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 LIBRARY 
 
 OF THE 
 
 UNIVERSITY OF CALIFORNIA. 
 
 A 
 
PROTECTION IN VARIOUS 
 COUNTRIES 
 
 Edited by William Harbutt Dawson 
 
 GERMANY 
 
PROTECTION IN GERMANY 
 
 A HISTORY OF GERMAN FISCAL 
 
 POLICY DURING THE NINETEENTH 
 
 CENTURY 
 
 BY 
 
 WILLIAM HARBUTT DAWSON 
 
 Author of " German Socialism and Ferdinand 
 
 Lassalle," " Prince Bismarck and State 
 
 Socialism," " Germany and the Germans," 
 
 Etc. 
 
 '^^^O- iH£ 
 
 I U^4•.VS-.«S5T 
 
 '■^^^A; 
 
 LONDON: 
 
 P. S. KING & SON 
 
 ORCHARD HOUSE 
 
 WESTMINSTER 
 
 1904. 
 

 BRADBURY, AGNEW, & CO. LD., PRINTERS, 
 LONDON AND TONBRIDGE. 
 
 I 
 
PREFATORY NOTE. 
 
 That history should be written without 
 tendency is a sound and just maxim. But 
 when a tendency is implicit in history, it is a 
 dishonest affectation of impartiality to omit 
 to bring that tendency to light. 
 
CONTENTS. 
 
 CHAP. 
 
 I. THE PRUSSIAN TRADITION 
 
 II. THE ZOLLVEREIN .... 
 
 III. THE REACTION .... 
 
 IV. PRINCE Bismarck's theories of taxation 
 V. the tariff of 1879 
 
 VI. the supplementary tariffs 
 
 "Wii. the commercial treaty era 
 
 VIII. the agrarian movement 
 
 IX. THE tariff of I902 
 
 X. PROTECTION AND TRADE . 
 
 XI. THE CONDITION OF THE WORKING MAN 
 
 XII. AGRICULTURE UNDER PROTECTION . 
 
 XIII. THE AGRICULTURAL LABOURER 
 
 XIV. PROTECTION AND TAXATION 
 
 17 
 26 
 
 41 
 
 58 
 
 78 
 98 
 
 128 
 
 141 
 
 161 
 
 185 
 202 
 224 
 239 
 
 INDEX 
 
 257 
 
f UNiV.- 
 
 PROTECTION IN GERMANY. 
 
 CHAPTER I. 
 THE PRUSSIAN TRADITION. 
 
 A REVIEW of fiscal policy in Germany must 
 begin with the statement that protective laws in 
 the interest of industry and agriculture have been 
 the tradition of the States which form the present 
 Empire. Freedom of trade has been the exception, 
 and when it has occurred it has been a temporary 
 lapse from continuity and custom. This is not a 
 proposition to be argued, but an affirmation of fact, 
 the recognition of which is necessary to the right 
 understanding of all that follows. 
 
 But this fundamental fact, that Protection is 
 the tradition of German policy, implies that from 
 an early period there was a trade to protect, hence 
 that Germany's commercial development is by no 
 means so modern as it is commonly supposed to 
 be. Writing of that country in the middle of the 
 fifteenth century, the Papal Legate -^Eneas 
 Sylvius said : " If this mass of great towns and 
 territories, with their population and their wealth, 
 were united in one purpose, what an empire and a 
 
