their 
 customers. This share under certain circumstances 
 may amount to so large a sum that it will be just as 
 possible (even if a slow process) for these state auxili- 
 ary plants to pay for themselves as it is for the state 
 subsidies to private institutions to be paid back. 
 
 LEVYING CONTRIBUTIONS ON ALL BUSINESS 
 
 Still another way leading to the same goal is 
 possible. Mention has been made above of a guar- 
 antee fund which had reference to an individual 
 industry. There will be as many such guarantee 
 funds as there are at hand industries of protective 
 value, or, as the case may be, of industries to be 
 
The Golden Guarantee and Discipline of Labour 73 
 
 protected. Since industry as a whole, and the in- 
 dividual kinds of industry represent a smoothly 
 running machine every part of which contributes to 
 uninterrupted operation, or, in other words, cooper- 
 ates in safeguarding the entire export trade, a 
 centralization of all the individual guarantee funds 
 — ^the formation of a general guarantee fund — ^will be 
 expedient. The latter in accordance with some 
 system would have the duty of making up the in- 
 dividual guarantee fund which would exist only as 
 a matter of form. 
 
 • If industries with protective value need the cost 
 of their raw materials reduced, in order to enable 
 them to sell at better prices, the general guarantee 
 fund could take care of that. Even in that worst 
 case of all, where the auxiliary industries had to 
 supply materials for this purpose at a loss to them- 
 selves, they would still be supported by the general 
 guarantee fund, thus being assured a proper percent- 
 age of profit. In cases where the auxiliary industries 
 enjoy a normal profit it could look after the amortiza- 
 tion, or along with defraying the expense of amortiza- 
 tion could still contribute a supplement to a small 
 manufacturing profit. 
 
 There arise here a large number of combinations 
 the explanation and discussion of which would lure 
 us too far. Since those industries which reap the 
 greatest advantage through its existence, would have 
 to contribute in largest measure to the guarantee 
 fund, no industry will be injured at the cost of others. 
 There will be introduced a constant cycle, which 
 
74 The Future of German Industrial Exports 
 
 will complete itself with harm to none but with 
 profit for all. For this reason it is not to be ex- 
 pected that opposition will arise against such a 
 means of safeguarding the export trade, unless it be 
 through selfish interests, which, for the common 
 good, would at once be shown the error of their ways 
 by the power of the state, if need be. 
 
 The State, moreover, will take care that all advances 
 of science and practice be made accessible to such 
 auxiliary industries without cost. The guarantee 
 fund would again have to take care of these costs. 
 It is apparent, therefore, that the State is not called 
 upon to sacrifice its resources. Its task is only to 
 exercise its right of special sovereignty so as to regu- 
 late quotas of contribution in a way satisfactory to 
 all industries, and to systematize the collection of the 
 quotas so that the fund proceeds automatically, with- 
 out constraint or friction. 
 
 The price-superiority of industries having protective 
 value will he brought about through the establishment 
 of auxiliary industries whose continued operation and 
 profitableness is assured through the State by means of 
 a general guarantee fund. All industries will be 
 called upon to support this fund^ because its benefits 
 to export activity reach every form of industry, 
 
 CRUSHING ** unthinkable" LABOUR DISPUTES 
 
 All financial support is useless if production is 
 interrupted by causes lying in labour conditions. 
 Here there now arises a delicate question the solution 
 of which could scarcely give satisfaction to one 
 
The Golden Guarantee and Discipline of Labour 75 
 
 party. It must nevertheless be given consideration 
 for it is essential. Strikes and lock-outs impairing 
 the work of industries which have one of the above- 
 mentioned protective values or all of them in general, 
 or impairing the work of their auxiliary industries, 
 must under all circumstances be avoided. Such 
 cases are unthinkable in times of war with industries 
 which are concerned in military supply, because the 
 State possesses sufficient means to prevent them — 
 means which are used impartially against employer 
 and employee and which experience teaches are 
 successful. Everything has been settled peacefully. 
 A command was sufficient. There is no reason, 
 therefore, why the State in any given case even in 
 times of peace could not straighten out affairs with- 
 out the tedious negotiations of contesting parties 
 which always leave bitter feelings in the hearts of 
 both. The export trade, because it is a measuring 
 of strength, domestic and foreign, is a battle even if 
 within the realm of peace. To wage it successfully, 
 the combatant must remain free from irritation and 
 dissension within. It is to the interest of foreign 
 countries hostile to our export trade to encourage 
 labour confficts and in concrete cases they will not 
 spare the *' silver bullets." Long investigations 
 about causes would injure industrial development 
 and therewith the export trade. As in times of war, 
 so here, the procedure must be cut short — by the 
 mandate of the State. 
 
 State action will prevent further trouble before- 
 hand by placing the relationship between employer 
 
76 The Future of German Industrial Exports 
 
 and employee on a clear basis which will satisfy the 
 claims of both, as far as possible. For the industries 
 in question, certain wage standards are to be estab- 
 lished which serve as guarantees that friction will 
 be avoided. The war has confirmed the truth of the 
 Kaiser's word concerning the elimination of party 
 antagonisms. All parties have indeed perceived 
 the advantages which arise when party interests 
 give place to the interest of the country. The pros- 
 perity of the export trade is in the common interest 
 of all, the employer as well as the employee, antagon- 
 isms which could damage it must therefore be elimin- 
 ated and remain so. They will in general be only 
 of a financial nature. A just proportioning of the 
 profits which come to the employer and to the 
 employee through the security of the export trade 
 can unquestionably be reached if good will and recog- 
 nition of the ultimate purpose are shared by both 
 sides. Where this is not the case there arise selfish 
 interests, which should be suppressed by force on 
 behalf of the general welfare. In given cases the 
 general guarantee fund can again be appealed to in 
 smoothing out financial inequalities. 
 
 In all industries having protective value as well as 
 in their auxiliary industries^ labour disturbances which 
 arise through antagonisms between employer and em^ 
 ployee must be suppressed by every means. 
 
 STOPPING LEAKS TO THE BLACKLIST 
 
 In another place we have pointed out that in case 
 our products have to be placed under a partial or 
 
The Golden Guarantee and Discipline of Labour 77 
 
 complete embargo, its effectiveness must not be 
 destroyed by the consumers receiving a supply in- 
 directly. This can be prevented only if the buyers 
 are known. Therefore there is a special necessity 
 of keeping a general register of the purchasers of 
 important raw materials and pre-manufactures. 
 Of course this must be done in such a way as not to 
 endanger business secrets. This very difficulty 
 makes the problem a hard one to solv^* We must 
 nevertheless attempt it. 
 
 A useful expedient, perhaps worth considering, is a 
 Central Sales-Bureau for goods having protective 
 value to the export trade. The danger that domestic 
 buyers will circumvent the Sales-Bureau and supply 
 the outside world in spite of it will be entirely elimin- 
 ated by a regulation to the effect that, only on 
 authorization by the Central Sales-Bureau, may 
 officials of roads crossing our boundaries permit goods 
 to be shipped out. The advantage of a Central 
 Sales-Bureau for foreign countries scarcely needs 
 further discussion. The danger of uneconomic 
 price regulation is out of the question since the state 
 will watch over that in the interest of export protec- 
 tion. Sufficient assurance that the Central Sales- 
 Bureau will not exercise influence upon purely domes- 
 tic trade is contained in the stipulation that it will 
 operate only for foreign countries and confine its 
 jurisdiction to exports. It is further presumed 
 that shipments through the Central Sales-Bureau 
 can be made only by manufacturers and never by 
 middlemen. To the proper governmental authori- 
 
78 The Future of German Industrial Exports 
 
 ties belongs the control of the Central Sales-Bureau 
 in reference to its foreign customers, prices, and the 
 right to lay partial or complete embargoes. This 
 control is most easily to be carried out by granting 
 the officials a seat and voice in the supreme directing 
 body. To simplify affairs a certain number of 
 places in the directorate of the Central Sales-Bureau 
 and of the general guarantee fund will be filled by 
 the same individuals, who are to be elected inde- 
 pendently of each other by industry and the state 
 authorities. 
 
 The Central Sales-Bureau is to be thought of as 
 organized in a similar fashion to the general guarantee 
 fund. The separate industries of protective value 
 form branch sales-bureaus, which represent subor- 
 dinate units of the Central Sales-Bureau. The 
 directors of these units as of those in the general 
 guarantee fund must be in close contact, especially 
 in regard to the above-mentioned indemnity quotas 
 which are temporarily placed upon the protected 
 industries. The Central Sales-Bureau is the execu- 
 tive organ for the practical carrying out of embargoes 
 and boycotts. The cooperation of the general 
 guarantee fund is necessary to maintain embargoes 
 and boycotts without economic injury to the domes- 
 tic industries involved. Its directors would adminis- 
 ter the financial power. 
 
 The Central Sales-Bureau can of course be re- 
 placed by a purely administrative office to which 
 must be reported all arrangements with foreign 
 countries concerning products of protective value. 
 
The Golden Guarantee and Discipline of Labour 79 
 
 This administrative office is the court of last appeal 
 for export permission from the instant when em- 
 bargo measures are applied. Which of the two forms 
 of control is preferable will appear from the detailed 
 studies of the government authorities and the in- 
 dustrial unions. Both bodies furnish the data for 
 the export-control statistics and work out the rules 
 and regulations for exports. 
 
 Industries having protective value are to make known 
 their foreign customers to a bureau of control. This 
 bureau works hand in hand with the directors of the 
 general guarantee fund. The directors of both bodies 
 are elected independently of each other by industry and 
 by the State. 
 
OBSESSED by the fear that their 
 invaluable monopolies, the 
 *' shock troops" of their in- 
 tended commercial conquests, will be 
 imitated or transplanted to America 
 or France or England, the Germans 
 decree that no alien capital shall 
 have any interest in any of them. 
 To keep them at maximum efficiency 
 they propose to replace all machin- 
 ery to keep pace with even the 
 minutest improvement; to compel 
 every scientist and inventor in the 
 Empire to reveal his discoveries 
 instantly to the monopolies, and to 
 guard all their plants and processes 
 with a cordon of bayonets. They are 
 going to bolster these monstrosities 
 of commerce with what they plainly 
 call * 'special privileges' ' — reba tes, 
 tax remissions, premiums, long 
 working hours, priority orders , And 
 every employee, from president to 
 water-boy, is to be enlisted for life 
 — the better to create an '^hereditary 
 personnel'' and maintain the pall of 
 secrecy. 
 
CHAPTER SIX 
 
 THE CHINESE WALL OF SECRECY 
 
 Hounding Allied Money Out of Germany! — ** Capital Does Not 
 Exist Independently of the State" — Prods to Speed Up "Pro- 
 gress" — Compulsory Reports of Discoveries — ^The Veil of Mys- 
 tery to Enshroud German Inventions — "Special Privileges" 
 for "Protective" Industries — Drafting Labour for Life — Strict 
 Exclusion of Foreigners from Teuton Enterprises — ^The Ban on 
 Entente Capital. 
 
 THE control of the State over those industries 
 which, thanks to their protective value, serve 
 as protection to the export trade, must 
 reach out also in the direction of capital; first, in 
 order to strengthen and stiffen their financial back- 
 bone, and then in order to hinder foreign capital 
 from gaining an influence over the conduct and 
 control of these industries. The first purpose is to 
 be accomplished by a subdivision under the admin- 
 istration of the general guarantee fund; the second, 
 by the proper government officials (commercial 
 registrars). Industries with protective value must 
 never under any circumstances be at a loss for capital; 
 their securities must be permanently beyond the 
 range of wild speculation. Their demands for 
 capital must find satisfaction in the general guarantee 
 fund, or as the case may be, through its mediation 
 
 82 
 
The Chinese Wall of Secrecy 83 
 
 with related industrial unions. In the case of in- 
 dustries especially valuable for protecting the export 
 trade every influence of foreign capital must be 
 eliminated. A seat and a voice in the directorates 
 of such industries must be entirely out of the reach 
 of foreigners. 
 
 Ways and means must be found to hinder the 
 appointment of dummies in directorates, who are 
 expected to prevent the formation of a majority 
 at the important meetings, so as to defeat measures 
 against foreign countries hostile to our exports. If 
 the usual expedients here are of no avail, the State 
 must have the right to annul directorate resolutions 
 which could impair the protection of the export 
 trade. That, to be sure, is an infringement of 
 guaranteed commercial liberties, yet it is necessary 
 when the State meets opposition in exercising its 
 duty to protect exports. Capital also must learn 
 that it does not exist and may not be active primarily 
 for itself, but that the common welfare comes before 
 its special interests, even forgetting for the moment 
 that the latter thrive most when capital is serving 
 the common good. 
 
 The administration and conduct of industries with 
 protective value must remain free from the influence 
 of foreign capital, 
 
 PRODS TO SPEED UP "PROGRESS" 
 
 There are a number of industries with especially 
 high protective value whose progressive development, 
 which is absolutely essential to the continued main- 
 
84 The Future of German Industrial Exports 
 
 tenance of their protective value, is dependent upon 
 their working equipment. This is especially true 
 in mining industries. It is in the interest of profit 
 to put up as long as possible with the equipment on 
 hand (or, speaking in accounting terms, until it can 
 be written off the books without any debt remaining). 
 Such a practice is often incompatible with the attain- 
 ment of the desired maximum efficiency, measuring 
 this by the latest improvements in science and 
 practical work. An industry of protective value 
 must stand in the forefront in every respect, if the 
 protective value expected of it is to be permanently 
 at our disposal in its fullest extent. 
 
 It must not be overlooked that success from the 
 standpoint of profits is always assured to these 
 industries (guarantee fund), if not on their account, 
 at least in the interest of export protection. The 
 general welfare demands that these industries be 
 kept on a sound basis, with natural and satisfactory 
 profits. Their rare and valuable advantages im- 
 pose duties, among which is primarily that of con- 
 tinually perfecting operating equipment, working 
 methods in use, and finally the organization of the 
 business. 
 
 COMPULSORY REPORTS OF DISCOVERIES 
 
 All industries in a technical way are already 
 subject to state control in respect to their safety 
 provisions. We ought to welcome rather than con- 
 demn the addition of state control of manufacturing 
 processes. Industry would reap only advantages 
 
The Chinese Wall of Secrecy 85 
 
 /rem this, because it would automatically be advised 
 of all means for perfecting and increasing its effi- 
 ciency. In future, at least, we will certainly strive 
 for this goal. Those who find themselves momen- 
 tarily advanced in a technical way will combat it 
 and because of their financial means will always 
 be in a position to make new advances. They will 
 see in the general endeavour for this result an injury 
 to their competitive superiority. 
 
 Closer examination, however, shows that this 
 fear is unfounded. If technical improvements 
 quickly become common property, progressive con- 
 cerns will be forced to add new improvements 
 to the old in order to remain superior. Since the 
 exchange of inventions is mutual, they will likewise 
 gain advantage from those of others. An unin- 
 terrupted contest is instituted in which (to the 
 general advantage) there will always be a new leader 
 at the top. Progress which formerly took place 
 spasmodically will become constant. Improve- 
 ments which give the owner superiority mislead him 
 into resting on his oars in stagnant waters until 
 others catch up. This rest acts like a brake upon 
 the general progress which is necessary for the main- 
 tenance and increase of the export trade. A control 
 of manufacturing processes would be the best imag- 
 inable encouragement for progress and the simplest 
 medium of exchange for all individual improve- 
 ments. To make such a control general will probably 
 take many years, but its foundations can even now 
 be laid through its introduction into those industries 
 
86 The Future of German Industrial Exports 
 
 which have especially high protective value. The 
 experiences gained in this way will make its genera! 
 application easier and will contribute toward banish- 
 ing individual mistrust. 
 
 Whether this control of manufacturing processes 
 is to be exercised directly through the State or 
 through the medium of the associations of the various 
 trades is a question of secondary nature. Here also 
 the uniting of industrial and state representatives will 
 probably present the best solution. 
 
 Industries with high protective value for the export 
 trade are to he subjected to a control of manufacturing 
 processes in order to assure an uninterrupted perfecting 
 of their technical efficiency. 
 
 The body controlling manufacturing processes 
 must have a system which keeps it informed con- 
 cerning all improvements of a technical nature. 
 It then has the duty of determining where and to 
 what extent the practical application of these im- 
 provements can take place. The sources at its dis- 
 posal are of a state and private nature. Frequent 
 reports will be made to the controlling body con- 
 cerning the scientific and experimental activity of 
 state testing institutions, laboratories, and technical 
 schools. This body will naturally also be in close 
 association with the patent authorities. 
 
 The duty of making reports will now fall to private 
 experimental institutions and laboratories to which 
 will be given scientific and practical support in re- 
 turn. From the mutual exchange of thought and 
 experience there arises a cooperation of all forces 
 
The Chinese Wall of Secrecy 87 
 
 subserving progress. It will be found necessary 
 to lay down certain rules for commercializing new 
 inventions in order to protect the maker from loss 
 when the inventions are made accessible to broader 
 circles. We dare not diminish his right to a share 
 in the earnings. The more secure his rights and 
 interests from the very start, the less becomes his 
 opposition to a general application of his invention. 
 For in this way experimental and inventive activity 
 becomes, from the first, independent of individual 
 capitalists and of capital in general. This duty 
 to surrender inventions can extend for the present 
 only to those the application of which strengthens 
 industries having high protective value. 
 
 Inventions and other technical progress which can 
 bring about an improvement in industries having pro- 
 tective value are subject to the duty of being reported 
 to the body exercising control of manufacturing pro- 
 cesses. This body will transmit them to the industries 
 mentioned. 
 
 To simplify the matter of compensating the in- 
 ventors and authors of new improvements, recourse 
 to the controlling body of the general guarantee fund 
 again recommends itself. This body will charge a 
 special sub-department with the estimation of the 
 royalties, with the elaboration and completion of 
 utilization agreements (between the inventor and 
 the industry using the invention), and with the col- 
 lection of royalties (licenses) and the payment of 
 these to the inventor, etc. 
 
 The financial activity resulting from the compulsory 
 
88 The Future of German Industrial Exports 
 
 handing over of inventions and improvements is mxide 
 the duty of the general guarantee fund. 
 
 THE VEIL OF MYSTERY 
 
 If all inventions and improvements are made 
 accessible to a central ofiice, a suitable organization 
 will make it possible to keep these inventions and 
 improvements out of the reach of foreign countries 
 hostile to our exports, so far as it appears necessary 
 for the protection of the export trade. The ways and 
 means necessary for this purpose are to be invented 
 and worked out by the body exercising control ot 
 manufacturing processes, and are to be formulated 
 by it in clearly and sharply defined regulations. 
 These will not involve work materials alone, but also 
 the persons engaged upon them. 
 
 The idea ought not exactly to get about that a 
 Chinese wall is being thrown around German in- 
 ventions and improvements, although the experiences 
 of the war have taught us that too great scientific 
 familiarity with foreign countries was rewarded by 
 ingratitude and injury. It is, however, necessary 
 to preserve certain inventions and improvements 
 exclusively for our own industries as long as need be, 
 in order to maintain their protective value undimin- 
 ished for the sake of strengthening the export trade. 
 Things like this seem difficult and complicated 
 at first glance, but where there is a will there is a 
 way. The will in this case is the command of self- 
 preservation and for that reason is assured. 
 
 Inventions and improvements which are necessary 
 
The Chinese Wall of Secrecy 89 
 
 for strengthening industries having a protective value 
 must he withheld from foreign countries hostile to our 
 exports. 
 
 Here, accordingly, arises a further obligation to 
 compensate experimenters and inventors. This obli- 
 gation is to be met by the general guarantee fund 
 which at the same time will make a charge upon 
 (debit to) the industries making use of these in en- 
 tions and improvements. 
 
 "special privileges'' for ''protective*' 
 industries 
 
 In a purely material connection, industries having 
 protective value must be granted special privileges 
 so that they may be provided with raw materials 
 and indispensable working equipment in advance of 
 all other industries, for the sake of preventing any 
 interruption in their activity. For instance, when 
 raw materials are scarce, the] industry 'having 
 protective value has the preference. Again, in case 
 of an interruption in the power current, safety pre- 
 cautions are to be taken beforehand at the general 
 power plant to prevent an industry with protective 
 value from being shut down. In securing coal, oil, 
 benzine, ores, metals, etc., industries having pro- 
 tective value enjoy the preference, the same as state 
 enterprises. As has already been explained prices 
 are regulated by the general guarantee fund in case 
 of advances in the market. 
 
 Among the prerogatives to be granted to industries 
 with a protective value are also: freight concessions, 
 
90 The Future of German Industrial Exports 
 
 which can be not only of a financial nature but also 
 such as to expedite industrial processes; the granting 
 of longer working hours in cases where they are tem- 
 porarily necessary; brief tax remissions, and, if 
 need be, tax exemptions; and expropriation rights 
 when expansion or enlargement over new land is 
 necessary. 
 
 Industries with protective value are to he given 
 special privileges in ordering raw materials and other 
 manufacturing necessities^ and in reference to freight 
 and transportation concessions^ working hours, tax 
 and expropriation rights, 
 
 DRAFTING LABOUR FOR LIFE 
 
 All persons who are employed in industries of pro- 
 tective value must be entered in special lists by the 
 body controlling manufacturing processes, so as to* 
 safeguard these industries. From the general lists a 
 special list is to be drawn up which contains the 
 names of employees in protective industries, who 
 work with manufacturing methods or procedures 
 over which foreign countries hostile to our exports 
 have no control. On the part of the State, care 
 must be taken that special material advantages 
 (premiums, profit-sharing, pensions), both now and 
 for the future, be granted to these individuals by 
 the employer in order to hold them fast to the in- 
 dustry in question. These persons — ^whether they 
 be directors, operating or scientific officers, or la- 
 bourers — must be subject to a state organization 
 similar to that of the army. 
 
The Chinese Wall of Secrecy 9 1 
 
 Without permission of this organization no emi- 
 gration of persons in these Hsts can take place. 
 They are subject to especially strict rules for safe- 
 guarding manufacturing secrets and methods. For- 
 eigners can not be permitted to find employment in 
 concerns of this sort. A certain limitation of per- 
 sonal freedom, it must be confessed, is here involved, 
 yet an objection against this can scarcely be raised 
 for there are considerable material advantages in 
 return. No one, moreover, is compelled to take 
 employment in these special industries. Whoever 
 places himself at their disposal knows what rights 
 and duties await him and must recognize that his 
 continuation there is necessary in the interest of 
 the country. There will always be deserters. They 
 must expect severe punishment meted out according 
 to the amount of responsibility attached to the post 
 which they left. On the other hand, freedom of 
 personal movement within the same or a closely 
 related industry is to suffer no limitation. 
 
 The employees in protective industries must be 
 prevented from transferring these industries or parts 
 of them to foreign countries. In these industries only 
 German subjects can be allowed to find employment. 
 
 STRICT EXCLUSION OF FOREIGNERS FROM TEUTON 
 ENTERPRISES 
 
 The exclusive maintenance of such industries for 
 the Empire demands a further control which ex- 
 tends to changes in ownership. Since these indus- 
 tries share the protection of the State in an especially 
 
92 The Future of German Industrial Exports 
 
 high degree, the State must be given the right of 
 consultation in case they pass into new hands. 
 With an individual owner the state control will limit 
 itself to ascertaining whether the future owner 
 exhibits those peculiarities which in a material, 
 technical, and moral connection offer a guarantee 
 that the industry in question will remain at its former 
 jbeight and capacity for development, and banish all 
 possibility of its being transplanted to foreign 
 countries by the new owner. In the case of indus- 
 tries with the form of companies, the State will 
 exercise its rights already mentioned above, in refer- 
 ence to the appointment of executors and directors. 
 The exclusion of foreigners is important in all cases. 
 
 Change of ownership in protective industries and 
 also the appointment of their higher officers are subject 
 to the approval of the State. 
 
 No objection will generally be made to industries 
 of protective value having an interest in similar or 
 related industries within Germany (first process, or 
 improving industries), as long as the participation 
 does not bring about financial weakness or an 
 undesirable dispersion of energy endangering their 
 protective value. Participation in similar foreign 
 industries will only be admissible where there is no 
 doubt about the security of raw materials or pre- 
 manufactures, and where financial participation 
 brings with it no weakening of the main firm or 
 tendency toward a transplanting of the industry. 
 Such participation, besides being entirely subject to 
 approval by the State in all cases of protective in- 
 
The Chinese Wall of Secrecy 93 
 
 dustries, must also take place in such a form that 
 an undiminishable right to a decisive voice in the 
 deliberations of the foreign firm is gained by the 
 industry owning the interest. 
 
 In the establishment of foreign branches (the 
 appointment of representatives) by protective in- 
 dustries, special care should be taken in all cases 
 that foreign officials can not possibly get an insight 
 into the manufacturing process. The personnel of 
 these officials must be known to our state control. 
 
 The participation of protective industries in foreign 
 industries is subject to the approval of the State^ which 
 is granted under certain pertinent regulations. Such 
 participation can not he permitted when it involves 
 the possibility of a protective industry being trans- 
 planted, 
 
 THE BAN ON ENTENTE CAPITAL 
 
 The participation of foreign capital in protective 
 industries must be absolutely debarred. This ex- 
 clusion can be accomplished by registering the name 
 of the owner on stock when it is issued, and by 
 the stipulation that dividends will be paid only to 
 citizens of the Empire, who must prove themselves 
 the owners. With an individual proprietor this 
 exclusion involves merely the rule that he must be 
 a citizen of the Empire. The substitution of dum- 
 mies can never of course be prevented, yet the 
 injurious influence arising from it will be entirely 
 avoided by the measures of control mentioned earlier. 
 The oversight and control of capital in its efforts 
 
94 The Future oj German Industrial Exports 
 
 to buy an interest in our industries must be con- 
 ducted with special strictness, because herein lies 
 the breach through which foreign countries hostile to 
 our exportation can most easily attack our protective 
 industry. Foreign countries will try to buy such 
 an interest not only in order to make our industries 
 of protective value subservient to them and to pre- 
 pare their transplanting, but also because the pro- 
 tective industries, thanks to their exceptional posi- 
 tion, will in all probability return sure and satisfac- 
 tory profits. 
 
 Foreign capital is to be excluded from protective 
 industries: It can not he permitted to acquire any 
 sort of influence over them. 
 
To MAINTAIN exclusive and 
 overwhelming advantages for 
 German commerce through- 
 out the world, the German Diplo- 
 matic corps will operate as an 
 Advance Guard of the Commercial 
 Invasion, working in secret unison 
 with every agency — to-wit, every 
 German — in Allied lands. The 
 ^'Defence Statistics,^' trade condi- 
 tions, business methods and mar- 
 kets, and all actions hostile toKultur 
 will thus instantly be marshalled 
 and reported. And the Kaiser pre- 
 sumes that by dint of offering to 
 trade rebate for rebate, subsidy for 
 subsidy, and private advantage for 
 German toleration, some nations 
 can be translated into the Prussian 
 influence and will open their doors 
 with privy welcome to German goods. 
 Temptation, in the shape of secret 
 concessions, and incentive, in the 
 shape of murderous threats, are to 
 be skilfully manipulated by the Am- 
 bassadors from Berlin, constituting 
 the weapons with which the Allies 
 in succession are to be dragged into 
 the spider's web. 
 
CHAPTER SEVEN 
 
 DIPLOMACY, THE ADVANCE GUARD OF 
 THE EXPORT WAR 
 
 Private Advantage and Hidden Rebates the Basis of German 
 Business — Obtaining Secret Privileges Abroad — Confidential 
 Exchange of " Compensations" — A Tempting Bargain in Rebates 
 and Premiums — ^The Prize Bait of the Prussian Ambassador. 
 
 4. Economic Compensations 
 
 WE SHOULD make a distinction between 
 economic compensations as to whether 
 they are domestic or foreign. Both have 
 the purpose of assuring advantage to our own coun- 
 try, the latter through a direct effect upon the do- 
 mestic industry, the former in the same way or in- 
 directly through the granting of such concessions to 
 foreign countries as will benefit our domestic industry 
 and therewith our export trade. 
 
 Economic advantages of a domestic nature have 
 been treated for the most part in the preceding para- 
 graphs. The compensations granted within our 
 country, as appears from earlier explanations, repre- 
 sent a mutual exchange of strength accomplished 
 under the direction of the State between the indus- 
 tries with protective value and the industries to be 
 protected, with the single purpose of throttling every 
 
 96 
 
Diplomacy the Advance Guard 97 
 
 attempt to weaken the export trade. The compensa- 
 tions consist of easily payable indemnities for the 
 protective industry which embargoes its exports in 
 order to secure justice for others, and in moral and 
 material preferments which are given to industries 
 having a protective value. 
 
 OBTAINING SECRET PRIVILEGES ABROAD 
 
 In return for the protective services which must 
 at times be demanded of certain industries and per- 
 formed by them in the interest of the German export 
 trade, these industries must also be assured special 
 privileges and compensations by commercio-political 
 means in foreign countries. The trade bureaus of 
 the diplomatic representatives will have the duty 
 of granting these industries not only especial atten- 
 tion but also special support in council and action. 
 This support will have to go so far that it represents 
 to a certain degree the very foundation for the activity 
 of these industries in foreign countries. By this 
 it is not meant that the other industries are not Hke- 
 wise to share the careful support of the foreign repre- 
 sentatives of the State, but they will have to come 
 after the industries having a protective value, for 
 the strengthening of the latter by diplomatic support 
 represents and immediately induces after it the 
 strengthening of all other industries shipping to this 
 foreign country. 
 
 Industries with protective value have claims upon 
 special support and advancement through the diplo- 
 matic missions. 
 
98 The Future of German Industrial Exports 
 
 These claims make it necessary for diplomatic 
 missions engaged in foreign countries to have not 
 only representatives who look after the interests of 
 commerce from a political point of view, but also 
 those who study commerce from the standpoint of 
 industry. The latter, whenever possible, must be 
 chosen right from the ranks of industrial life. The 
 thought readily suggests itself that these representa- 
 tives should work hand in hand with the domestic 
 protective organizations which were mentioned in 
 earlier explanations and that the latter organizations 
 should represent the source from which the permanent 
 assistants of our missions abroad are drawn. It must 
 not be overlooked that in imposing temporary em- 
 bargoes on our exports when the need arises, the 
 deciding factor will be the reports from our foreign 
 missions. These reports must not only be thoroughly 
 practical but also expert. This second condition 
 presupposes an expert stafFsuch as is scarcely imagin- 
 able without practical training and industrial ex- 
 perience for years in advance. The experiences 
 which have been gained recently in high offices of 
 state with men who came from the outside world 
 of affairs give a satisfying assurance that officials 
 of our foreign missions who come from industrial 
 circles will perform good service for the export 
 trade. 
 
 For the protection of industrial exports there are to 
 he placed at the disposal of our diplomatic missions in 
 foreign countries representatives who have had unusual 
 experience in many years of industrial activity. 
 
Diplomacy the Advance Guard . 99 
 
 CONFIDENTIAL EXCHANGE OF *' COMPENSATIONS" 
 
 By placing officials in our foreign missions better 
 and faster work will be done on statistics, so that 
 we can have an exact idea of the condition of the 
 export trade at all times. Every upward and down- 
 ward movement of exportation in general or of any 
 individual export will immediately be recognizable 
 in its full extent and will be subject to regulation 
 by the proper measures. 
 
 Besides the above-mentioned compensations in 
 which industries with protective value can share 
 there is still a larger number, the necessity for which 
 is conditioned by current circumstances. It is for 
 instance imaginable that a foreign country may 
 promote by import measures German industries 
 not essential to it if other German industrial products 
 which this country finds necessary are introduced as 
 cheaply as possible. The degree of cheapness coming 
 into question here can become so low under certain 
 circumstances that the industry in question endangers 
 its profitableness if it wishes to meet the demand. 
 Since, however, the fulfilment of this demand is in 
 the interest of other export products a financial 
 equalization must be made. It can be brought about 
 either by recourse to the general guarantee fund or 
 by granting export premiums through the State 
 or by combining both means of assistance. 
 
 Another form of compensation consists in allowing 
 dutv-free importation of raw or unfinished materials 
 needed by industries having protective value, in 
 
lOO The. Future of German Industrial Exports 
 
 order to satisfy the demand in question; in many- 
 cases a temporary exemption from duty, often only a 
 moderation of duty, will suffice. 
 
 Besides the support and preferments explained in 
 the previous paragraph which are to be granted to 
 industries having protective value ^ compensations should 
 he devised in the interest of the entire export trade^ in 
 the form of export premiums^ duty- reductions and 
 -exemptions, 
 
 A TEMPTING BARGAIN IN PREMIUMS 
 
 It will be the duty of the representatives of in- 
 dustrial commerce in our foreign embassies to point 
 out to the agents of foreign concerns that the in- 
 terests of their own country will be served by placing 
 certain industries of Germany in a position to 
 supply their country cheaply. If this hint is well 
 received, then the next task of the representatives 
 of industrial commerce will be to inquire into what 
 kinds of compensation foreign countries grant to 
 German industries whose goods they expect to import 
 at a certain minimum price, and then to induce the 
 proper authorities in the country in question to grant 
 these compensations permanently or temporarily. 
 Such compensations might for instance take the 
 form of freight rebates upon the transportation 
 routes which lead to Germany, or the form of foreign 
 export premiums upon raw materials which the Ger- 
 man industry in question needs for the sake of cheap 
 production, and which are produced in the foreign 
 country itself. These compensations will of course 
 
Diplomacy the Adva7ice Gu^rd tox 
 
 have reference only to such amounts of raw materials 
 as correspond to the amounts of finished products 
 shipped from Germany to the country in ques- 
 tion. 
 
 It will he the task of our diplomatic representatives 
 to secure special inducements from foreign countries 
 for our industries of protective value^ whose products 
 are needed by the foreign countries. 
 
 In return for these inducements, Germany will 
 grant freight rebates to goods passing through her 
 territory on the way to the foreign countries. The 
 feasibility of mutual compensations, for the purpose 
 of making sure that both parties get the raw materials 
 and manufactured articles they need, is too self- 
 evident to require further discussion. If, in the 
 interest of industrial exports, compensations of such 
 a nature as to injure one domestic industry while 
 benefiting another are necessary, recourse will again 
 be had to the general guarantee fund to indemnify 
 the former for its loss. It is plain therefore that com- 
 pensations giving rise to such loss ought only to be 
 granted with the consent of the highest authorities 
 in industry. Here again we find that from every 
 point of view an uninterrupted contact between 
 government officials and industrial authorities is 
 necessary. The guiding lines for mutual compensa- 
 tions are established by commercial treaties. 
 
 The export trade can also he encouraged hy muttial 
 compensations hetween the countries of import and 
 exporty such that hoth countries will always find their 
 needs supplied 
 
I02 Thj Future of 'German Industrial Exports 
 
 THE PRIZE BAIT OF THE PRUSSIAN EMBASSY 
 
 Finally we can imagine a case where, on account 
 of the attitude of some foreign country, the peaceful 
 growth of Germany's industrial exports will appear 
 possible only if we consent to the transplanting of an 
 especially important industry to that country. 
 So far as our own industrial circles are concerned — 
 in other words, so far as concerns the owner of the 
 industry to be transplanted — opposition to this 
 demand will be met with only in the rarest cases. 
 It is even imaginable — capital is always selfish— 
 that suggestions leading a foreign country to 
 demand a compensation of this sort will come by 
 roundabout ways, the starting point of which, how- 
 ever, will be found in our own capitalist circles in- 
 terested in the deal. From earlier explanations it 
 appears that the most permanent protection for the 
 entire manufacturing export trade lies in those very 
 industries, the transplanting of which to foreign 
 countries must be prevented. It may indeed be 
 possible that, in carefully weighing the advantages 
 and disadvantages, the balance sinks on the side of 
 permitting the transplantation, but it is not very 
 probable that the advantages will permanently out- 
 weigh the disadvantages. There will be greater 
 likelihood of the permission being granted if undenia- 
 ble proof can be submitted that a considerable number 
 of other industries not yet transplanted are at hand, 
 to make up for the loss to the sum total of protective 
 value incurred by the transplanting of an industry. 
 
-Diplomacy the Advance Guard 103 
 
 Since the number of such especially valuable in- 
 dustries — valuable in reference to their protection 
 for industrial exports — is not too large, the question 
 whether such a proof will be possible must for the 
 present be passed over. Here also we should repeat 
 our oft-mentioned admonition not to put much trust 
 in treaties. No one after all can guarantee that, 
 after an industry has actually been transplanted 
 into a foreign country, that country will not find 
 some excuse or pretext for refusing to perform what 
 it has guaranteed by treaty in return. It is also 
 not to be overlooked that an industry transplanted 
 to one foreign country lessens beforehand the general 
 protection available against a second foreign country. 
 For suppose Germany decrees an embargo upon the 
 products of this very industry as against this second 
 foreign country, as a protective measure for certain 
 other exports. The transplanted industry could 
 scarcely be prevented from supplying that country. 
 