 P.G. B 
 
2 PROTECTION IN GERMANY. 
 
 people the Germans would be ! " " In the fifteenth 
 and sixteenth centuries," says a German writer, 
 " Germany was unquestionably esteemed as very 
 rich in comparison with the other countries of 
 Europe, and it became so principally through 
 mining and trade. The seat of her great com- 
 merce was in the North, though in the towns 
 of the South, too, an important and prosperous 
 industry was developed, thanks especially to 
 their ties with Italy, whose industries were so 
 famous at that time." But the industry and 
 trade which had been built up under the fostering 
 care of guild and merchant at home, and by 
 Hanseatic enterprise abroad, fell into decay during 
 the Thirty Years' War of the seventeenth century. 
 When the Peace of Westphalia ended the strife in 
 1648 the desolation remained. Town and country 
 alike were depopulated; the national resources had 
 been deplenished ; the working classes had to 
 learn their arts and trades over again ; the entire 
 economic life of the nation was disordered and 
 paralysed. Thus before the war began there were 
 in Berlin and Kolln (old Berlin) 1,236 inhabited 
 dwellings, but in 1653 (three years after the peace) 
 1,052 ; in Brandenburg the number fell from 1,144 
 to 554, in Frankfort-on-the-Oder from 1,029 ^o 523, 
 in Potsdam from 191 to loi, in Rathenow from 299 
 to 153, and in Mittenwalde from 245 to nil. Once 
 German merchants had controlled the markets 
 of Russia and Norwa}^ but during those terrible 
 years of unrest and demoralisation that position of 
 
THE PRUSSIAN TRADITION. 3 
 
 primacy had been forfeited ; their privileges were 
 withdrawn ; their goods were refused admission to 
 the wonted markets. Abroad as at home the fruits 
 of generations of effort were sacrificed. 
 
 In Prussia the economic regeneration was 
 stimulated by artificial immigration from Holland 
 and France. It is estimated that in 1786 not less 
 than one-third of all the inhabitants of the 
 monarchy were either immigrants or descendants 
 of immigrants. Many names of towns and 
 villages in the western provinces still com- 
 memorate this admission and assimilation of a 
 foreign element which was then invaluable. If 
 ever Prussian autocracy justified itself it was 
 during the reign of Frederick the Great, between 
 1740 and 1786, years which saw a vast economic 
 revival and expansion in all parts of the young 
 kingdom. His theory of State policy was that of 
 his age, the Mercantilism of Colbert, with its 
 political ideal of a self-contained State. Hence 
 Frederick erected barriers around his frontiers for 
 the purpose of preventing, and not merely of' 
 restricting, the import of foreign commodities, 
 yet with unsuspected inconsequence armed his 
 own manufacturers and merchants for the in- 
 vasion of the foreigner's preserves by the gift of 
 export premiums, well satisfied that the natural 
 wealth of his dearly consolidated kingdom should 
 be exchanged for gold and silver from abroad. It 
 was the age of the balance of trade. His edicts 
 went so far as to roundly forbid the introduction 
 
 B 2 
 
4 PROTECTION IN GERMANY. 
 
 of every class of goods which could be produced 
 at home, even if less cheaply and of inferior 
 quality, and where total prohibition was relaxed 
 he imposed hi.^h duties, so that the State coffers 
 might benefit side by side with native enterprise. 
 
 On the other hand, the exportation of raw 
 material was forbidden in the interest of cheap 
 production, for so much of economic insight 
 he possessed, in spite of his Mercantilistic fallacies, 
 as to know it to be sounder policy to send 
 abroad manufactured goods than raw material, 
 since in the former case the foreigner exchanged 
 his own products to a larger extent for labour, and 
 by purchasing that labour maintained the strength 
 and life behind it. So far did he carry this principle 
 of productive independence that he imported silk- 
 worms into the country, so that silk need not be 
 purchased from abroad. 
 
 By subsidy, too, new industries were estab- 
 lished, and old industries which languished were 
 encouraged. If the foreigner's goods were' not 
 desired, the foreigner himself was welcomed, so 
 ,'he brought manufacturing skill and knowledge 
 into the land. The State was ever ready with 
 liberal gifts and temporary loans for the purchase 
 of raw material, for the establishment of technical 
 instruction, and for the introduction of foreign 
 teachers. The sums which Frederick gave in 
 these and other ways for the promotion of 
 industries made an aggregate which was indeed 
 enormous for an age characterised by State 
 
THE PRUSSIAN TRADITION. 5 
 
 bounty so less spacious than our own. In 1783 
 he granted 260,000 thalers in one sum for the 
 improvement of the Prussian mines and smelting 
 works. It was also his idea that the town was 
 the town and the country the country, and 
 that never the twain should blend. While 
 industry was natural and good in the former, it 
 was incongruous in the latter : hence all enter- 
 prise of the kind was forbidden on the land, and 
 the " garden city " was reserved for a later age. 
 