 If these possible results are taken into considera- 
 tion it then appears that the transplanting of 
 a valuable industry, hitherto only pursued in Ger- 
 many, to one foreign country is equivalent to trans- 
 planting it to the whole outside world without the 
 possibility of our getting from the world an equiva- 
 lent service. If, therefore, advantages are gained 
 from the one foreign country, these are ofFset by the 
 immeasurable disadvantages which arise from our 
 export trade having once and for all unconditionally 
 resigned a powerful protective weapon against the 
 rest of the world. Such a procedure could indeed 
 
I04 The Future of German Industrial Exports 
 
 scarcely be consented to, even if momentarily alluring 
 advantages should be gained by it. Not momentary 
 value is of importance but permanent future value. 
 
 Compensations in the form of permission to trans- 
 plant valuable industries to foreign countries are not 
 allowable. 
 
/N ORDER to accomplish their 
 programme, the commercial 
 war lords of Essen and Hamburg 
 agree that absolute and dictatorial 
 power shall remain in the German 
 ''State/' It is to retain the ''Divine 
 Righf by which it can forthwith 
 commandeer those minerals that 
 are the life blood of industry; to 
 sentence labouring men for life to 
 any pursuit at any wages, and hedge 
 them around with jailers; to draft 
 experts and captains of industry 
 upon service determined by the 
 General Staff; to decree tariffs, em- 
 bargoes, freigh t ra tes, reba tes, prem - 
 iums and subsidies at will; to levy 
 "contributions^' upon all business 
 and all workmen alike, disposing 
 thereof as it chooses, and to direct 
 the personal actions, aspirations, 
 endeavours, and rewards of all men 
 of scientific, technical, or financial 
 capacity. Not only personal 
 liberty, but the immortal spark of 
 genius is to be chained to the Im- 
 perial chariot wheels. 
 
CHAPTER EIGHT 
 
 A FEUDAL SYSTEM OF COMMERCE 
 
 The Panacea of Arbitrary Power — The Unquestioned Command 
 of Supplies — Dispersing Workmen's Unions — ^The Universal 
 Levy on Capital and Labour — State Ownership of the Individual 
 — Jurisdiction Over the Minds of Scientists. 
 
 5. State Protection 
 
 THE work of strengthening and safeguarding 
 German3'^'s export trade will only be accom- 
 panied by permanent success if those indus- 
 tries which exhibit special protective value are as- 
 sured of a proportionate amount of state protection. 
 This protection will involve: guarding against inter- 
 ruptions in manufacture, such as might arise in 
 procuring raw materials and machinery, and in 
 labour troubles. It will make right losses which are 
 incurred through regulation of the export trade, keep 
 manufacturing secrets intact and prevent movements 
 of labour and capital which endanger these secrets. 
 State protection will also supplement the work of the 
 associations which were formed by the various trade 
 interests for accompHshing these same tasks. 
 
 THE UNQUESTIONED COMMAND OF SUPPLIES 
 
 It has already often been pointed out that the 
 starting point of all protective measures lies in mak- 
 
 106 
 
A Feudal System of Commerce 107 
 
 ing secure the supply of raw materials. Through 
 suitable laws and regulations the State will have to 
 take care that under all circumstances protective 
 industries must be supplied from within our own 
 country with the raw materials and machinery which 
 they need for the maintenance of their business and 
 for the production of unsurpassable goods. It will 
 be the task of the State to see that there are no 
 interruptions in the connection between raw-material 
 producers and their customers; that industries of 
 protective value are supplied before all other buyers; 
 and that these protective industries be charged only 
 such prices for their supplies as are compatible with 
 the price limits which must be imposed upon their 
 output. Where such moderate charges are im- 
 possible through the nature of momentary circum- 
 stances, the difference which is having an injurious 
 effect upon the price at which the protective indus- 
 tries can manufacture must be made up by the State 
 in a form which balances inequalities without making 
 noticeable inroads upon state finances. For this 
 purpose it will not be absolutely necessary to pay 
 out cash subsidies. Export premiums, freight re- 
 bates, etc., in amounts determined by the price 
 difference to be equalized, will suffice in most cases. 
 The producer of raw materials can also be induced 
 to a corresponding moderation in price if the State 
 assures him in return certain contracts at maximum 
 prices. For then he can increase the value of such 
 contracts by postponing the time of fulfilment to 
 a period of lower market. Encouragements in 
 
ic8 The Future of German Industrial Exports 
 
 other ways may be given to the producer to induce 
 him to a moderation in price. 
 
 The state protection begins with making secure the 
 sources upon which the manufacturers of the protective 
 industries depend. 
 
 DISPERSING workmen's UNIONS 
 
 In general it will be easier to safeguard the supply 
 of raw materials than to safeguard the manufacturing 
 process itself, the greatest danger to which is to be 
 found in the relations between employer and em- 
 ployee. Both put their personal interests foremost. 
 The former will try to raise the amount of work 
 required (to take a very bald example) and to lower 
 wages; the latter will strive for the opposites. It will 
 be the duty of the State to interpose, and mediate 
 between them or bring about a reconciliation. Be- 
 fore all else, however, it ought to take care that 
 points of friction which could give rise to differences 
 of opinion are forthwith banished. Work and wages 
 must be adjusted so that the course of manufacture 
 may remain unvarying. Every interruption in the 
 activity and development of a protective industry 
 has an injurious effect upon the whole manufacturing 
 export trade, because its very protective value, at 
 least for the time, runs the risk of not being con- 
 sidered as a factor of importance which can be reck- 
 oned upon. 
 
 The solution of this question is all the more diffi- 
 cult because here the generally accepted principles 
 can scarcely be applied. Rather will the regulations 
 
A Feudal System of Commerce 109 
 
 to be issued in this connection have to confine them- 
 selves to pointing out the general guiding lines in 
 accordance with which one must proceed. In every 
 case mischief-makers who try to advance their per- 
 sonal interests to the injury of protective value 
 are to be severely punished. Certain statutory 
 limits must be placed upon the right of forming com- 
 binations, whether it be invoked by proprietors or 
 by subordinates, to the injury of a protective indus- 
 try. It is not a question of the individual, but of 
 the whole! More than ever it will be necessary to 
 give all co-workers in a protective industry a share 
 in its earnings. If all have a common interest no 
 one will then attempt an injury to it. 
 
 Persons who are listed as employees in the rolls 
 of protective industries are subject to especially 
 strict rules in reference to the preservation of manu- 
 facturing secrets and to safeguarding the industry 
 against transplantation. Danger of the latter comes 
 largely from the higher officers among the em- 
 ployees, and often from the management itself or 
 from the capitalists interested in the business. 
 The regulations will have to provide that the officers 
 are bonded to the proper amount, and that the stock 
 of the concern can be requisitioned and called in 
 when necessary. They must provide that no one 
 person can ever become possessor of the entire secret 
 of manufacture wherever such a thing is avoidable, 
 that the way the manufacture is conducted never 
 discloses the secret itself, and finally that aliens can 
 find no employment in such industries. 
 
no The Future oj German Industrial Exports 
 
 Industries of protective value can be kept in uninter- 
 rupted operation only hy the cooperation of the State, 
 The State^ primarily y has the duty of guarding against 
 transplantation. 
 
 THE UNIVERSAL LEVY ON CAPITAL AND LABOUR 
 
 If it becomes necessary to place an embargo on the 
 shipments of certain protective industries to foreign 
 countries for the benefit of our export trade, the 
 industries hit by the embargo will be decidedly in- 
 jured if it leads to a cessation of work. The em- 
 ployees will also suffer. Since the embargo is 
 dictated by the State, the latter has the duty of 
 providing compensation, regardless of whether it 
 itself pays this or not. If, therefore, the State be 
 granted by law the right to lay an embargo (the 
 recognition of this right is required in the interest 
 of the manufacturing export trade), ways and means 
 of procuring compensation funds must be made 
 plain, and the principles which are to govern the 
 payment of the compensations to the claimant must 
 be defined. 
 
 As has been explained earlier, the parties who 
 benefit by the embargo, or on behalf of whose exports 
 the embargo was laid, are to be called upon to furnish 
 compensation for the embargoed industries and their 
 workmen. The benefited parties include not only 
 employers but also the employees in their service; 
 it seems reasonable that both should be Hable to 
 furnish compensation, in proportion of course to the 
 amount of profit which has come to them. This 
 
A Feudal System of Commerce in 
 
 liability becomes oppressive when it must be met 
 without preparation. The state regulations will 
 therefore go further and specify in what form and to 
 what extent the compensation funds are to be pro- 
 vided beforehand, in what way the contributions 
 from all liable parties are to be collected, and in 
 what manner repayment is to take place after the 
 embargo is raised. 
 
 That repayment is justified has already been 
 shown; for after the embargo is Hfted the industries 
 which were under it may expect increased manufac- 
 turing activity and increased sales which will last 
 until the normal supply of the consumer is reached. 
 As a matter of principle the repayment ought to 
 begin with the commencement of this increased 
 activity and to end when normal conditions are 
 resumed. Since employers as well as employees of 
 the embargoed industries share in the benefits of 
 compensation, both must be called upon for repay- 
 ment. In all probability deposits to, and with- 
 drawals, from the compensation fund will represent 
 an approximately symmetrical wavy line, the first 
 crest of which is represented by the deposits (pre- 
 paratory fulfilment of the duty of compensation), 
 the first trough by the compensation (to the embar- 
 goed industry and its employees), and the second 
 crest by the repayment (made by the industry and 
 employees after the embargo is lifted), etc. The 
 only actual loss of money will therefore be through 
 the necessary interest payments which in justice 
 ought to be made by all the parties concerned. 
 
112 The Future oj German Industrial Exports 
 
 State protection must include making good and 
 regulating all deficits caused by temporary embargoes 
 on protective industries in the interest of industrial 
 exports. 
 
 If embargoed industries are to be able to supply 
 the increased demand for their products after the 
 embargo is Hfted, they ought to continue operation 
 as much as possible during the time their shipping 
 is prohibited; in other words, they should work 
 upon a stock-surplus. The claims upon the com- 
 pensation fund will in this case be higher than if 
 they shut down, for, should they stop work, the 
 fund would only be relied upon for profits. When 
 operations are continued, however, raw materials 
 will have to be supplied, and running expenses met, 
 while at the same time the foreign country affected by 
 the embargo will perhaps withhold payments. The 
 compensation fund is to be estimated with these facts 
 in mind. 
 
 The effective carrying out of the embargo, that 
 is, the prevention of deliveries of embargoed pro- 
 ducts by indirect routes, is the business of the State. 
 It therefore has the duty of formulating measures 
 of control, which will render the embargo effective. 
 
 STATE OWNERSHIP OF THE INDIVIDUAL 
 
 Capital will be hard hit not only by embargo 
 measures, but still more by the transplanting of the 
 protective industries being forbidden. These in- 
 dustries can be endangered by movements of labour, 
 where skilled workmen are involved. Protection 
 
A Feudal System of Commerce 113 
 
 might without a doubt be had against this danger by 
 placing the labour Hsts under state supervision, in 
 the same way that this was done in certain industries 
 during the war, with success and to the general 
 satisfaction — also to that of the employees. This 
 form of militarizing invaluable industries can scarcely 
 be avoided m spite of the opposition it will be exposed 
 to in times of peace. Increased participation in 
 profits will make this compulsion easier to bear; 
 favourable provision for old age will considerably 
 mollify it. Constraint must likewise be put upon 
 capital, if it shows itself stubborn in pushing through 
 transplantings. Then, too, we must always reckon 
 with short-sighted and narrow-hearted capital. It 
 is possible that leading capitaHsts might resolve to 
 shut down the protective industry if its transplanting 
 is prevented, or that they may refuse to grant further 
 capital for a necessary expansion of this industry.) 
 In such cases the State must step in without fear or 
 favour; the right of expropriation must be estab- 
 lished by law for this purpose. If there is danger 
 that the refractory individuals may find themselves 
 relieved of their entire capital, then there will scarcely 
 be damaging resistance from the capitalist side. 
 
 The State must he given the right to use coercive 
 measures in preventing the withdrawal of workers and 
 capital from protective industries. 
 
 JURISDICTION OVER THE MINDS OF SCIENTISTS 
 
 In all these protective measures the State will find 
 good support in all industrial and technical associa- 
 
114 The Future of German Industrial Exports 
 
 tions which work in the interest of the entire manu- 
 facturing export trade. To prevent damage being 
 done by the special interests of one kind of industry, 
 these various associations must be united into a 
 common body in the supreme control of which the 
 State is to have a deciding voice. The better these 
 bodies and the special representatives of the State 
 cooperate, the more effective becomes the state 
 protection of industries and of their export trade ! 
 
7UST as every suitable human 
 being in the empire was drafted 
 into the army, so every plant 
 in the Kingdom is to be conscripted 
 into the German Industrial Army 
 for the export war. Each industry 
 will constitute an Army Corps, divide 
 ed into five divisions — scientific, in^ 
 dust rial, mercantile, commercial, 
 and financial. Presiding over each 
 division will be a generalissimo. 
 These generalissimos, together with 
 a controlling number of state funC" 
 tionaries, will constitute the five 
 great Boards of Strategy, whose 
 heads in turn will be the Great 
 General Staff, the fountain head and 
 final dictator of the campaign. 
 
 The Scientific Division will draft 
 into service all inventors and con^ 
 duct in carefully formulated detail 
 the production and application of 
 those inventions and discoveries re^ 
 quired by the Industrial Division, 
 which in turn will marshal them 
 where most needed, and act as an 
 immense clearing house andinform^ 
 ation ]bureau for all technical im." 
 provements. 
 
CHAPTER NINE 
 
 ORGANIZATION OF THE GERMAN EXPORT 
 ARMY 
 
 The Army Corps of the Commercial OfFensive — Industrial 
 Divisions in Action — ^The Board of Strategy — The General 
 Staff — ^Tactics of the Scientific Division — Drafting and Drilling 
 the Inventors — Assembling the Fruits of Genius — Capturing 
 Foreign Inventions — ^The Industrial Division, the Compulsory 
 Information Bureau. 
 
 6. Industrial Protective Unions 
 
 A SPLITTING up of state protection is to 
 be avoided under all circumstances. Each 
 individual manufacturer is to participate in it, 
 yet not directly, otherwise the number of negotia- 
 tions and investigations would become endless, 
 friction between the individual manufacturers who 
 persist in putting their own special interests foremost 
 would be unavoidable, oversight of the justification 
 of individual demands would be lost, and chaos 
 would result, bringing severe injury to the export 
 trade. 
 
 industrial divisions in action 
 
 The protective power emanating from the State's 
 authority must be thought of as the composite result 
 
 ii6 
 
Organization of the Export Army 117 
 
 of the influence exercised by separate federations 
 which serve scientific, industrial, mercantile, com- 
 mercio-industrial, and financial purposes, and whose 
 basis is formed by the individual kinds of industry. 
 In this way it is impossible, from the very first, 
 for the selfish interests of a single form of industry 
 to win the upper hand and injure those of other 
 industries. Each influence in the composite whole 
 represents within the bounds of its own federation 
 another whole, the component parts of which are 
 to be looked upon as protective influence for the 
 individual kind of industry. Since each of the 
 above-named federations exerts part of its influence 
 upon every kind of industry, the result is that every 
 kind of industry stands under five diff^erent protective 
 influences (those protecting scientific, industrial, 
 mercantile, commercio-industrial, and financial in- 
 terests). These influences thus form a polygon, 
 whose results is the centralized state protection upon 
 which the kind of industry in question can reckon. 
 
 THE BOARD OF STRATEGY 
 
 As long as the influence of each individual kind of 
 industry is properly balanced (that is, no commercio- 
 industrial measures, for instance, are carried out at 
 the expense of manufacture, or no financial measures 
 at the expense of commercial industry, etc.), the 
 resulting whole, in its force and nature, will not be 
 out of proportion, and the entire protective system 
 will therefore be at equilibrium. Consequently, 
 the State's protection attains undiminished uniform 
 
Il8 The Future of German Industrial Exports 
 
 efFectiveness; the whole protective system works 
 smoothly. On the other hand every change in the 
 combinations of influence will affect the great whole, 
 and will therefore be immediately detected. Thus 
 it admits of being removed without delay. In other 
 words: every selfish measure, which is detrimental 
 to industrial exports in general, and which is not in 
 harmony with the whole protective system, can at 
 once be recognized and stopped. 
 
 State protection affects the federations directly. The 
 latter conduct it to the indivdual kinds of industry 
 and through these to the individual industries. 
 
 THE GENERAL STAFF 
 
 In this Statement are given the guiding lines for the 
 construction of the state protective organization for 
 which it is a matter of indifference whether the feder- 
 ations are entirely of a governmental nature (state 
 officials) or entirely of an industrial nature (boards), 
 or of the two combined. From the introductory 
 discussion it is to be seen that the mixed system is 
 given the preference, for this avoids in equal measure 
 bureaucratic clumsiness and inflexibility and the 
 dominating influence of selfish special interests either 
 from the lesser unions in a federation or from individ- 
 uals in general. In the mixed system the state dele- 
 gates are personally disinterested individuals — 
 therefore unselfish; the delegates of industry are 
 personally interested — therefore selfish. The latter 
 will make demands, the former will bring them 
 within reasonable limits in the interest of industrial 
 
Organization of the Export Army 119 
 
 exports as a whole. Thus the state delegates will 
 act as a counterpoise. 
 
 Such a federation is to be compared to a large 
 reservoir into which flow the carefully defined pro- 
 tective measures of the State, worked out theoreti- 
 cally for the time being, and also all the special 
 interests of industry. Here they mingle, to be 
 united at last in a quiet and clarified whole, the 
 pressure (protective eff^ect) of which finds its outlet 
 through the proper channels. 
 
 Protective measures for the export trade are issued by 
 a single body which is composed of state and industrial 
 representatives and which hands down its instructions 
 to the individual federations. 
 
 The federations are elected by industry, perhaps 
 best by the governors of the sub-associations. They 
 will include in their membership a state representa- 
 tive, who will have the duty of making reports to 
 the state delegates in the supreme body which is 
 made up according to the mixed system. The 
 number and kind of sub-associations are given by 
 the number and kind of those principal industries 
 which are concerned in the manufacturing export 
 trade. It will be advantageous for the separate 
 sub-associations to organize themselves again into 
 sections of a scientific, industrial, mercantile, 
 commercio-industrial, and financial nature. The 
 chairmen of these five sections constitute the director- 
 ate of the sub-associations and are at the same 
 time members of the appropriate federation and 
 reporters for their trade specialty in it (for instance 
 
I20 The Future of German Industrial Exports 
 
 the chairman of a commercio-industrial section is 
 a member of the commercio-industrial federation). 
 