 Agriculture he no less supported in every suit- 
 able way. The great landowners he checked 
 with a firm hand ; the small peasant proprietors he 
 encouraged to ways of enterprise and thrift ; the 
 condition of the serfs he ameliorated in the rough 
 spirit of an age to which the ideas of liberty, 
 equality, and fraternity were still alien. 
 
 " The endeavours of Frederick the Great to improve 
 the economic condition of Prussia," writes Adolf Beer, 
 " cannot be sufficiently estimated, even though one 
 may not agree with the fundamental ideas by which he 
 was led. He gave equal attention to trade, industry, 
 and agriculture. By inducing foreigners to settle down 
 in various provinces he sought to give to agriculture 
 the labour required in the draining of marshy districts 
 and tlie cultivation of waste lands. Numerous decrees 
 prove the care with which the King promoted agri- 
 cultural interests ; better methods came into applica- 
 tion, and the instruction given to the peasants at the 
 command of the King had very successful results. 
 Worthy of all admiration is the energy of the King, 
 who repeatedly enjoined his subjects to plant vacant 
 lands with fruit trees, to lay out hop-gardens, and to 
 cultivate the vine, llax, madder, woad, carraway seed, 
 
6 PROTECTION IN GERMANY. 
 
 anise seed, &c. It was, however, a great evil that, 
 owing to the opposition of the nobility, the King was 
 not able to abolish serfage, hereditary servitude, &c., 
 and that he had to be satisfied with the amelioration 
 of the peasants' oppressed condition." ^ 
 
 Simultaneously many of the ancient restrictions, 
 like the Guild system, which had acted in restraint 
 of trade, were relaxed; roads and canals were built ; 
 the system of inland excise taxes was simplified 
 and alleviated ; better means of letter conveyance 
 were introduced. Foreign trade enterprises were 
 similarly encouraged. As early as 1750 the Asiatic 
 Trading Company was formed, by Frederick's 
 help, at Emden for the promotion of the export 
 trade ; and to the same patronage was due the 
 Maritime Trading Company {Seehandlungscoiii- 
 pagnie), founded in Berlin in 1772 for the same 
 purpose. Nearly a hundred years before this, how- 
 ever, the African Trading Company {Afrikanische 
 Handelsgesellschaft), an undertaking half mercantile 
 and half colonial, had been formed (in 1682) by a 
 band of merchant adventurers desirous of exploit- 
 ing the resources of the Guinea Coast.^ Jn. the 
 interest of foreign trade Frederick also concluded 
 "^ commercial treaties with Russia, with Holland, 
 with Poland, with Turkey, and North America. 
 If the Prussian monarchy lost ground between 
 1786 and the Emancipatory Edicts of the 
 
 ' " Allgemeine Geschichte des Welthandels." 
 - In his " Deutsche Colonialgeschichte " Max von 
 Koschitzky, with the characteristic thoroughness of his 
 nation, traces German Colonial endeavours back to the 
 tenth century. 
 
THE PRUSSIAN TRADITION, 7 
 
 Stein-Hardenberg period, the decline must be 
 attributed in part, of course, to the poHtical troubles 
 of the period, but also, and in a large degree, to the 
 untoward fate which placed the destinies of the 
 country for eleven fateful years in the hands of the 
 weakest member oftheHohenzollern race, Frederick 
 William II., years which saw the abandonment of 
 a great and salutary tradition, and were no longer 
 marked by that ardent and unwearying solicitude 
 of the Crown for the economic welfare of the nation 
 which was so important a feature of Frederick the 
 Great's strong if arbitrary rule. 
 
 The Prussian linen, woollen, cotton, silk, 
 leather, and sugar manufactures, the mining and 
 mineral industries, the trades in metals, both 
 precious and base, all go back to the eighteenth 
 century or earlier, and even then they had a con- 
 siderable export. In 1781 Prussia sold manufac- 
 tures to the value of 25 million thalers, in 1785 to 
 the value of 30 million thalers, in 1793 to the value 
 of 37 millions, and it is computed that one-half 
 went abroad. Her pig-iron production was 
 15,145 tons in 1798, and by 1824 it was only 
 35,813 tons. In the year 1795-96 Prussia had 
 the following exchange of metals : — 
 
 Iron in bars . . . 
 Steel ... 
 Iron plate ... 
 Iron and brass ware 
 Rough iron ware 
 
 Imports. Exports. 
 
 Thalers. Thalers. 
 
 312,828 259,287 
 
 213,411 200,866 
 
 158,102 160,042 
 
 29.792 35,815 
 
 360,666 569,632 
 
8 PROTECTION IN GERMANY. 
 
 a total import value of 1,074,799 thalers, against 
 an export value of 1,225,642 thalers, giving the 
 desired " balance of trade " of 150,843 thalers. In 
 1802 Prussia's metal workers numbered 10,719 
 persons, for the most part engaged in iron. 
 
 At the beginning of last century Prussia was 
 still an agricultural State : 80 per cent, of its 
 inhabitants followed pastoral occupations of one 
 kind or another. Hence not only did the country 
 produce corn enough for its own use, but it was 
 able to export freely. Manufactures were in the 
 main confined to the West, to Silesia, and to 
 Berlin and Magdeburg, while its most flourishing 
 ports were Memel, Danzig, Konigsberg and 
 Emden. The practice of exclusive trading was 
 as before carried on to the utmost, and the inter- 
 change of merchandise, not only between State 
 and State but even within the boundaries of the 
 same political territory, was impeded by a gro- 
 tesque system of duties and dues. The combined 
 effect of these hindrances to intercourse was 
 ruinous. '* The principles of the Mercantilistic 
 system," sa3'S a German writer, in reference to this 
 period, " had paralysed trade. The embargo 
 system extended even to the internal parts of 
 the monarchy. A province, even a district, 
 regarded its neighbour as foreign, and every 
 locality had its own duties and its special tariffs. 
 Foreign imports were prohibited, but as it was 
 impossible to do without the better and much 
 cheaper English and French cotton and silk goods, 
 
THE PRUSSIAN TRADITION. 9 
 
 a large smuggling trade was carried on everywhere, 
 which defied the severest legal measures. Such 
 was the condition of Prussia before 1806."^ And 
 of the social effects of this short-sighted and ex- 
 hausting fiscal policy in Prussia especially, King 
 Frederick William III. himself said: — 
 
 " When I reflect that, as experience has always 
 proved, the principal revenues of the State, and those 
 most suited to its needs, can only be raised on the 
 primary needs of life and the commonest articles of 
 trade, and that the number of those articles is very 
 limited, I am shocked at the voluminous excise and 
 customs tariffs." 
 
 It was the laws and regulations prompted by the 
 wise statesmanship of Stein and Hardenberg that 
 gave to Prussia the relief which its economic life 
 needed by removing the fetters upon industry, 
 handicraft, and trade, and making possible for the 
 first time the full exercise of its productive powers. 
 It would lead us too far to review in detail the 
 policy inaugurated by these sagacious men, who 
 were as great in practical knowledge as in ideas, as 
 great in administrative genius as in patriotism, and 
 this is the less necessary since the late Professor 
 Seeley's exhaustive work on Stein is accessible to 
 those who desire to follow up the subject more 
 minutely. Of the two men Hardenberg may be 
 regarded as by preference the thinker, the theorist, 
 Stein as the doer, the practitioner ; but both were 
 alike in proceeding from the supposition that 
 
 1 " Die ueuere Nationalokonomie," Moritz Meyer, 1881. 
 
10 PROTECTION IN GERMANY. 
 
 greater liberty in every direction was Prussia's 
 need and the key to her regeneration. Hardenberg 
 boldly called for the application of " democratic 
 principles in a'monarchical Government," for "a 
 revolution in a good sense." In his Memorial 
 {Denkschrift) of September 12, 1807, on " the re- 
 organisation of the State," he avowed the desire 
 to give to the State and the nation the greatest 
 possible amount of freedom — in thought, in speech, 
 in action, in trade, in industry, in government. He 
 did not propose to abandon protective laws alto- 
 gether ; but, while contending for free imports as 
 far as practicable, he was willing to retain such 
 moderate duties as would not impede trade where 
 the conditions of industry seemed to require them. 
 Nor did he abandon the idea that the future of 
 Prussia was bound up with the continued prosperity 
 of agriculture. " I am quite convinced," he wrote, 
 " that we have sacrificed the benefits of trade, 
 which for the greater part, and in Prussia particu- 
 larly, is derived from agriculture, to the factory 
 system, to the clear disadvantage of the State." 
 