 TACTICS OF THE SCIENTIFIC DIVISION 
 
 The duties of the scientific federation will be: 
 
 To work out proposals for the practical use of new 
 scientific improvements in the interest of protection 
 for industrial exports. 
 
 To arrange competitions with prizes for those 
 who can contrive substitutes for raw materials which 
 are now supplied by foreign countries hostile to our 
 exports. In this way our own industries will be made 
 less dependent. 
 
 To go over, revise, and make reports on the solu- 
 tions which have been submitted. 
 
 To exert an influence over state and private testing 
 stations. 
 
 To provide the scientific answer to the problems 
 arising in every-day work. 
 
 To watch for and follow up all inventions and im- 
 provements in foreign countries. 
 
 To centralize all scientific research, so far as it 
 might have an influence upon industrial exports. 
 
 To publish a scientific journal for the exclusive 
 purpose of promoting the export trade, and of 
 keeping the parties interested in it informed. 
 
 Many scientific gains remain forever within the 
 scholar^s study in which they originated, because of 
 exaggerated modesty, selfishness, or a lack of practi- 
 cal knowledge. They must be called forth from 
 obscurity and be turned over to men of afi^airs 
 who, from an industrial standpoint, will separate 
 the wheat from the chaffs. The directors of the 
 
Organization of the Export Army 121 
 
 federation must see that justice is done to the 
 scholar's moral and financial rights. It will therefore 
 be necessary to create a bureau which will collect 
 scientific improvements, turn them over to practical 
 application, and watch over and encourage this 
 application itself (most easily accomplished by dele- 
 gating the scientific inventor as its agent). jThis 
 bureau of collection must work hand in hand with a 
 bureau for testing out scientific improvements, 
 which has the duty, when necessary, of providing the 
 necessary financial interest of the inventor. 
 
 It is the duty of the scientific federation to put to 
 practical test all scientific improvements connected 
 with the export trade. 
 
 DRAFTING AND DRILLING THE INVENTORS 
 
 Foreign countries hostile to our exports can take 
 an especially effective stand against our industrial 
 trade when they have large or exclusive control 
 over raw materials which German industry can not do 
 without. (They ought seldom to have exclusive 
 control.) The course of the war thus far has taught 
 us that our enemies know how to use such weapons. 
 However, it has also shown that German science did 
 not remain idle. On the contrary it found in this a 
 new stimulus to produce substitutes for raw materials 
 withheld by foreign countries. Since we must reckon 
 that foreign countries may make profitable use of 
 monopolies in raw materials also in the future, it 
 will be the duty of the scientific federation not only 
 to take the path already used by individuals in pro- 
 
122 The Future of German Industrial Exports 
 
 ducing substitutes, but also to broaden it by means 
 of science and organization. It should make clear 
 the needs of the situation and should give the in- 
 struction and suggestions necessary for the manu- 
 facture of substitutes in sufficient quantities. La- 
 boratories and testing stations will be called upon 
 for joint assistance. Under the guidance of the 
 federation men trained in theory will join with the 
 men from the ranks of experience in working out the 
 necessary directions for the application and use of 
 the substitutes. Through the cooperation of govern- 
 ment experts, mining operations given up because 
 of their poor productivity in comparison with foreign 
 mines will be given a new and more practical ex- 
 ploitation. New combinations of electrical and 
 chemical devices are to be proposed in order to gain 
 independence of foreign countries in the market for 
 raw materials. With the increase of this indepen- 
 dence, our protective values rise, and the commercio- 
 industrial weapons which can be used against foreign 
 countries hostile to our exports become more effective. 
 
 ASSEMBLING THE FRUITS OF GENIUS 
 
 In order to enlist even the farthest circles in this 
 work of preparedness the scientific federation will 
 work out those principles which underlie the problem 
 of producing substitutes, will list in logical order the 
 substitutes to be worked out, and will make corres- 
 ponding offers of prizes. The solutions which are 
 sent in must be judged primarily from the standpoint 
 of the principles which have been laid down, and 
 
Organization of the Export Army 123 
 
 secondarily in reference to the possibility of manu- 
 facturing the proposed substitutes, and using them 
 profitably in industry. To estimate these, the repre- 
 sentatives of the proper industries are to be given a 
 place in the judging bodies. If the solutions in 
 question are recognized as suitable substitutes the 
 scientific federation, in common with the industrial 
 federation to be discussed farther on, has to deter- 
 mine ways and means to carry out the manufacture 
 of the substitutes in bulk. They will then be de- 
 livered to the industries where they are needed 
 through the commercio-industrial, or, as the case 
 may be, through the mercantile federation. 
 
 It is a further duty of the scientific federation to 
 produce or provide a way for the production of sub- 
 stitutes for important raw materials that can be 
 secured only from foreign countries. Dangerous 
 weapons against our export trade can thus be 
 wrested from the hands of countries which are hostile 
 to our exports. 
 
 CAPTURING FOREIGN INVENTIONS 
 
 The scientific federation will create an office for 
 collecting all international technical improvements 
 of a theoretical anYi practical nature, will arrange 
 incoming material according to industries, will make 
 comparisons with similar or related German im- 
 provements, and will deduce from new material the 
 practical lessons to be applied to German industry. 
 In order to start the process of application it will 
 arrange the material according to the various kinds 
 
124 The Future of German Industrial Exports 
 
 of industry, after having summarized and united it, 
 and will add the theoretical and practical explana- 
 tions which will make it clear to the man of industry. 
 The material should then be passed on to the in- 
 dustrial sections of the proper kinds of industry. 
 These sections will get in touch with the individual 
 concerns, so that the proposals of the scientific federa- 
 tion can be put into actual practice. Not only 
 theoretical and industrial requirements but also 
 commercio-industrial, and above all financial con- 
 siderations will of course play their part in such a 
 procedure. 
 
 We thus can see that uninterrupted cooperation 
 goes on between the individual federations, their 
 subdivisions, and sections. By this cooperation, the 
 consciousness of unity is strengthened, selfish aberra- 
 tions are avoided, and there is attained a state of 
 general protection whose results will be favourable 
 for individual enterprisers and their export [trade. 
 Everything which originates in foreign countries 
 or is recast by them must be weighed and tested by 
 this central office in reference to its superiority to 
 similar German improvements and in reference to 
 the possibility of its utilization for the profit and 
 strength of German industrial exports. 
 
 Here, as with all other associations, special value 
 should be laid upon avoiding all complication of 
 business routine and upon speeding up all protective 
 activity. Since everything is destined finally for 
 use in practical business, it must all be dealt with in 
 a swift and practical way. In matter-of-fact affairs. 
 
Organization of the Export Army 125 
 
 bureaucratic red tape is to be avoided because it 
 slows things up. We will be in a continual race 
 with foreign countries for the purpose of overtaking 
 them, and meanwhile they are hardly going to re- 
 main idle. The more spiritedly business is dispatched 
 between the individual protective bodies, the more 
 easily and surely it will be possible for us to catch up. 
 All efforts must be directed toward blunting as 
 quickly as possible every new weapon which foreign 
 countries forge against the German export trade. 
 At the same time, however, we must invent new 
 weapons of defense by which the protection of that 
 trade will be increased. 
 
 The scientific federation forms an office for collecting 
 all technical improvements abroad^ and for adapting 
 these to the use of the German manufacturing export 
 trade. 
 
 It appears that the publication of a trade journal 
 is the simplest means of info'rming all interested 
 parties concerning all measures, organizations, re- 
 searches and their results, tests, in actual work, and 
 the practical value of innovations, etc. This trade 
 magazine (whose title might for instance be, The 
 Industrial Exporter's Herald) will consist of five main 
 divisions in accordance with the above-mentioned 
 organization, each of which is to be edited by one 
 of the above-mentioned federations. 
 
 The part of the trade magazine to be edited by the 
 scientific federation will consist largely of a periodic- 
 ally recurring enumeration of all domestic and foreign 
 improvements important for the export trade, their 
 
126 The Future of German Industrial Exports 
 
 industrial value, reports concerning experiments with 
 substitutes and new work materials, instructions and 
 directions, prize competitions and their results. 
 
 A journal serving Germany s manufacturing export 
 trade shall record the results of the activity of the five 
 federations and of their associated and subordinate 
 bodies. 
 
 THE COMPULSORY INFORMATION BUREAU 
 
 The industrial federation will, in the main, be 
 associated with the scientific, and will have the duty 
 of arranging for the industrial appHcation of the 
 improvements of a domestic and foreign nature, 
 submitted to it by the scientific federation, and of 
 starting the manufacture of substitutes; or by the 
 reverse process, it will turn over to the scientific 
 federation requests for the scientific treatment of 
 new or still incompleted industrial problems. The 
 industrial federation will cooperate with that of 
 commercial industry when it becomes necessary 
 to put articles of export on a better competitive 
 footing so far as price goes, through contriving 
 more efficient machinery and through better utiliza- 
 tion of raw material. 
 
 In order to prevent unnecessarily large sums of 
 money from being squandered in attempts to put 
 the fruits of scientific research into use, the industrial 
 federation will establish an experiment division which 
 can supply all the practical suggestions which will 
 benefit the export trade. This central office is 
 necessary in order to keep research work unified and 
 
Organization of the Export Army 127 
 
 to convey the experiences which were gained with 
 the same material by different parties to all who 
 work with it. The experiment division which will 
 be conducted by practical men (delegates of the 
 industries in question), is not to carry out the work 
 of experimentation itself, and will therefore use no 
 experimental plants. Its function is to direct the 
 work m the existmg state or private stations, which 
 by their experience and equipment are placed in a 
 position to carry out the assigned work in a practical 
 manner, according to all rules of science. The same 
 problems will be assigned simultaneously to various 
 experiment stations in order that diverse results 
 and opinions may be brought to bear. The various 
 results and views will then be compared by the 
 experiment division with the cooperation of the 
 practical men who evolved them. So, in most 
 cases, a working programme for the final solution of 
 the assigned problems will be gained by combining 
 the best practical details and view-points of the 
 individual solutions. 
 
 It will be the duty of the experiment division to 
 determine the numerical share of the individual 
 workers in the practical solution in order to obtain a 
 scale for their financial compensation. Likewise 
 it will have the duty of making proposals to the 
 proper federation concerning the royalties to be 
 charged for the use of the invention. 
 
 The industrial federation is called upon to put 
 scientific discoveries into practical use in the interest of 
 strengthening the export trade. 
 
128 The Future of German Industrial Exports 
 
 A second department of the industrial federation 
 will serve as an office to collect all the demands made 
 by practical industry upon science. Practical men 
 are often more keen-eyed, because they are under 
 the lash of competition. They will comprehend 
 more quickly the superiority of foreign products 
 because the latter threaten to supplant their own. 
 Cases will arise where the industrial enterpriser 
 can not overtake his competitors in technical matters 
 because he lacks certain scientific fundamentals, 
 and a knowledge of the findings and suggestions of 
 experts. In such cases he will have recourse to the 
 collection office of the industrial federation. It will 
 be found that claims of the same kind are often made 
 upon this office. They will then be passed on to 
 the scientific federation to be answered. The 
 suggestions it makes will be returned to the collection 
 office by way of the experiment division of the in- 
 dustrial federation, in a practical form which has 
 already been proven good by experimentation. 
 The collection office hands them back to the individ- 
 uals who originally asked for the information, and 
 simultaneously makes them known to all the proper 
 concerns (through the trade journal). 
 
 The collection office likewise has work to do, 
 viz. : when the manufacturers send in a call for sub- 
 stitutes for certain raw materials; when the commer- 
 cio-industrial federation has occasion to point out 
 that certain raw materials are not sufficiently utiHzed 
 in comparison with the methods of foreign competi- 
 tion; when domestic industry takes insufficient 
 
Organization of the Export Army 129 
 
 account of certain usable qualities in waste products; 
 and when it appears that foreign competitors have 
 in use machinery of superior efficiency, which gives 
 them an industrial advantage over Germany. Here, 
 too, we shall find that remarks and suggestions will 
 be made by various parties on the same subject. 
 The collection office will unite and sift these and will 
 pass them on, along with pertinent suggestions in a 
 unified inclusive form to the scientific federation; 
 or, as the case may be, it will deliver to the inquirers 
 the advice they have sought, as it comes back. 
 
 The industrial federation has the further task of 
 collecting the technical suggestions coming from in- 
 dustrial circles and of giving these a practical test^ in 
 order that the superiority of German industry may he 
 permanently maintained. 
 
 All occurrences of a technical nature which are of 
 interest to industry are brought to general notice 
 by the industrial federation in the common trade 
 journal. In these articles hints on the practical 
 lessons afforded by the occurrences, and their in- 
 fluence in strengthening the export trade are to be 
 given prominence. 
 
THE Field Marshals who are to 
 execute the active manoeuvres 
 of the coming trade war, will 
 operate from the commercial Divi- 
 sion Headquarters, Theirs the duty 
 to snap out the orders, to hoard up 
 the potash, hold up the shipping, 
 slap on the premium and distrib- 
 ute the largess which will gather in 
 their war chest. Theirs the privilege 
 of enrolling the secret army that 
 will permeate every rolling mill and 
 drug store in Christendom, and of 
 dictating the thunder of diplomat 
 and war lord when their schemes 
 begin to fail. To the last comma 
 their duties are defined — how they 
 will outflank the Yankees through 
 neutral territory, eliminate friction 
 by not tolerating it, establish them" 
 selves as an inevitable collection 
 agency for German merchants, and 
 straddle the world as a court of last 
 resort passing upon all trade dis- 
 putes under the sun. ^ 
 
CHAPTER TEN 
 
 THE EXPORT ARMY IN ACTION 
 
 The Ubiquitous Commercial Division — ^The Dictator of the 
 World*s Prices — In Charge of the War Chest — ^The Espionage 
 Headquarters — ^The Men Behind the Guns — The Supreme 
 Court of Creation — Launching the Propaganda — ^The Listening 
 Post of Kultur — ^The Automatic Collection Agency — ^The Money 
 Kings' Campaign. 
 
 T 
 
 ^O THE commercio-industrial federation be- 
 long the following duties: 
 
 Safeguarding the supply of certain raw materials 
 which must be shipped from foreign countries, or, as 
 the case may be, safeguarding the supply of their 
 substitutes. 
 
 The creation of organizations for the purchase and 
 distribution of raw materials. 
 
 The creation of the various guarantee and com- 
 pensatidn funds mentioned above. 
 
 The rendering of reports to the other federa- 
 tions concerning foreign and domestic facts of inter- 
 est. 
 
 Advisory activity in commercio-political affairs 
 (commercial treaties). 
 
 Supporting our embassies abroad in commercio- 
 industrial matters. 
 
 The diffusion of information among German in- 
 dustrial concerns. 
 
 132 
 
The Export Army in Action 133 
 
 The settlement of difficulties between producer and 
 customer, should such arise. 
 
 Advertising German goods in foreign countries (by 
 sample displays and exhibits). 
 
 The compilation of statistics, from which one can 
 find out the ratios and amounts of various exports 
 in case embargo measures are adopted. 
 
 Making suggestions to the proper officials con- 
 cerning embargoes or unrestricted exportation. 
 
 The erection of a permanent information bureau 
 with branches in foreign countries. 
 
 Making proposals concerning tariff" and premium 
 inducements. 
 
 Mediation between officials and industrial enter-' 
 prisers. 
 
 The maintenance of German export products on a 
 firm competitive footing in the matter of price. 
 
 Collaboration on the trade journal. 
 
 To safeguard the supply of raw materials which 
 can not be procured within German territory is 
 absolutely essential in maintaining the independence 
 of German industry and at the same time in strength- 
 ening the German export trade. Difficulties of the 
 kind such as arose temporarily in the procuring 
 of raw materials during the early days of the war 
 must be impossible in future. And the same is 
 true of manipulation of the prices of raw materials 
 which German industry can not do without — a prac- 
 tice that borders on usury. A well-conducted divi- 
 sion of raw materials in connection with the commer- 
 cio-industrial federation will form the best means 
 of protection against occurrences of this sort. 
 
134 The Future of German Industrial Exports 
 
 THE DICTATOR OF THE WORLD's PRICES 
 
 This division has first of all the task of bringing 
 about production of these forms of raw material 
 which were previously obtained from abroad. On 
 the basis of import statistics are to be ascertained 
 the yearly amounts of individual raw materials used 
 in Germany. Supplementary statistics which will 
 work against usurious price-manipulation, should 
 show the prices of these raw materials in recent years, 
 the dependency of prices upon the fluctuations of 
 the market and the season of the year, and the in- 
 fluence of combinations in determining prices. These 
 statistical statements give ground for accurate con- 
 clusions concerning the dependency of certain 
 German industries upon foreign countries and upon 
 the foreign factors influencing the prices of raw ma- 
 terials. They make it possible to ascertain the 
 yearly minimum amount of individual raw materials, 
 which must be absolutely guaranteed by the com- 
 mercio-industrial federation. It is a matter of minor 
 importance whether this guarantee is carried out 
 in the form of direct purchase or of middle-dealing or 
 of a priority right of purchase. It is, however, es- 
 pecially important to provide that the yearly mini- 
 mum amount is on hand in Germany at all times; 
 in other words that the impartial fiUing of all orders 
 is assured. 
 
 If the commercio-industrial federation takes care 
 of satisfying the entire demand for raw materials, 
 speculators will be eliminated from the start. In 
 
The Export Army in Action 135 
 
 any case, at least in Germany, the State should 
 prevent price-manipulation of raw materials which 
 are essential to the vigour of the export trade. The 
 middleman can not expect consideration when his 
 interests conflict with those of German industry. 
 A central office for supplying raw materials, which 
 aims not for profit but for the strengthening of 
 industry, will surely be given helpful assistance by 
 the State through customs- and freight-concessions. 
 These concessions are such as will have an advan- 
 tageous influence upon German export products in 
 the matter of price. 
 
 As a working supply which must always he kept filled 
 up on German soil, the commercio-industrial federation 
 must insist at least upon the minimum yearly amounts of 
 raw materials that have to he ordered from other countries. 
 
 It can not of course be the duty of the commercio- 
 industrial federation to provide each individual 
 concern with raw material directly. To simplify 
 industrial associations the necessary gross amounts, 
 leaving to them the distribution among the individ- 
 ual manufacturers. In this way not only will middle- 
 men be successfully eliminated but embargoes on 
 manufactures can easily be carried out by cutting 
 off* the allotment of raw material. Other problems 
 to be solved here will be: 
 
 Coordination of purchase. 
 
 The formation of a purchasing fund of the neces- 
 sary amount. 
 
 Quotas to be contributed to the above by industries 
 dependent upon this supply of raw materials. 
 
136 The Future of German Industrial Exports 
 
 The adjustment of accounts carried by the federa- 
 tion with individual industrial associations, and by 
 the latter with manufacturers. 
 
 The satisfaction of claims growing out of these 
 accounts. 
 
 Compensation for injurious advances in price by 
 remitting a part of the net production cost, thus 
 enabling the finished articles to compete in price 
 in the international market — assuming that the 
 rise in prices is caused by combinations of business 
 interests which are aimed, in the last analysis, 
 against Germany's industrial export trade. 
 
 The commercio-industrial federation has the duty of 
 regulating for the benefit of the export trade the price 
 of raw materials y the height of which is dependent upon 
 the will of foreign countries. 
 
 There are two factors which will aid in this regula- 
 tion: first, the above-mentioned contributions to a 
 purchase fund, for which of course all industries are 
 to be called upon in a direct or an indirect way, if 
 they profit directly or indirectly in the export trade 
 through a moderation in the price of certain raw 
 materials; secondly, lessening of consumption. The 
 more the consumption of raw materials decreases, 
 the less becomes the demand for them, and the 
 lower the price at which they can be procured. 
 Decrease in consumption can be brought about fun- 
 damentally by two means: a change in manufactur- 
 ing methods, and the use of substitute materials. 
 
 With the cooperation of the individual industrial 
 associations the commercio-industrial federation can 
 determine exactly which forms of industry are work- 
 
The Export Army in Action 137 
 
 ing with the raw material in question. By the help 
 of the scientific and the industrial federation it will 
 be possible to show certain industries new ways of 
 manufacture which enable them to do without their 
 customary raw material completely or to use it in a 
 smaller degree. In this way it not only is left free 
 for other industries but probably also becomes 
 cheaper since the entire consumption of it decreases. 
 
 The more oppressing the dependency upon foreign 
 raw material is found to be, the more will the com- 
 mercio-industrial federation insist that the proper 
 technical (scientific and practical) circles do their 
 best to procure substitute materials which will 
 shake ofF this dependency. In most cases it will be 
 entirely sufiicient to obtain substitutes for individual 
 industries alone, because the entire demand for the 
 original raw material will thus again be decreased 
 and an effective breach made in the dependency. 
 
 The commercio-industrial federation must push the 
 work of supplanting foreign raw materials by domestic 
 substitutes, 
 
 IN CHARGE OF THE WAR CHEST 
 
 Since the commercio-industrial federation is al- 
 lowed the greatest range of oversight, it will be its 
 duty to work out plans for the organization and ad- 
 ministration of the various compensation- and 
 guarantee-funds mentioned earlier, and to exercise 
 supreme control over them. The commercial statis- 
 tics, which ought always to be kept up to date by 
 this federation, furnish it with the exact measure for 
 
138 The Future of German Industrial Exports 
 
 determining the individual contribution and com- 
 pensation quotas in question, for appointing the 
 times for payment and repayment (of which mention 
 was made above), and for designating the kinds of 
 industry which are to be called upon to contribute 
 to the funds, or which are to be compensated. For 
 in the current statistics of commerce every wave of 
 market-fluctuation reveals itself to the expert in its 
 very inception. The beginning of every steadying or 
 weakening in prices allows itself to be seen, often 
 indeed to be foreseen. 
 
 In these current statistics will lie the means of re- 
 cognizing all the causes of change and of meeting them 
 eff'ectively, or in other words of turning them to ad- 
 vantage. The commercial statistics are the most 
 delicate barometer for foreign measures friendly 
 or hostile to our exports and for the strength of the 
 effect of opposing measures. Upon both of these 
 kinds of measures depend all changes in the indem- 
 nity and guarantee funds; by them the other federa- 
 tions are influenced in their activity, and manufac- 
 turing and economic measures are evoked, the eff'ect 
 of which finds expression again in these statistics. 
 
 The administration of the funds provided for the 
 protection of the export trade is left to the commercial 
 federation. 
 
 THE ESPIONAGE HEADQUARTERS 
 
 Some of the many factors which influence industrial 
 exports are: the opening up of new finding- 
 depots for raw materials in foreign countries; the 
 
The Export Army in Action 139 
 
 increase in raw-material consumption in other coun- 
 tries; the use of raw materials in foreign countries for 
 other purposes than common heretofore; the replace- 
 ment of them abroad by substitutes; the introduction 
 of lucrative manufacturing methods; the practical 
 adaptation of new scientific inventions in foreign 
 industry; the imitation, circumvention, or overtaking 
 of German inventions which are important for the 
 export trade; the issuing of special directions for 
 supplying and using goods (directions for setting up 
 mechanical appliances); the establishment of certain 
 minimum technical standards for raw materials and 
 finished products; regulations concerning packing, 
 concerning the use of patterns, concerning changes 
 in custom arrangements and results of competition 
 in other branches of exportation, and the causes of 
 those results, etc. 
 
 German industries must, therefore, be constantly 
 informed about such facts as these, and speed in 
 rendering the information will be of great value. 
 The relationships and means of communication 
 which must be at the disposal of the commercio- 
 industrial federation in foreign countries will en- 
 able it to make these observations early and to 
 transmit them to the interested parties. It is self- 
 evident that for this purpose the industrial federa- 
 tion will not only try to enter into official relation- 
 ships and those of a semi-official nature, but that it 
 will devote special care to making sure of private con- 
 nections which have a deeper insight into the special 
 conditions of each case. Our foreign representa- 
 
140 The Future of German Industrial Exports 
 
 tives, travellers abroad, the governors of foreign 
 branches of our transportation companies, etc., will 
 perform good service as sources of information. It 
 will be the duty of the commercio-industrial federa- 
 tion to use certain printed forms so as to make the 
 information service facile, regular, and as far as pos- 
 sible, automatic. It must collect the incoming re- 
 ports, and revise and speedily transmit them to the 
 interested parties. Facts to be gained from our 
 statistics will help to complete such reports. 
 
 All changes in conditions abroad which affect our 
 industrial exports are to he observed by the commercio- 
 industrial federation and brought to the cognizance 
 of the interested parties in a practical and useful form. 
 
 THE MEN BEHIND THE GUNS 
 
 By this activity there will be collected in the 
 archives of the commercio-industrial federation a 
 rich quantity of material that will bear upon all 
 questions concerning the export trade. This material 
 in many cases can form a basis for, and a guide in 
 commercio-political affairs. Precautions of an en- 
 tirely practical nature, in the form of commercial 
 treaties or amendments to them, will be framed upon 
 the ground of the experiences collected by the com- 
 mercio-industrial federation, and will make it possi- 
 ble to assist our state missions abroad with advice and 
 help in treaty negotiations as well as in doubtful 
 individual cases. We shall have to consider whether 
 it would not be advantageous to create a direct and 
 permanent connection between the federation and 
 
The Export Army in Action 141 
 
 the commercio-industrial representatives of the state 
 missions abroad. Both parties, and the export 
 trade particularly, would be benefited thereby. The 
 commercio-industrial representatives of our state 
 missions abroad would by this arrangement gain a 
 very direct knowledge of the necessities and wishes 
 of the export dealers. These dealers would be en- 
 couraged in their activity by the consciousness of the 
 presence of a support upon which they can always 
 call for help. Between export theories and export 
 practice will be formed a bridge promising mutual 
 benefits which for the present are still lacking. 
 Many export industries can be given helpful assist- 
 ance at the proper moment by a gentle and opportune 
 political pressure on other countries, if the contact 
 mentioned above between theory and practice is per- 
 manently maintained. The political pressure will be 
 felt as a favour, if in support of it certain advantages 
 for foreign countries can be offered, which will always 
 be feasible through a close connection between offi- 
 cials and men of business. 
 
 The commercio-industrial federation should form a 
 connecting link between commercial politics and prac- 
 tical commerce. 
 
 THE SUPREME COURT 6P CREATION 
 
 The knowledge of all the conditions of exportation 
 and no less of the strength of its own position, will 
 enable the commercio-industrial federation to allay 
 quickly and decisively controversies arising between 
 domestic and foreign producers and customers. To 
 
142 The Future of German Industrial Exports 
 
 avoid tedious litigation the formation of a permanent 
 court of arbitration for export affairs will recommend 
 itself. All contracts for supplies to be concluded be- 
 tween our own country and others are to come before 
 the court of arbitration of the commercio-industrial 
 federation as unappealable cases. This court might 
 be delegated in cases of necessity to the foreign coun- 
 try in question. To banish as quickly as possible 
 all points of friction which disturb the export trade 
 must be a primary duty of the commercio-industrial 
 federation. The foreign customer must have a feel- 
 ing of assurance that in the court of arbitration he 
 will find absolute protection against infringements of 
 his rights; the domestic manufacturer must know 
 that it protects him against arbitrary vexations from 
 abroad. In order to remove all suspicion of favour- 
 itismx from this court, it will be well to include in it 
 in all individual cases a representative of the proper 
 foreign industrial association. 
 
 Controversies which arise in the export trade are to 
 he settled summarily by a court of arbitration which 
 forms an integral constituent of the commercio-indus* 
 trial federation, 
 
 LAUNCHING THE PROPAGANDA 
 
 Foreign countries should be acquainted as quickly 
 as possible with the general make-up and efficiency 
 of every new improvement which finds a place among 
 our exports. Means of introducing it which will 
 here perform good service, are the press propaganda 
 upon which there will be further discussion later, the 
 
The Export Army in Action 143 
 
 opening of sample displays, and the organization of 
 mobile exhibitions. 
 
 It must be admitted from the very first that the 
 accompHshment of this task, amid the probably 
 very strained relations which are to be expected after 
 the conclusion of peace, will encounter great diffi- 
 culties. These, however, must not be permitted to 
 restrain us from going ahead with the necessary prep- 
 arations in good time. All the hatred of foreign 
 countries can not deliver them from their needs and 
 necessities. This fact can be safely reckoned upon. 
 The former foreign customer of German products 
 in his own interest will strive as soon as possible to 
 make new connections which will restore his business 
 to a prosperous footing. For its sake he will tempor- 
 arily forget his hatred to Germany. First of all he 
 will have to get his bearings after such a long inter- 
 ruption in business. It therefore seems well to start 
 sample-displays and mobile trade exhibits for the 
 present in German or neutral territory. They will 
 keep the foreign customer posted, and later, when 
 enmity has sufficiently subsided, they can be contin- 
 ued abroad. 
 
 Industrial goods of the same or related kinds ought 
 to be united. All ornamentations must give place 
 to actual merit. The materials and their make-up 
 must be the inducement. Our present enemies will 
 probably order from Germany, for the time being, 
 only such products as they can get in no other way. 
 Our plans must be based upon this supposition. 
 Sample displays and mobile exhibitions are there- 
 
144 ^^^ Future of German Industrial Exports 
 
 fore, for the present, to be supplied only by such in- 
 dustries as can count with assurance upon exports 
 to foreign countries immediately after the conclusion 
 of peace. In order to transfer interest by degrees 
 to other articles of export, it will be advantageous 
 to include in these displays and exhibitions the 
 products of related or auxiliary industries, and in 
 the course of time to extend advertising slowly in 
 such ways as this until the moment has come to 
 transfer it directly into foreign countries. In order 
 to avoid difficulties and friction and not to burden 
 our state missions unnecessarily with intervention, 
 this advertising ought not to be conducted by indi- 
 viduals or by individual industries associations, but 
 by a body which has the recognition of the govern- 
 ment and of industry, by a single agency. 
 
 For this purpose the commercio-industrial federa- 
 tion is best suited. The more individual interests 
 are eliminated in these demonstrations, and purposes 
 of instruction are given prominence, the more surely 
 can success be anticipated. The opening up of 
 commercial connections will come naturally from this 
 advertising. They will and must be evoked solely 
 by the command of necessity. The commercio- 
 industrial federation will take up all the questions 
 of interested parties, will pass them on to the proper 
 industrial associations for solution, and will transmit 
 the answers to the inquirers. In a similar way, for 
 the time being, orders and deliveries will be handled 
 by this federation in order, at first, to dispense with 
 personal contact between former enemies. In the 
 
The Export Army in Action 145 
 
 course of time this contact will come of itself to ap- 
 pear desirable and the federation will then be relieved 
 of this burden. The restoration of interrupted com- 
 mercial relationships requires painstaking tact be- 
 cause at first one must reckon with an emotional at- 
 titude which unfortunately is incalculable. Here a 
 disinterested agency does better service than indi- 
 viduals who are looking out only for themselves and 
 not for the general welfare. 
 
 The commercio'industrial federation will have the 
 dutjy with the help of sample displays and mobile trade 
 exhibits y of effecting the re-opening of commercial rela- 
 tionships with other countries^ and of making these 
 secure in such a way that they can later be extended by 
 the individual manufacturers. 
 
 THE LISTENING POST OF KULTUR 
 
 The commercio-industrial federation will compile 
 statistics of the export trade, independent of the 
 government's statistics; the guide in drawing them 
 up will be their immediate practical applicability. 
 The commercio-industrial federation will gain a bet- 
 ter insight into the practical business of industrial 
 exporting than the state officials. It will at all 
 times observe the up and down movements of export 
 quantities in detail and will more quickly comprehend 
 and recognize the inclinations of foreign customers 
 and therefore will be soonest in the position to dis- 
 cover means for throttling dangerous influences at 
 their very beginning. The application of these means 
 is the business of the state authorities, and to the 
 
146^ Tlu Future of German Industrial Exports 
 
 latter the commercio-industrial federation should 
 present suitable proposals concerning the nature, 
 extent, and duration of these means. Since, again, 
 their eflFect will be recognized first by this federation 
 it is possible for it to suggest to the state authorities 
 the instant at which measures in operation are to be 
 annulled. 
 
 The commercio-industrial federation is to serve as 
 a feeler for the state authorities when it comes to adopt- 
 ing measures to boost the export trade. 
 
 As organs of this ^'feelers-activity will be used the 
 branches of the commercio-industrial federation en- 
 gaged in work abroad. The latter might at the start 
 be loosely associated with the commercial staff of the 
 state missions abroad. They could be separated 
 and made independent representatives, as the healing 
 of mutual relationships takes place. These repre- 
 sentatives will of course remain permanently in 
 touch with the missions, as has already been indi- 
 cated, and will serve them in the same way as *',feel- 
 ers" and sources of information, just as the federa- 
 tion does for the proper government officials at home. 
 These branches also institute and direct the courts of 
 arbitration, engaged abroad. They form the offices 
 of the federation for collecting information and the 
 executive organs for its directions. Similarly they 
 serve as bureaus of information for our citizens and 
 foreigners — for the latter directly, for the former 
 indirectly — ^through the federation to which they are 
 subject. They furnish mediation and support in 
 trade between German concerns and their customers 
 
The Export Army in Action 147 
 
 abroad; they give instruction concerning customs and 
 tariff conditions and price movements. In a word 
 they are pioneers who have to reopen the commercial 
 highways destroyed by the war. They will furnish 
 to the federation periodic reports concerning commer- 
 cial conditions and the factors influencing these in 
 the countries in question. Such reports are to be 
 published in the general trade journal. 
 
 The re establishment and maintenance of commercial 
 relationships will he advantageously cared for hy branch 
 establishments of the commercio^industrial federation 
 which should he permanently located abroad. 
 
 THE AUTOMATIC COLLECTION AGENCY 
 
 The mercantile federation will have the primary 
 duty of adapting former business usages to the cir- 
 cumstances changed by the war. In particular the 
 modes of accounting, of invoicing goods, and of 
 payment must be subjected to a thorough-going 
 renovation. The experiences which have been gained 
 wiA outstanding accounts in hostile countries warn 
 us to be on our guard, and to make a change in mer- 
 cantile business practice in order to prevent similar 
 very detrimental occurrences in all the time to come. 
 
 The most flourishing export trade becomes worth- 
 less if collections are even in the least endangered. 
 We should look into the question as to whether it 
 might not be advisable for the sake of precaution to 
 institute a Central Clearing House which will make it 
 possible to cancel on the books the total amounts 
 due on exports and on imports in such a way that the 
 
148 The Future of German Industrial Exports 
 
 money payments in either direction reach only the 
 remainder. In terms of business practice, this means : 
 The claims of foreign shippers upon German custom- 
 ers will be settled by the obligations of foreign cus- 
 tomers to German shippers being indorsed directly 
 over to the Central Clearing House. Unpaid ac- 
 counts due us from foreign countries will in this way 
 always be small. The danger of loss from a fall in 
 the rate of exchange is lessened. The security of 
 collections is increased. The German exporter is 
 protected since the payment office is a German one. 
 He will be saved losses of interest if foreign claims 
 upon us and obligations to us are at an equilibrium, 
 and accordingly can be balanced off immediately by 
 the Central Clearing House in the foreign country. 
 Payment is provided for, since the importer settles 
 with the Central Clearing House. The mercantile 
 federation will erect branches abroad for this purpose 
 which will be housed in the same quarters with the 
 branches of the other federations to make intercom- 
 munication easy. 
 
 A problem of the mercantile federation will consist 
 in guaranteeing and lessening outstanding accounts 
 due us from foreign countries. It will he solved hy 
 cancelling^ as far as possibky the claims of other coun- 
 tries upon us by their obligations to us. That will he 
 done in the foreign land itself by clearance^ or^ in 
 other wordsy hy endorsing over the bills of exchange. 
 
 A more detailed description here of payment 
 methods would lead us too far. The balancing can 
 be done directly with the help of the financial federa- 
 
The Export Army in Action 149 
 
 tion, or indirectly by foreign customers handing 
 over to foreign shippers their obHgations to pay — 
 (bills of exchange and so forth). Since the value of 
 such commercial paper depends upon the credit of 
 the maker, it will be necessary for the mercantile 
 federation to establish an information office which 
 will be free from the shady features of private in- 
 formation offices to-day. The mercantile federation 
 is to protect the German exporter from loss by placing 
 at his disposal truthful reports concerning the sol- 
 vency of foreign customers. For its own protection, 
 the federation will stipulate that it only guarantees 
 the collection of claims upon foreign customers when 
 the solvency of the customer was confirmed by it 
 before the conclusion of the transaction. 
 
 In order to bring in a little money so as to balance 
 its books, the federation by a reverse process will 
 furnish to the foreign shipper equally faithful reports 
 concerning the solvency of German importers, and 
 In that way will gain the confidence of the foreign 
 business world. At the same time, it will also make 
 personal contact largely superfluous — a valuable 
 service in view of the feelings which must be expected. 
 Absolute and fully warranted confidence must take 
 the place of the warmer emotions that can scarcely 
 be looked for in the years immediately ahead. The 
 mercantile federation will form the path by which 
 such confidence can come. 
 