 If Hardenberg was in favour of fundamental 
 reforms, so also was Stein, though his was a greater 
 caution. Of the two he was unquestionably the 
 more solid economist. He had studied at 
 Gottingen, par excellence the school of the cameral 
 sciences in those days, and while a follower of 
 Adam Smith, he sought to apply Liberalistic ideas, 
 not on any slavish model, but according to the 
 special needs of Prussia. One of his first official 
 
THE PRUSSIAN TRADITION. ii 
 
 acts was the foundation of the Prussian Statistical 
 Bureau in 1805, the year after he became Minister 
 of Agriculture and Commerce. Greater liberty 
 was Stein's watchword. The " Instruction to the 
 Royal Governments of the Prussian Provinces " 
 of December 26, 1808, after emphasising the 
 principle that industry must be free and no man 
 must be restricted in the choice of a calling 
 proceeded : — 
 
 t>' 
 
 "Together with this liberty, facility of communica- 
 tion and freedom of trade both at home and abroad 
 are also necessary if our industry, trade, and welfare 
 are to thrive. Thus those industries will naturally 
 come into being which can be carried on to the best 
 advantage, and which are the most suited to the 
 economic condition of the countrv and the civilisation 
 of the nation. It is a mistake to believe that it is 
 advantageous to a State to produce itself articles 
 which can be bought more cheaply abroad. The 
 increased costs of production caused by manufacturing 
 them are an absolute loss, and had they been employed 
 in another industry would have given abundant gain. 
 It is a distorted view that one should in such a case 
 seek to keep the money in the country, and rather not 
 buy at all. ... It is not necessary to favour trade ; 
 it must simply not be obstructed. Freedom of trade 
 and of industry creates the greatest possible competi- 
 tion between the producing and consuming public, 
 and protects the consumers most effectively against 
 scarcity and excessive prices." 
 
 That was the theory of Stein's economic posi- 
 tion. In practice he departed from it, like a wise 
 statesman, just as interest and policy dictated. 
 Thus while he introduced a low tariff of import 
 
12 PROTECTION IN GERMANY. 
 
 duties, he continued to prohibit the export of raw 
 wool in the interest of Silesia. While he advo- 
 cated the free import of corn on principle, he held 
 that the condition of agriculture must determine 
 whether it were safe to apply the good principle in 
 reality, and this reservation stayed his hand. 
 
 Having first strengthened the foundations of 
 civil and political life by legislation reforming the 
 land laws and provincial and local administration, 
 he promptly turned to economic and fiscal ques- 
 tions. The law of October 28, 1810, for the 
 unification of the customs system provided that 
 henceforth excise should be levied on but twenty 
 commodities ; the tax was made uniform in all the 
 provinces ; and octrois were abolished. 
 
 Thus from the second decade of the nineteenth 
 century the direct State encouragement of industry 
 and trade ceased for a long time. Rightly or 
 wrongly, it was deemed to be incompatible with 
 the new theories of economic freedom and inde- 
 pendence. So long as the State had exercised 
 the right to control the movements of its citizens 
 b}^ restrictions upon the choice of trade and occu- 
 pation, upon migration and residence, it recognised 
 the counter obligation to act in something like a 
 parental relationship towards every class of the 
 community. When, however, the restrictions 
 were thrown off, the State's direct patronage was 
 forfeited as well. There was less prohibition of 
 exports and imports, but there were also no more 
 bounties and subventions. There was gain and 
 
THE PRUSSIAN TRADITION. 13 
 
 there was loss ; and in the end the gain probably 
 proved the greater, though while the transition 
 lasted the pressure of the discipline was often 
 more obvious than its beneficial effects. At that 
 time Prussia had two tariffs — one for the agri- 
 cultural East of the monarchy, devised to meet 
 its special economic conditions and sufficiently 
 protective, and the other for the more industrial 
 West, marked by lower duties. These duties 
 were twofold. There was an import duty proper, 
 levied on the gross weight of the goods brought 
 over the frontier, and there was an excise levied on 
 the net weight of goods which were destined to 
 remain in the country. 
 