 The mercantile federation will serve as an informal 
 tion office for the solvency of the business world con" 
 nected with the export trade. 
 
150 The Future of German Industrial Exports 
 
 In conjunction with the associations of German 
 merchants, the mercantile federation will work out 
 business standards which are adapted to the new 
 conditions and the various branches of commerce, 
 and which are to be observed in business deaUngs 
 with foreign countries. 
 
 Some lesser duties of the mercantile federation will 
 be: representing German firms for the time being in 
 business abroad; recommending foreigners for em- 
 ployment as agents; submitting reports of foreign 
 markets; representing German firms before foreign 
 officials in business litigation; maintaining a legal 
 bureau with a staff of lawyers and business men for 
 work on foreign cases; collaborating on the general 
 trade journal. 
 
 THE MONEY KINGS* CAMPAIGN 
 
 The financial federation, which likewise will em- 
 ploy foreign branches in its work, should be assigned 
 the following duties of first importance: 
 
 Transactions in actual money as directed by the 
 mercantile federation. 
 
 Collection of money from, and payment of money 
 to, parties concerned with the compensation- and 
 guarantee-funds, and entitled to support from them. 
 
 Administration of these funds. 
 
 Collection and disbursing of royalties for the use of 
 inventions, according to earlier explanations. 
 ^ Entire financial administration of all the federa- 
 tions. 
 
 Creation and support of a special industry fund 
 
The Export Army in Action 151 
 
 which is to be used for temporarily reinforcing weak- 
 ened industries, in the interest of the export trade. 
 
 Financial control of the associations for raw ma- 
 terial. 
 
 Prevention of the exploitation of financially weak 
 industries by grasping capitalists. 
 
 Finally, a share in supervising the influence whick 
 foreign capital exercises over important protective 
 industries, or strives for. 
 
 It is readily to be supposed that the financial 
 federation will perhaps expand by degrees into a 
 bank for the manufacturing export trade, and that 
 in it lie the possibilities of a German Export Bank 
 on a grand scale, which will represent not the special 
 interests of one industry, but the general interests 
 of all German industries. Since this bank can find 
 a sound basis only in the mutual interest of all in- 
 dustries, it will be able to offer special advantages 
 and security to all manufacturers who are concerned 
 in the export trade. Its relation to banks already 
 in existence is made clear by these considerations. 
 
 To the financial federation falls the duty of controlling 
 all financial operations which are necessary for increas- 
 ing industrial exports; it forms a foundation for th^ 
 general German export bank of the future. 
 
PRECEDING the Export War, 
 the German plan contem- 
 plates laying a monumental 
 foundation for the siege guns of 
 commerce with the peace treaties. 
 Blandly stating that they will be 
 dictated in Potsdam and [written 
 in blood, they have tabulated their 
 *^ minimum demands.'' These will 
 impose upon the United States and 
 all creation the conditions that the 
 Prussians may select their own 
 properties in our country and 
 operate them under Imperial jur- 
 isdiction; that their officials be 
 stationed in Allied territory to 
 punish anyone refusing to buy their 
 goods; that we give bond^ guaran- 
 teeing their enforced investments 
 and accounts, and that we purchase 
 from them exactly the amount of 
 all their exports which they shall 
 command. And they add that they 
 will '^consider whether it is not well 
 to demand exclusive favouritism of 
 Germany in this point or that, or 
 in air'! 
 
CHAPTER ELEVEN 
 
 A STUDY IN SCARLET. THE PROPOSED 
 TREATIES 
 
 Blood and Bombast — ^The Kaiser's "Minimum Demands" — 
 The Exclusive Favouritism of Germany — Unlimited Right to 
 Take Allied Materials — German Supervision in Allied Countries 
 — Control of the Allied Freight Rates — Punishment of Hostile 
 Boycotters — Restoring the "Stolen" Patents — ^Allied Guarantees 
 Against "Insufferable Discrimination" — A Warm Welcome For 
 the "Federation." 
 
 7. Commercial Treaties 
 
 INTELLIGENCE, hard work, and organization 
 have raised Germany's trade to an elevation 
 which was followed by her enemies with increasing 
 envy, and at last with alarm. All means admissible 
 in peace were brought into play to stop this upward 
 sweep. Through German resourcefulness and Ger- 
 man initiative they came to naught. German 
 technical skill emerged in all respects victorious. 
 Every new obstacle, in the form of commercial 
 treaties and their supplements, which was set up 
 abroad against its victorious progress was overcome 
 and banished by the increased and successful appli- 
 cation of mental power. When all efforts at re- 
 pression, in the form of commercial treaties, had 
 
 154 
 
A Study in Scarlet 1 55 
 
 shown themselves vain, they seized the sword and 
 cleft the commercial treaties, purposing to dictate, 
 in blood, new ones which should sever the vital 
 sinews of German exportation. It has turned out a 
 bit different from what the shrewdest of the shrewd 
 had planned. In one point they were right. The 
 future commercial treaties will be written in blood. 
 German might and German justice will stamp and 
 seal them. 
 
 THE kaiser's "minimum DEMANDS" 
 
 The fate and fortune of our industrial exports 
 hang upon the coming trade agreements. These 
 will show very plainly whether German industry 
 has learned the lessons of the war and the years 
 preceding. The experiences then gained show, as 
 has already been pointed out, that international 
 treaties are only partially reliable. To reckon in 
 future upon the security of treaties, to build upon 
 loyal observance of them, would be more than im- 
 provident. Security, as before, must lie in the 
 power of German industry. The commercial treaty 
 in the immediate future must be looked upon only 
 as an attempt to define, as exactly as may be, the 
 possibilities and opportunities within the reach of 
 exportation — as a standard for deciding upon means 
 of transit through, and trade with countries, or as a 
 category for all obstructions to development which 
 are not set up officially by foreign countries against 
 the German export trade. He who sees more in it 
 for the present, sees too much. 
 
156 The Future oj German Industrial Exports 
 
 The foregoing discussion contains in principle all 
 that we must demand of the future commercial 
 treaties in the interest of our industrial exports, 
 namely: 
 
 Assurance of a supply of indispensable raw ma- 
 terials at reasonable prices, not jacked up by either 
 the country consigning the goods or transporting 
 them across its territories. 
 
 Prevention of import or transit duties which 
 would be oppressive to our exports. 
 
 Prevention of tariffs which are onerous in com- 
 parison with those charged other countries. 
 
 Inadmissibility of foreign export-premiums which 
 are injurious to Germany's export trade. 
 
 Obligation on the part of the foreign country to 
 suppress every boycott movement against German 
 products. 
 
 Assurance of the inviolability of German intellec- 
 tual property and of German trade-marks with a 
 retroactive guarantee, extending back to the time 
 of the origin of the property right. 
 
 Admittance of German competitors to official 
 competitions and to the bidding for government 
 contracts, when other foreign competitors are 
 admitted. 
 
 Assurance of fair contract awards when German 
 bids are superior in specifications and price to others. 
 
 Granting of all concessions to German manufac- 
 turers which are given to other foreign concerns. 
 
 Protection of German branches and representa- 
 tives abroad in equal measure with that assured to 
 other foreign countries. 
 
 Official recognition of the five federations named 
 above, and their branches abroad. 
 
 Terms governing compensations and embargoes. 
 
A Study in Scarlet 157 
 
 Full equality for German undertakings and 
 capital engaged abroad, in comparison with those of 
 other foreign countries, respecting taxation and 
 other levies. 
 
 Inadmissibility of any sort of favouritism of citizens 
 of former allies, so far as the German export trade 
 could be injured in this way. 
 
 Security of capital invested abroad, and of out- 
 standing accounts due us. 
 
 THE EXCLUSIVE FAVOURITISM OF GERMANY 
 
 It must be emphasized that the above are only a 
 selected few from among the points which suggest 
 themselves in this connection, and that they repre- 
 sent minimum demands. The representatives en- 
 trusted with working out the foundations of future 
 commercial treaties will certainly consider whether it 
 would not be well to demand exclusive favouritism 
 of Germany in this point or that, or in all, considering 
 the levity with which this bloody war was forced 
 upon Germany, and the sacrifices she has had to 
 make. 
 
 UNLIMITED RIGHT TO TAKE ALLIED MATERIALS 
 
 If the raw-materials division of the commercio- 
 industrial federation wishes, as was explained earlier, 
 to remove all uncertainty about the supply of raw 
 materials which have to be ordered from abroad, it 
 must be sure that the foreign states it relies upon do 
 not place in its way obstacles of any sort which 
 might bring with them injurious advances in price. 
 Before all else a restriction in quantity must be out 
 
158 The Future of German Industrial Exports 
 
 of the question. That will be attempted in the case 
 of raw materials for the protective industries. Hav- 
 ing provided against this danger, it must stipulate 
 also an unlimited opportunity to acquire the sites 
 needed for winning of raw materials and an unlimited 
 right to get them out by German enterprises. It 
 must preclude any further restriction by providing 
 that these enterprises can not be bound to sell any 
 amounts of these raw materials in the country where 
 they have gained them, not to use them there in 
 manufacture or any other way. The government 
 of the country in question can be permitted to exer- 
 cise its right of requisitioning them only with the 
 consent of the proper German officials. To guaran- 
 tee the fulfilment of these demands certain pledges 
 must be given. 
 
 The commercial treaty must assure an opportunity to 
 procure unrestricted quantities of raw materials in 
 foreign countries^ and to export them without restriction^ 
 to German territory, 
 
 GERMAN SUPERVISION IN ALLIED COUNTRIES 
 
 The German export trade in the interest of its 
 efiiciency must be able to reckon upon full uniformity 
 in certain respects, with the limits suggested below. 
 The raw materials which its protective industries 
 need must always be on hand in sufficient quantities. 
 Just as, on the one hand, it is inadmissible to exploit 
 natural resources uneconomically for capitalistic 
 interests, so on the other hand, the amount of raw 
 materials turned out can never be permitted to be 
 
A Study in Scarlet 159 
 
 decreased artificially because of a selfish desire to 
 charge a higher price, nor can their quality be re- 
 duced. Hostile countries have no interest in oppos- 
 ing such pernicious practices, which would hurt only 
 our export trade. It is, on the contrary, to be 
 expected that they will secretly encourage thenio 
 Therefore it must be made possible for the German 
 government to interfere without foreign countries 
 protesting that their sovereignty is violated. The 
 possibility or probability of friction over this point 
 must be removed beforehand through the commercial 
 treaty, by granting to the proper German authorities 
 the same rights over German concerns abroad as 
 they have over domestic business. Since these 
 rights are largely of an industrial nature, no opposi- 
 tion can very well be made to their establishment by 
 treaty. 
 
 Germany must have the right of supervision over 
 German plants abroad for supplying raw materials 
 to her protective industries, at least in reference to their 
 operating processes and the nature of their work. 
 
 CONTROL OF THE ALLIED FREIGHT RATES 
 
 It will not alone suffice to demand unlimited oppor- 
 tunities to secure raw materials in foreign countries 
 for our protective industries, for, by the time they 
 reach Germany, their prices may have been raised 
 to inadmissible amounts by export- or transit- 
 charges, freight rates, the refusal of export premiums 
 which are granted to other foreign businesses of sim- 
 ilar kind, and by other petty forms of chicanery, the 
 
i6o The Future of German Industrial Exports 
 
 consequences of which are oppressive; (for instance, 
 a refusal to build connecting railways, or to recognize 
 the expropriation rights of German enterprises, etc.) 
 The commercial treaty must place an absolute bar 
 to such arbitrary advances in the final prices of raw 
 materials, which would render dijfEcult the work of 
 German industry and would put the export trade 
 under a disadvantage in the prices it could charge. 
 That treaty must likewise be a bar to any discpm- 
 ination in favour of other foreign industries when 
 concessions are being granted. The retaliatory 
 measures to be applied in case of infringement must 
 be determined upon beforehand with all severity, in 
 order that every attempt of foreign powers in such 
 directions may be nipped in the bud, for reprisals 
 are only successful when their effect is keenly felt. 
 
 The commercial treaty must make it impossible be- 
 forehand to damage German business in raw materials 
 abroad by manipulating prices. 
 
 PUNISHMENT OF BOYCOTTERS 
 
 In recent years boycotts have been frequently 
 enforced against foreign articles and businesses under 
 the cloak of nationalism, while governments silently 
 encouraged or acquiesced in them. Fear of retaliatory 
 measures will prevent states hostile to our exporta- 
 tion from officially or even secretly supporting boy- 
 cott movements of this kind, which are one of the 
 factors with which the German manufacturing ex- 
 port trade must surely reckon in the immediate years 
 to come. We can not, however, be satisfied with a 
 
A Study in Scarlet i6j 
 
 merely passive attitude on the part of foreign gov- 
 ernments, for it does more damage than can be per- 
 mitted. Provision must be made in advance that 
 foreign officials employ all the force at their com- 
 mand against the originators, promoters, and parti- 
 cipants in boycotting movements which injure our 
 export trade, and that in such cases the German gov- 
 ernment have the right to be consulted, and to share 
 in deciding the measures of opposition. 
 
 We can imagine a case where sabotage, silently 
 acquiesced in on the part of officials, is carried on in 
 those industries which serve to procure raw materials 
 abroad for German protective industries. Again, we 
 can imagine a case where, under the harmless fiction 
 of collecting statistics, German goods are labelled 
 by the officials so that their German origin may be 
 particularly noticeable, and boycotts or other injury 
 may thus be incited. We can imagine a case where 
 the same or similar products of non-German origin 
 are given the right, or are silently permitted to choose 
 distinguishing marks which especially emphasize their 
 non-German origin. We can imagine a case where, 
 under an apparently harmless pretext, non-German 
 products are granted financial concessions (subsidies, 
 import premiums, etc.), for the purpose of destroying 
 the competitive abihty, in the matter of price, of 
 products coming from Germany. The simplest 
 German measures of retaliation would consist in 
 granting products threatened in this way export 
 premiums that are enough to make up the difference. 
 This means is not to be recommended, out of regard 
 
l62 The Future of German Industrial Exports 
 
 for the state finances; rather it must be stipulated by- 
 treaty that all foreign concessions which could in- 
 fluence prices must be granted without exception to 
 German products also. 
 
 The commercial treaty must provide for protective 
 measures against boycotts of German products and 
 whatever would put them under a disadvantage in price. 
 
 RESTORING THE " STOLEN '' PATENTS 
 
 A Striking proof of the kind of motives behind this 
 bloody war is the action taken by hostile countries 
 with reference to patent rights — declaring the crea- 
 tions of German intellect and German science prop- 
 erty without an owner. Since they could not reach 
 the heights of German creative ability, thievery of 
 intellectual property was sanctioned by law. The 
 remedy was extremely simple and worthy of Ger- 
 many's enemies. The results of a half century of 
 intensive intellectual activity became free robber- 
 booty. This spoliation, nevertheless, had its good 
 side, for under its pressure, as German patent litera- 
 ture shows, undreamed-of improvements and inven- 
 tions were brought forth, and numerous important 
 industrial innovations are in preparation. The fu- 
 ture commercial treaty will not only see to it that 
 the stolen rights of ownership are restored to their 
 former owners unimpaired, that full compensation 
 is made for the financial loss incurred up to the time 
 when the property is restored, and that a priority 
 right in hostile countries is assured to the German 
 patents awarded during the war; but the treaty must 
 
A Study in Scarlet 163 
 
 also make certain that special statutory measures 
 make occurrences of this sort impossible in future. 
 Similar precautions are to be taken in the interest of 
 German trade-marks. 
 
 The commercial treaty must safeguard the intellectual 
 property rights of German industries in greater measure 
 than previously^ the guarantee to extend backward to 
 the time of their origin, 
 
 ALLIED GUARANTEES AGAINST '* INSUFFERABLE DIS- 
 CRIMINATION" 
 
 The uninterrupted maintenance of German indus- 
 try during the war, the activity of which in certain 
 respects actually shows an advance over the times of 
 peace, is for Germany's enemies an extremely un- 
 pleasant surprise. However, in spite of the hostile 
 attitude of her enemies, it assures her the probability 
 that, in indispensable products, her industry will be 
 patronized abroad on account of its intactness and 
 efficiency, but only in cases where other producers 
 can not be found who can deliver the same goods 
 within the same time. In other cases it must be 
 expected that German technical skill will be excluded 
 from supplying our present enemies. Such a condi- 
 tion as this would be insufferable. It must be pre- 
 vented from arising. The commercial treaty must 
 stipulate that German shippers be eligible wherever 
 foreign material and foreign workmanship are patron- 
 ized at all. It must be absolutely impossible for 
 manufacturers from countries now allied against 
 Germany to enjoy, under any form or pretext what- 
 
164 The Future of German Industrial Exports 
 
 soever, a preference in competing for state work. 
 Protection must go so far that domestic manufactur- 
 ers of the country in question who order foreign ma- 
 terial are not permitted to exclude German articles. 
 
 But no confidence can be placed in paper conces- 
 sions alone. On the basis of statistical data, we 
 must specify the proportion in which German prod- 
 ucts have to be included in official consignments 
 from foreign countries, no matter whether the deliv- 
 ery be made directly, or through the medium of a 
 domestic dealer. Purchases according to this pro- 
 portion must be guaranteed by the state which is 
 a party to the treaty. The objection will then be 
 made that such a demand is an attempted intrusion 
 upon the sovereignty of the state. The patience of 
 Germany before the war was stretched farther than 
 was really well; it was exercised only to keep the 
 peace. We have gained nothing by generously 
 yielding a point time after time, instead of insisting 
 upon our rights. 
 
 "Equal justice for all!" must here also be the 
 watchword. But because justice is a term which 
 can be all too easily bent to suit one's purposes, as 
 the most recent past teaches, it must be made a 
 matter of figures and put down in black and white. 
 The duty of the guarantors will be to see to it that 
 the pledged security goes unforfeited because the 
 guarantee is fulfilled. After the war also, the Ger- 
 man export trade must insist upon finding among its 
 present enemies the market which belongs to it, ac- 
 cording to the rights of the past, and the degree of its 
 
A Study in Scarlet 165 
 
 efficiency. It must insist that it be not discrimin- 
 ated against in favour of other foreign competitors, 
 that at least its former percentage share in the world 
 market be guaranteed, and that this share shall be 
 enlarged in future in proportion to the increase in the 
 capabilities of German industry. As an integral 
 constituent of the commercial treaty there must be 
 an import guarantee given by the foreign power in 
 figures for each individual kind of German industry 
 (the figure understood as the percentage of German 
 goods to all other imported goods of the same in- 
 dustry). 
 
 The commercial treaty must demand state guarantees 
 that German goods be accorded as wide a range of sale 
 as is justified by statistics and by the increasing effici- 
 ency of German industry. 
 
 A WARM WELCOME FOR THE " FEDERATION '* 
 
 Without regard to the range of the officially guar- 
 anteed market, warrants must be given that the 
 private sales of our industrial exports be not re- 
 stricted. Such a restriction can be avoided if Ger- 
 man branches and representatives are not subject to 
 any sort of exceptions, and if the freedom of move- 
 ment guaranteed to all other foreign representatives 
 and branches holds good for them also. 
 
 It is not necessary here to demand special prefer- 
 ments and concessions; equality in qualification is 
 entirely sufficient. If it be granted, German dili- 
 gence and German efficiency will take care that our 
 industrial exports come to their rights in private 
 
l66 The Future of German Industrial Exports 
 
 trade also. But there must be an open door! If 
 this demand is incontestably essential in the case of 
 foreign branches of private industries, it must hold 
 good in a still greater degree for the official represen- 
 tatives of Germany's technical industry, embodied 
 in the five federations mentioned above, and in their 
 foreign branches. The special protection itself 
 which is to be granted to them brings great advan- 
 ^ tage to the foreign country in question, because they 
 represent instrumentalities of mediation in the best 
 (moral) sense of the word, because they render effec- 
 tive service to Germany's export trade only when 
 they provide for a smooth settlement of all business 
 affairs between domestic and foreign buyers and sell- 
 ers, and because that country after all will be the 
 gainer from such smoothly running business. It 
 must also be demanded that these federations, since 
 they themselves aim at and can gain no profit, remain 
 free of taxes in foreign countries. 
 
 German branch-establishments and representatives 
 in foreign countries must not be burdened by being 
 singled out for special rulings and obligations. 
 
 To be always demanding and never giving in re- 
 turn is repugnant to German nature. It goes with- 
 out saying that concessions representing valuable 
 compensations will be granted to foreign countries 
 which again renew unobjectionable commercial rela- 
 tions by treaty. In the interest of our own industrial 
 exports we will not limit ourselves to granting certain 
 customs- and tariff-reductions; we will go further 
 and grant import premiums to certain foreign prod- 
 
A ^tudy in Scarlet 167 
 
 ucts and manufactures, if the trade in them is suited 
 indirectly to promote our export trade. These con- 
 cessions are to be defined by treaty, just as the am- 
 bargo rights. 
 
 The lessons of the most recent past make it neces- 
 sary to demand a special guarantee (with specific 
 figures) for all capital invested in foreign countries, 
 and all outstanding accounts, the guarantee being 
 retroactive to cover amounts already existing. 
 
 The liability of foreign countries for German capital 
 employed in them is to he carefully defined hy the com-^ 
 mercial treaty. 
 
 Every import concession granted hy foreign countries 
 must be effective for exports from Germany also. 
 
To NEUTRALIZE hostility 
 and allay the suspicions 
 of allied customers, the 
 advance guard of the German 
 invasion will offer for sale only 
 ' 'Dena tionalized goods ." They 
 will appear to be ^'anonymous'* 
 — cosmopolitan. To maintain 
 this disguise, the Teutons cfe- 
 cree that everyone else shall 
 keep their goods also free from 
 mark or sign. Advertisements 
 and shipments of these prod" 
 ucts incognito will appear to 
 come from neutral countries, 
 and will be spirited into our 
 homes and our stores by clever 
 actors sedulously made up to 
 resemble our harmless neigh^ 
 bours. Even their correspond 
 dence, mimeographed in Berlin 
 in Bostonian English will bear 
 a neutral post mark and an 
 impartial signature. 
 
CHAPTER TWELVE 
 
 THE DENATIONALIZATION DODGE. AN 
 ANTIDOTE TO HATRED 
 
 Commerce Incognito — ^The Stratagem of Deceit — Outwitting 
 the Allied Buyers — ^A Severe Lesson in Customs Procedure — 
 Propaganda Under Cover — A Flank Movement Through 
 Neutral Ground. 
 
 8, Ways of Denationalizing German Goods 
 
 GERMAN exporters must expect that, for a 
 long time after the end of the war, German 
 manufacturers will be outlawed among our 
 present enemies. It would be idle to live in the opin- 
 ion that peace will banish hatred at once. The latter 
 must be reckoned with the German industry also. 
 It will be well, therefore, to meet people half way, 
 avoiding everything that might provoke national 
 passions which are not yet lulled to rest. Victory in 
 this conflict will be harder than with the sword, for 
 the weapons to be wielded here are patience, forbear- 
 ance, and often also the denial of the individual 
 "ego" — that natural pride which finds expression 
 externally in the labelHng of goods. Such mild 
 tactics are sure to meet with opposition, but they 
 must nevertheless be adopted, if we listen to calm 
 reasoning and cold facts. Vanity — fortunately it is 
 
 170 
 
The Denationalization Dodge 171 
 
 still in Its infancy in Germany — must give place when 
 the goal ahead demands it. What we propose is not 
 a disgraceful sort of "hide and seek," but rather due 
 consideration for conditions where sentiment is 
 master. In this connection the reader is referred to 
 the introductory remarks. 
 
 THE STRATAGEM OF DECEIT 
 
 In the early days of peace the manufacturing 
 export trade must have as its first commandment 
 the following: The German "make-up'* is to be 
 avoided wherever at all feasible, without the in- 
 trinsic quality of German export products being 
 allowed to suffer. This quality must not only be 
 maintained, but also increased, for it is the backbone 
 of the export trade, it is exactly the thing which is a 
 thorn in the eye of its enemies. There is indeed the 
 danger that foreign competition may find easier sail- 
 ing because of our action, but this competition must 
 be reckoned as part of the bargain. If competitors 
 turn out goods of the same intrinsic value, then 
 German goods simply must be made better. The 
 strenuous contest which thus results will be altogether 
 good for the German manufacturer, for as the past 
 teaches he knows no weakening. The intrinsic 
 quality of exported goods must be typically German; 
 their external garb, for better or for worse, will have 
 to be anonymous — neutral. 
 
 Out of regard for the rehabilitation of trade with 
 formerly hostile countries, the German garb of manufac- 
 tured articles must be put away. 
 
172 The Future of German Industrial Exports 
 
 The "make-up'' — by which term not only the 
 packing but also often the style are to be understood — 
 must for the present adapt itself exclusively to the 
 taste of the customer even if a thorough-going change 
 in the manufacturing process be thereby involved. 
 Unfortunately the world judges first of all by the 
 looks, and "German" looks in such countries will 
 militate against the sale of German goods. Dis- 
 avowal, under such circumstances is required, it can 
 not be avoided. The German products controlling 
 the world market were recognizable even from the 
 outside by their make-up; this furnished people in 
 general with a guarantee of their intrinsic quality. 
 German inventiveness will certainly not find it 
 difficult to improvise new make-ups of such a nature 
 that they quickly make a general impression, and 
 again become a sign of intrinsic quality without being 
 at the same time a characteristic German mark. 
 This mark is inscribed in golden letters upon the 
 book of history; it must not vaunt itself on every 
 wrapping. In the former it illumines vision, in the 
 latter it so blinds the hostile buyer's eye that he no 
 longer sees the inner quality of the article. The loss, 
 then, falls to the German export trade, the profit 
 to foreign competition. 
 
 OUTWITTING THE ALLIED BUYERS 
 
 The German trade-mark formerly performed good 
 service abroad. Now it will be a token by which to 
 recognize the former enemy. "Camouflage" in 
 war is an important strategic method; when oppor- 
 
The Denationalization Dodge 173 
 
 tunely and ingeniously applied, it increases the effec- 
 tiveness of weapons. The appUcation of this precept 
 for the commercial struggle is as clear as day. The 
 German trade-mark does not conceal, on the contrary 
 it acts like a torch, it illumines — the source! The 
 article is recognizedly good, but the origin spoils 
 the whole effect. Away then with the German 
 trade-mark where it offends feelings which, though 
 they are certainly unjustified, must nevertheless be 
 reckoned with. Away with it where it brings loss 
 instead of gain. Where the trade-mark is absolutely 
 necessary to safeguard property rights, a foreign 
 mark must be used in its stead; the increased expense 
 incurred in this way is inconsiderable in comparison 
 with the results achieved. 
 
 The German trade-mark ought not to he used at first 
 in export-trade with formerly hostile countries; the 
 same rule holds good in placing German patent stamps 
 on the outside of goods. 
 
 A SEVERE LESSON IN CUSTOMS PROCEDURE 
 
 Too much stress can not be laid upon the fact 
 that is here fundamentally a question of pre- 
 cautionary measures exclusively, in order to avoid 
 injuries to the manufacturing export trade. 
 
 If the German manufacturer with great self-efface- 
 ment makes every requisite effort to banish scoures 
 of irritation, he for his own part has the right to 
 insist that the government of the hostile country 
 does not work against him. Officers of foreign states, 
 whether they be railroad- or customs-officials can 
 
174 ^^^ Future of German Industrial Exports 
 
 under no circumstances be permitted to label goods 
 so as to disclose the place of origin. Nor can they 
 be allowed to do this after laying down rules under a 
 pretense of impartiality, to the effect that all im- 
 ports are to be labelled in this way without regard 
 to the particular country from which they come. 
 It is clear that the indication of origin from a formerly 
 allied country represents an official recommendation 
 for the product in question, and that a rule requiring 
 such a label in all cases has only the purpose of mak- 
 ing German goods especially recognizable — to their 
 disadvantage. 
 
 It is, however, not sufficient for the German manu- 
 facturer to gain his point, namely, that the goods 
 coming from him need not be thus indicated. He 
 must be inexorable in demanding that no recognizable 
 mark of origin may be used at all on goods, without 
 regard to the country from which they come. For 
 the non-marking of German goods, as a right of 
 exception granted to them (while other foreign goods 
 are labelled) amounts in actual practice to giving 
 away their origin. The path to foreign trade must 
 not be beset with ambushes of this sort, the possi- 
 bility of which ought always to be taken into ac- 
 count. If peace is to be made, it must be a commer- 
 cial peace also. Secret malicious weapons must be 
 destroyed before their use — by force, if there is no 
 other way. 
 
 No labelling of goods by the country of their origin 
 can be permitted foreign officials against the will of the 
 German exporter. 
 
The Denationalization Dodge 175 
 
 The German exporter alone will have the right 
 to decide whether the origin of his goods is to be 
 indicated; his order book will here determine his 
 decision. 
 
 Of importance for the success of efforts toward 
 denationalizing goods are, further, the skilful use of 
 propaganda abroad, the proper selection of our 
 foreign representatives, and taking advantage of 
 closely related business circles in those countries 
 which, during the war, have remained neutral 
 without wavering. 
 
 PROPAGANDA UNDER COVER 
 
 *^ Propaganda which is to bring results must be 
 aimed at the individual." This sentence stands as 
 the supreme law of all advertising means and 
 methods. It is valid in an increased degree where 
 one must reckon with people's feelings. In general 
 the propaganda will strive to transform these feelings 
 into favourable ones. Here where it is a question 
 of carrying out propaganda in countries whose 
 feelitigs in the first few years will presumably remain 
 hostile to German products, this effort toward trans- 
 formation must be abandoned because for the present 
 it is hopeless. Rather we must strive to make the 
 influence of such feelings secondary, placing in the 
 foreground a recognition of the quality of German 
 export products. Methods of propaganda which, 
 however unintentionally, could possibly offend the 
 national feeling of the customer must be most care- 
 fully avoided. 
 
176 The Future oj German Industrial Exports 
 
 An example may make this point plainer: It is 
 generally recognized that the impression produced 
 by propaganda is strengthened by using tables of 
 figures which afford an insight into the great output 
 of the industry. In the case of a hostilely minded 
 customer such means would be abandoned, for they 
 give him an unwelcome view of the power of German 
 industry, and they involuntarily give rise to un- 
 pleasant conclusions about the strength of his own 
 country, and evoke the desire to contribute so far 
 as possible by not himself increasing this quantitative 
 efficiency of Germany — in other words by purchasing 
 nothing. It would be just as undesirable to adduce 
 the usual figures of comparison with competitors 
 of other countries, if the latter are allies of the nation 
 to which the customer belongs, for he will see in such 
 a comparison an attempt to detract from the worth 
 of his ally. 
 
 The German export propaganda must guard against 
 offending the national feelings oj other countries; it 
 ought to he content with giving concrete and instructive 
 information. 
 
 As for propaganda in general, so here, the principle 
 holds good that all exaggeration! and quackery are 
 to be excluded, and that all efforts must be directed 
 solely toward convincing the future customer of the 
 intrinsic value of the goods introduced by the 
 propaganda. Comparisons with the products of other 
 firms — German firms included — -are to be omitted 
 absolutely. The consequences of a comparison with 
 foreign firms have already been mentioned above. 
 
The Denationalization Dodge ifj 
 
 The consequences of a comparison with German firms 
 eventually have not only an injurious effect upon 
 them, but also upon our entire export trade. They 
 give the impression that this trade does not always 
 draw upon first-class sources. Such damaging com- 
 parisons ought to be severely condemned even if 
 they were framed for the sake of caution so as to 
 be read only between the lines. 
 
 You never add to your own reputation by running 
 down others. The foreign propaganda must b« 
 worked out in advance with special care, it must have 
 a suggestive effect upon the recipient, compelling 
 him, perhaps unconsciously, to calculate whether 
 he would gain by purchasing the recommended 
 articles. Ifthey justify themselves in his calculation 
 then he is sure to become a customer. If the ejSi- 
 ciency of the recommended products is recognized, 
 and their superiority, in comparison with that of 
 other foreign products (even from an ally), admitted, 
 then the propaganda has done its sole important 
 duty; it leads to orders. Emphasizing the origin, 
 as was said before, is of course to be avoided; the 
 question is not *%here from** but **what." 
 
 The propaganda abroad must have a neutral cloaky 
 and must confine itself exclusively to proving the value 
 of the recommended articles. 
 
 We must distinguish between printed, written, and 
 personal propaganda. The order above gives at 
 the same time the order of their application in normal 
 cases. In the time following the war this sequence 
 must be inverted in the formerly hostile countries. 
 
178 The Future of German Industrial Exports 
 
 for it is almost certain that foreigners, embittered 
 by the events of the war, will at first throw every 
 communication from Germany into the waste-basket* 
 Another means must be used to regain attention for 
 these communications. This will be attained only 
 by degrees, and only by intensive personal influence. 
 With this matter is bound up the question of the 
 future organization of foreign branches and represen- 
 tations which likewise are to be used as means of 
 neutralization. 
 
 An advantageous path for the future propaganda 
 abroad can be found by starting from neutral territory. 
 
 A FLANK MOVEMENT THROUGH NEUTRAL GROUND 
 
 This compromise is proposed because we are not 
 justified in assuming that in every individual case a 
 citizen of the foreign country in question can at once 
 be found, who is competent to represent German 
 manufacturers satisfactorily. At least in the be- 
 ginning foreign experts who are fitted for this work 
 will shrink from taking a German agency. There 
 will doubtless be numerous persons abroad who 
 would be ready to represent our firms, but who will 
 protest that for the moment they could scarcely be 
 successful with German manufactures because they 
 would run the risk of putting themselves in a bad 
 light before their countrymen. Even the offer of 
 steady compensation independent of first results 
 might here not answer the purpose, even apart from 
 the fact that there would be great danger of its 
 misuse. A satisfactory compromise can be found 
 
The Denationalization Dodge 179 
 
 by making the foreigner only indirectly an agent for 
 his German concern. He would get his immediate 
 orders through a neutral firm. 
 
 It must be admitted that a certain complication 
 arises here; however, it can scarcely be avoided. 
 One ought not to surrender himself to the optimistic 
 opinion that it will be sufficient to erect a branch 
 establishment in a neutral nation, and that the form- 
 erly hostile countries will be worked from this point. 
 Success by this method seems pretty much out of 
 the question, for foreign countries will investigate 
 carefully and soon uncover the true state of affairs. 
 There will be firms which keep trying to reopen 
 their foreign (at present confiscated) branches after 
 the war by gathering a staff inclusive of the directing 
 officers, from the foreign country in question. It is 
 to be feared that this makeshift will not at first bring 
 success, any more than the foundation and operation 
 of apparently independent foreign firms. The best 
 remedy will ^always be found through neutral coun- 
 tries. The decrease in profits resulting from this 
 use of intermediaries ought not of course to be made 
 up by raising prices but rather by lessening the cost of 
 production, since in every case superiority in prices 
 must be preserved. 
 
 The reopening of export relationships with once 
 hostile countries must take place through neutrals in- 
 stead of through direct representatives as in the past. 
 
 This rule blazes a path to be followed in conducting 
 propaganda. Again as before, its elaboration and 
 organization will be left to the German manufacturer 
 
l8o The Future of German Industrial Exports 
 
 (provided he observe the points mentioned above), 
 but it will be conducted entirely from neutral terri- 
 tory. The printed matter destined to promote our 
 export trade ought accordingly to be worded and 
 finished up in such a way that neutrals can make 
 direct use of it. Tliey will have to receive it and 
 pass it on according to the system evolved by the 
 German manufacturers. The results of thp propa- 
 ganda, including the negative ones, are to be trans- 
 mitted by neutrals to the German concerns in order 
 that the latter may themselves compile the necessary 
 propaganda statistics, and learn from them the 
 lessons. 
 
 To simplify matters, the epistolary propaganda 
 will be drawn up in Germany, ready for mailing, and 
 will be sent to the neutral power for further distri- 
 bution. The orders coming in to the latter, when- 
 ever possible, will be filled directly from the German 
 production plant, while the invoices fully prepared 
 for the mails are transmitted to the neutral. The 
 incoming payments pass through the neutral's bank- 
 ing connections to those of the German manufac- 
 turer. If import difficulties prevent the goods from 
 being shipped directly, a route must be found 
 through a neutral country. The neutral country 
 will doubtless profit by this; this profit may neither 
 be curtailed nor looked upon invidiously, for the 
 neutral performs valuable pioneer service for Ger- 
 many's industrial exports. He brings business to 
 our manufacturers which otherwise would be lacking 
 or at least doubtful. We must respect the rule not 
 
The Denationalization Dodge i8i 
 
 to begrudge another his gain when our own is suffi- 
 cient. It ought also to be remembered that neutral 
 countries in a certain sense have had to suffer more 
 through the war than the belligerents, and that for 
 the latter they have performed valuable services, 
 which demand recognition. This recognition can 
 be evidenced all the more easily if in so doing our own 
 advantage is served. In this discussion only those 
 neutrals are meant whose neutrality was above 
 all doubts, and who in maintaining it looked neither 
 to the right nor the left. 
 