 It is interesting to notice how freedom broadened 
 down from precedent to precedent. The reforming 
 work of Stein was continued in his spirit by 
 Count von Biilow, as Finance Minister, who did 
 away the last of the old prohibitions. The first 
 project of law was one of January 7, 1817, 
 intended to readjust both customs and excise, and 
 it was one of the first duties of the Council of 
 State {Staatsrath) called into being by Frederick 
 William III. in March, 1817, to deliberate upon 
 this measure, which was referred to a committee 
 of twenty-four members, whose president was 
 Wilhelm von Humboldt. Billow's idea was on 
 the one hand to simplify internal taxation by 
 abolishing a majority of the excise duties, which 
 at that time fell upon an enormous number of 
 articles, and to confine them to a tcw remunerative 
 
14 PROTECTION IN GERMANY. 
 
 imports, and on the other hand to facilitate 
 foreign trade by the introduction of a rational 
 tariff. While, however, very low duties were to 
 be imposed upon goods which were either not 
 produced in Prussia or were not likely to create 
 serious competition, upon articles of luxury a high 
 tax was levied for revenue purposes : upon tea, 
 coffee, sugar, as much as 30 per cent. The excise 
 proposals were rejected, though the customs 
 tariff was approved, and it is notable that one 
 reason for the former step was the objection 
 that the suggested tax on meat and flour 
 would press heavily on the food of the poor. 
 The whole scheme had to be withdrawn for 
 revision. 
 
 A better fate awaited its successor, which became 
 the law of May 26, 1818, " on the customs and 
 excise duties on foreign goods and on trade between 
 the provinces of the State," a law which intro- 
 duced a great measure of freedom of trade and 
 made of Prussia a fiscal unity. It provided that 
 foreign products might be imported into the 
 country and home products be exported, the former 
 to be subjected to a moderate duty, which in general 
 amounted to half a thaler per cent., and some also 
 to an excise tax not exceeding 10 per cent, ad 
 valorem, though less where home industry was not 
 injured. " The duties," the Edict ran, " shall 
 protect home industry b}' a suitable taxation of 
 foreign trade and the consumption of foreign 
 goods, and shall secure to the State such a 
 
THE PRUSSIAN TRADITION. 15 
 
 revenue as may be possible without impediment 
 to trade." 
 
 It was against the Free Trade tendency that was 
 thus gaining ground that Friedrich List's " German 
 Commercial and Industrial Association " {Deutscher 
 Handels- iiitd Gewerbeverein) was established in 1819, 
 with its policy of unrestricted commercial inter- 
 course within the State, but a customs system on 
 the frontiers. Theoretically, List was himself a 
 Free Trader, though he regarded the doctrine of 
 Adam Smith as a counsel of perfection, and pend- 
 ing mankind's greater maturity, he was concerned 
 that Germany should confine attention to her own 
 interests, and leave other countries to work out 
 their economic salvation in their own way. List 
 suspected that by her new law Prussia was making 
 history too fast. 
 
 There can be little doubt that it was this freer 
 industrial movement and this freer mercantile 
 intercourse which regenerated the economic life of 
 the country, depressed and disordered as it was by 
 the exhausting wars of the end of the eighteenth 
 and the beginning of the nineteenth century. 
 Those were times of invincible hopes and pathetic 
 assurances. A Cabinet Order issued by Frederick 
 William III. from Carlsbad, August i, 1817, 
 declared that the principle of the free import of 
 foreign manufactures, in return for a comparatively 
 small duty, should be the basis of the legislation of 
 the Prussian State " for all future time." Such 
 legislation for perpetuity was beyond the power even 
 
i6 PROTECTION IN GERMANY. 
 
 of an absolute Sovereign. The time of reaction 
 came, of course, when the work of Stein, Harden- 
 berg, and Biilow was in part impugned and 
 undone, but it is not less idle than ungrateful to 
 pretend that men like these and the many advisers 
 who helped in the realisation of their ideas — 
 Niebuhr, von Altenstein, Dolma, Schon, Wilhelm 
 von Humboldt, Scharnhorst, Gneisenau — were the 
 fools which by implication they are often made 
 out to be by sages after the event. 
 