 The profit which neutrals make hy acting as inter- 
 mediaries is entirely justified^ since it naturally carries 
 with it profits for our exporters. 
 
 The management of advertising in foreign papers 
 will be carried on through neutrals under the direc- 
 tion of the German manufacturer. Special attention 
 should be paid to neutral trade journals which are 
 issued in various countries. They represent ex- 
 cellent disseminating mediums not only for advertise- 
 ments, but also for instructive information concern- 
 ing new inventions and methods of applying them. 
 Account must be taken of the fact that it will require 
 a long time for technical journals published in Ger- 
 many to regain currency and circulation in hostile 
 countries to that degree which is necessary for pro- 
 moting our export trade. 
 
 Neutral trade journals represent an effective means 
 for promoting the German manufacturing export trade. 
 
 If rightly managed, neutral agencies will, more- 
 over, facilitate the supply of those raw materials 
 
1 82 The Future of German Industrial Exports 
 
 which German industry needs from abroad. Just as 
 direct trade with formerly hostile countries will meet 
 with export difficulties, so likewise obstacles will be 
 placed in the way of securing raw materials. They 
 ought to be removed whenever possible without slate 
 assistance — ^which should be the last resort. Foreign 
 countries will not hesitate to ship raw materials to 
 neutrals without any burdensome restrictions, for 
 v/hat they are concerned with, after all, is a sure 
 market. If they can secure one without getting 
 into closer connections with the citizens of a former 
 enemy, they will certainly welcome this solution of 
 the problem. If a neutral power is used in eliminat- 
 ing the troubles of the raw-materials question, we 
 will profit by the fact that accounts can be mutually 
 cancelled through it, in the country where we buy 
 and sell. The remainder due us is therefore all that 
 need be transmitted to Germany. 
 
 In war we recognize the advantages of domestic 
 money not only remaining at home, but also circulat- 
 ing there; in peace times also we should try to pre- 
 serve this condition as far as possible. This can 
 be done if our exports exceed our imports (an aim 
 we should keep always before us) so that the pay- 
 ment for our imports can be made by direct clearance 
 in the foreign country in question. To facilitate 
 this, it will be well to establish special neutral clear- 
 ing offices for balancing (transferring) accounts. 
 
 Neutrals will perform good service in the procuring 
 of raw materials^ and in making possible an agreeable 
 financial settlement. 
 
T\HE German confidence 
 in the outcome of his 
 ruthless cut-throat bat-' 
 tie for the markets of the world 
 IS ultimately based upon a com- 
 placent assurance of their su- 
 perior genius. They propose to 
 reinforce this with a really 
 formidable weapon — high speed 
 and painstaking ef^ciency. All 
 small traders and manufac- 
 turers are to be eliminated 
 without pity. Production is to 
 be mobilized in great Trusts 
 and strictly standardized. The 
 labour is to be permanent and 
 hereditary. No man in Ger- 
 many will be allowed to con- 
 duct a plant unless he adopts 
 the military regulations de- 
 fining efficiency. And incom- 
 petence and failure will be 
 marked down for the wrath 
 and annihilation of the State. 
 Efficiency is not only to be 
 taught and studied, but com- 
 manded. 
 
CHAPTER THIRTEEW 
 
 THE HEREDITARY WORKMEN OF COM- 
 BINED INDUSTRIES 
 
 The Ban on the Small Business Man — "Permanent" and 
 "Hereditary" Labour — ^The Crime of Incompetence — A Drastic 
 Remedy for Bargain Sales. 
 
 9. Competitive Ability 
 
 RAW materials and industrial products can 
 count upon sale if their usability and effec- 
 ^ tiveness keep pace with that of others in the 
 market. They will supplant the latter if they are 
 superior in quality and if, at the same time, their 
 selling price does not exceed the market price. 
 
 Considering the obstacles, mentioned earlier, 
 which can be placed in the way of our export trade 
 in future, and which must for the most part be ex- 
 pected, we must under all circumstances avoid han- 
 dicaps in construction or price that could injure our 
 sales abroad. All products of German manufacture 
 destined for export must be able to compete in the 
 matter of technical workmanship and price. 
 
 No special discussion is necessary to show that the 
 manufactured products of the great German indus- 
 tries answer in the main these two requirements. 
 In future, however, our export trade must count on 
 
 184 
 
The Hereditary Workmen of Combined Industries 185 
 
 the lively participation of our middle and smaller 
 industries. A compromise can perhaps be found by- 
 forming for the individual branches of industry, 
 export associations which will handle orders within 
 this country, and likewise act as exporters. Their 
 producers will be the middle and smaller manufac- 
 turers. By uniting many small industrial forces 
 under a single hand, an efl&cient export concern will 
 be formed which can follow the same paths as the 
 great individual firms. Only when all forces — even 
 the smallest — cooperate, will our export trade reach 
 a size which corresponds to the efficiency of German 
 industry. 
 
 In this effort, however, it is undoubtedly neces- 
 sary for the middle and smaller industries to follow in 
 their work the same principles as the great industries. 
 
 "permanent'' and ''hereditary" labour 
 
 The middle and smaller industries should confine 
 themselves to as narrowly limited branches of manu- 
 facture as possible, and should give up producing 
 all the necessary parts themselves. The greater 
 the number of these parts, the more mechanical en- 
 ergy and capital resources are split up and spread 
 out. The principle of a division of labour which 
 bears such splendid fruit during the war in Germany 
 ought also to be adhered to in time of peace. The 
 smaller the number of different parts to be manu- 
 factured, the easier it will be to train an hereditary, 
 highly specialized line of workers, and to keep and 
 employ them permanently. 
 
1 86 The Future of German Industrial Exports 
 
 Since all intellectual and mechanical energy is ap- 
 plied to the mastery of fewer processes, it is to be 
 expected that the technical perfection of the prod- 
 ucts will be as great as possible. The smaller the 
 number of different parts to be produced, the fewer 
 will be the kinds of machinery necessary for the work, 
 and the less, therefore, will be the capital required. 
 The expense account will have smaller interest pay- 
 ments to make, for the amount of capital needed is 
 largely determined by the floor space and equipment. 
 Supervision of work becomes a simpler matter, the 
 organization is easier to control, the precision of the 
 work can be regulated with fewer instruments, all 
 in proportion as the range of manufacture is limited. 
 In place of a great deal of minor work, there will be a 
 single specialty to which all efforts are devoted. All 
 these directions are aimed at placing the middle and 
 smaller industries in a position to produce articles 
 which cannot be surpassed in technical workman- 
 ship. 
 
 If this direction is followed out, the capacity of the 
 plants will automatically become very high, and will 
 increase as the number of different materials and 
 finished products is cut down. Just as the separate 
 divisions of the great industries work hand in hand, 
 and to a certain extent represent within themselves 
 produpcer and consumer in mutual cooperation, so 
 the middle or smaller manufacturer must work. He 
 must think of himself as the head of a division, en- 
 gaged exctusively in the production of a certain kind 
 of goods which are closely related to the products of 
 
The Hereditary Workmen of Combined Industries 187 
 
 other manufacturers (imaginary divisions of indus- 
 try as a whole). 
 
 Superiority in the construction and price of Ger- 
 man industrial products over those of foreign com- 
 petitors is a pre-requisite for the prosperity of the ex- 
 port trade. 
 
 THE CRIME OF INCOMPETENCE 
 
 It seems necessary to call attention to an undesir- 
 able class of individuals who were only half- 
 heartedly opposed before the war, but who now ought 
 to be ferreted out relentlessly. Manufacturers who 
 lack the necessary talent for organization, who give 
 too little attention to accounting, and who start a 
 business with insufficient means, really belong in the 
 category of production costs, which make coopera- 
 tion against foreign competition impossible. Worthy 
 understudies of theirs are to be found in those en- 
 terprisers who by failing to understand the market 
 or in the stubborn purpose of creating a favourable 
 market artificially, increase their output to a degree 
 that is entirely out of proportion to the demand. To 
 both sorts of enterprisers comes the instant when 
 they must dispose of their goods at any price, in order 
 to be able to meet their further obligations, or in 
 order to get new working materials. Generally 
 they will not wait for the perilous moment to come, 
 but will already have planned how to get their prod- 
 ucts into the hands of the customers. Experi- 
 ence shows that they get rid of their goods by price- 
 cutting, and by offering them far below the market. 
 
1 88 The Future of German Industrial Exports 
 
 A DRASTIC REMEDY FOR BARGAIN SALES 
 
 In our future trade with old enemies, such individ- 
 uals will cause immense loss. As it is essential to the 
 export trade that we always be strong competitors 
 in the matter of prices, there is a minimum figure 
 set by the limit of profitableness, which we can 
 never allow to be passed, if the continuation of the 
 industry is not to be endangered. Every transgres- 
 sion of this limit brings others after it, and hastens 
 the coming ruin. Foreign countries become sus- 
 picious when German articles of the same kind are 
 offered to them at widely varying prices. They be- 
 gin with right to exert pressure on prices in general, 
 in order not only to get cheaper goods but also to 
 injure German industry, and with it, or through it, 
 the German industrial trade. As soon as price- 
 cutting has or threatens to have consequences 
 which could injure our export trade, the practice 
 must be stopped by an exercise of state authority, 
 or by the remedies within the hands of the industrial 
 associations. 
 
 The competitive ability of German industrial ex- 
 ports in the matter of price must not be reducible to the 
 point of slaughter prices. 
 
A SSUMING the role of 
 ZJk the supply train, the 
 bankers and capitalists 
 of Germany will henceforth 
 supply their golden ammuni- 
 tion to German commercial 
 units only. The High Com- 
 mand in Potsdam, perceiving 
 that the JEntente has no more 
 moral regard for property than 
 to seize German accounts, has 
 decreed that henceforth no 
 German money shall be in- 
 vested except in German in- 
 dustries, and in those outposts 
 of the advancing German ex- 
 port trade which directly profit 
 in the commercial war. And 
 this plan further contemplates 
 two other rigid limitations up- 
 on all banking. That no allied 
 capital shall ever find its way 
 into the ^'Indispensable In- 
 dustries'^ of Germany and 
 that for a German banker to 
 refuse a loan to one of these 
 ^'offensive units,'' is strictly 
 'Werboten.'' 
 
CHAPTER FOURTEEN 
 
 THE CURB ON CAPITAL 
 
 The Kaiser's Complaint: The Predatory Allies Violate Private 
 Property! — ^The Evil Influences of Independence — ^The Blessings 
 of Financial Bondage — German Money for Germany — Relation 
 of Investments to Invasion. 
 
 lo. Capital 
 
 THE results of our entering into a state of war 
 were very destructive for German capital 
 engaged in enterprise abroad. It is to be 
 hoped that we shall not forget that lesson when peace 
 is restored. However great the damage may be, it 
 can be forgotten and repaired if in future the Ger- 
 man capitalist will constantly bear in mind the fact 
 that circumstances may arise where our capital in 
 foreign countries may be entirely outlawed. The 
 enemies of Germany who have simply thrown over- 
 board all traditional conventions and law did not 
 delay a moment on the way which, to use the mildest 
 expression, led to violation of private property rights. 
 Of course we cannot and should not require capital 
 to be withheld absolutely from enterprises abroad; 
 but experience teaches that among foreign en- 
 terprises we should carefully distinguish between 
 those under foreign and those under German man- 
 
 190 
 
The Curb on Capital 191 
 
 agement, between those advantageous and those 
 detrimental to German industry, those working for 
 it or against it, and those which represent its allies, 
 or its competitors. All German capital which is in- 
 vested in foreign countries must be sure not only 
 of being returned to Germany in its cycle, but also 
 of constantly having a stimulating and beneficial 
 effect upon German industry, 
 
 German capital in future is to be invested only in 
 work under German directors^ and even then not in 
 foreign countries unless it brings benefit and support 
 to our industrial export trade. 
 
 THE EVIL INFLUENCES OF INDEPENDENCE 
 
 Certain financial and banking circles will surely 
 take a position against this requirement. These 
 circles are not at all interested in serving the com- 
 mon welfare first and then the safety of the capitalist, 
 but rather in reaping the highest profits possible 
 from their investments. In recent years there has 
 already been on foot a precautionary movement 
 against the flow of German capital into foreign coun- 
 tries; there has as yet, however, been no recourse to 
 decisive measures. To the expert who understood 
 financial conditions it was most depressing to see our 
 own German capital lured abroad by high-sounding 
 promises, often when that meant *^ good-bye for 
 good," while at the same time German industry often 
 had to go into foreign countries in order to get to- 
 gether the capital it needed — at a heavy sacrifice. 
 A large number of German undertakings which were 
 
192 The Future of German Industrial Exports 
 
 founded in recent years fell through after a compar- 
 atively short time, the failure in its mildest form lead- 
 ing to a pooling of the capital stock. The reason was 
 perhaps not so much that their foundations were 
 rotten, or that the officers in the producing or selling 
 end of the business lacked expert knowledge, but was 
 solely that the financial sacrifices which had to be 
 made beforehand to secure capital abroad were so 
 heavy that they consumed not only profits but capi- 
 tal also. 
 
 The short-sightedness of many industrial circles in 
 Germany is really incomprehensible when one con- 
 siders that any control over capital which has gone 
 abroad is almost impossible, while control over that 
 invested in domestic industries at home is at all times 
 possible. The introduction of foreign capital into 
 German industrial enterprises represents under some 
 circumstances a source of danger for them and the 
 export trade, which could certainly be avoided if we 
 could get rid of such short-sightedness. Practical 
 experiences teach us only too well that in many cases 
 foreign capital is invested in German concerns only 
 for the purpose of destroying their export trade, 
 either through the foreigner's right to a voice in the 
 business being used to fathom the manufacturing 
 secrets and methods and to transplant these abroad, 
 or through unscrupulous directors being appointed 
 to undermine the strength of the enterprise in com- 
 peting with foreigners. More than ever, the war is 
 teaching us that German organization celebrates its 
 greatest triumphs even along industrial lines, when 
 
The Curb on Capital 193 
 
 foreign influence is kept away; likewise that German 
 capital would then be at hand in superfluity to back 
 all German concerns without need of foreign help. 
 German capital ought not to be put at the service of 
 foreign industrial undertakings under German lead- 
 ership until domestic industry no longer needs it. 
 Support must proceed from within outward, not 
 from without inward. 
 
 Our export trade will he helped if the flow of German 
 capital into foreign countries is stopped. 
 
 THE BLESSINGS OF FINANCIAL BONDAGE 
 
 It is primarily the duty of the banks to afford the 
 guidance and instruction needed in this situation. 
 We must, however, admit the deplorable fact that in 
 many cases it is by the banks themselves that the 
 German manufacturer is denied a just appreciation 
 of his circumstances. The old proverb — "a prophet 
 is not without honour save in his own country'' — 
 still holds true. Between the manufacturer who is 
 seeking capital and many German banks there exists 
 a profound antagonism which expresses itself even 
 in the first proposals. The banks rightfully demand 
 a thorough preliminary investigation by an indus- 
 trial expert, and also an examination from the busi- 
 ness standpoint. Here they make a mistake by 
 stipulating that the investigation is to be conducted 
 by their own employees. The manufacturer opposes 
 that for two reasons, one of which is certainly jus- 
 tified, and often the other also (according to the char- 
 acter of the bank). The manufacturer takes his 
 
194 The Future of German Industrial Exports 
 
 stand against the industrial employee, because he is 
 of the opinion that, as an employee, the latter can 
 not judge objectively, and because it is possible that 
 the bank in question stands in closer connection 
 with another concern of the same kind, so that man- 
 ufacturing secrets and advantages might most easily 
 be communicated to the latter. 
 
 It can not be denied that this opinion has a certain 
 justification. A compromise, satisfactory to both 
 parties, will be found if independent experts from out- 
 side are entrusted with the examination. The manu- 
 facturer further justly opposes the bank's wish to 
 make a simultaneous business investigation, which 
 allows it an insight into the most intimate circum- 
 stances of the undertaking, an insight which consid- 
 ering the close connection of banks with each other 
 can become dangerous if the demand for capital is not 
 granted. As a general thing the business investi- 
 gation ought not to take place until, upon the basis 
 of the industrial investigation, the bank has de- 
 clared itself thoroughly in favour of granting the 
 capital, provided that the business conditions be 
 sound. 
 
 The judgment of German industrial undertakings 
 hy the banks with a view toward financing them must be 
 kept purely objective in future, 
 
 RELATION OF INVESTMENTS TO INVASION 
 
 German capital, as a matter of principle, ought to 
 take stock in foreign enterprises only when its in- 
 fluence upon their management can be permanently 
 
The Curb on Capital 195 
 
 preponderating, for the purpose of promoting our 
 export trade, or of supplying German industry with 
 raw material. In certain cases such an interest will 
 be acquired as a provision for opening up new chan- 
 nels for German workmanship. If such an invest- 
 ment in the stock of a foreign concern is made solely 
 by industrial circles who have a special interest in the 
 shipping business which that concern will carry 
 on, they will be justified in putting up with compara- 
 tively low dividends, provided that other profits or 
 benefits result from the shipments, and that Ger- 
 man industry is assured of receiving all future deliv- 
 eries. In no case, however, should our industries 
 themselves buy the foreign stock; this can be al- 
 lowed only the capitalist circles related to them. 
 Industrial concerns should be builders, not bankers; 
 their funds ought to be applied solely within their 
 own business. These related capitalists can exercise 
 sufficient influence over the foreign concern in favour 
 of our industries. 
 
 Capital in the service of our domestic industries must 
 be absolutely debarred from acquiring an interest in 
 foreign concerns even for the purpose of safeguarding 
 our imported supplies^ because such participation 
 might in a financial way involve a weakening of do- 
 mestic efficiency. 
 
 Innumerable industrial values have been destroyed 
 by the war. Their restoration will demand increased 
 activity from Germany's industry, which will doubt- 
 less require an abundant supply of capital to accom- 
 plish the coming tasks. The economic and financial 
 
196 The Future of German Industrial Exports 
 
 preparation for supplying this capital needed after 
 the war ought to be carried out and finished in good 
 season. Likewise German capital should be made 
 aware in good season of the advantages which it can 
 gain from participating in German industrial enter- 
 prises. Too much illuminative instruction can not 
 be given in this matter, if the following demand is 
 to see fulfilment : 
 
 German capital for German technical industry. 
 
 END 
 
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