 The policy whose culmination and crown was 
 the law of 1818 was that William Huskisson 
 lauded in our own House of Commons in 1825, 
 ending with the expression of a pious hope that 
 "the time would come when England would 
 follow Prussia's example." 
 
THE ZOLLVEREIN. 17 
 
 CHAPTER n. 
 
 THE ZOLLVEREIN. 
 
 Another and still more important period in the 
 history of German fiscal policy is marked by the 
 Zollverein in which most of the States of the 
 Empire were one by one drawn together for com- 
 mercial and customs purposes on the basis of the 
 Prussian law of 1818. The fiscal arrangements of 
 the old Empire were the embodiment of chaos. 
 Not only did every State fight its neighbours with 
 duties of everv kind, but within its own borders an 
 ill-conceived system of excises and dues made the 
 interchange of commodities as difficult as possible. 
 There were imposts by land and imposts by water ; 
 there were octrois at every town gate, with dues on 
 sales and dues on purchases ; and the mischief 
 which this melange of fiscal absurdities left undone 
 was completed by the monopolies exercised by 
 Governments and the privileges conferred upon 
 corporations and private persons. 
 
 In 1817 the first serious attempt to introduce 
 freedom of trade within the whole Empire was made 
 in a proposal brought forward in the Federal Diet 
 {Bundestag) by the representative of Wiirtemberg. 
 While, however, the cause of fiscal unity owed 
 much to the enlightened Sovereign of that kingdom, 
 
 P.G, c 
 
iS PROTECTION IN GERMANY. 
 
 William I., the inspiration which carried the 
 movement forward came unquestionably from 
 Prussia. Between 1819 and 1823 the States of 
 Schwarzburg and Anhalt adopted the Prussian 
 tariff by treaty, and amalgamated with her for 
 customs and excise purposes. In 1828 the Grand 
 Duchy of Hesse joined the combination, in 1831 
 Hesse-Cassel followed, and in 1833 Bavaria and 
 Wiirtemberg (the last two already joined with 
 Hohenzollern in a customs and commercial union 
 of their own since 1828), whose adhesion made 
 certain its eventual extension to the rest of the 
 Empire. But the Zollverein, whose motto was 
 " Freedom of Trade through Unity " {Handels- 
 freiheit dutch Eintracht), was hailed by the 
 Imperialists of that day as more than a victory 
 for the arts of peace and for rational methods of 
 taxation ; it was regarded, as indeed it proved, as 
 an important step on the way to political federa- 
 tion. " A new era in national life begins," writes 
 the Prussian bureaucrat Stengel in a quaint tractate 
 of 1835 iiow before me : ^ 
 
 " The larger part of Germany, closely united by the 
 great German Customs and Commercial Union, sees 
 its industry freed from the fetters which heretofore 
 impeded internal trade — the most important for all 
 peoples — and by means of an extensive territorial 
 organisation is protected, by a moderate customs 
 
 1 " Von dem auslandischen Handel und der Seemacht 
 deutscher Stadte im Mittelalter und von den finanziellen 
 Verhiiltnissen des jetzigen deutschen Zollvereins." (Pots- 
 dam, 1835.) 
 
\ UM 
 
 THE ZOLLVEREIN. 19 
 
 system which, with wise caution, does not exclude all 
 foreign competition, from the trade of those nations 
 that, thanks to a selfish commercial policy, refuse 
 admission to German manufactures altogether, and 
 only admit German produce to the very smallest extent. 
 The German peoples . . . are now by community of 
 material interests, that important basis of a common 
 national life, united more closely than ever before, 
 and in such a manner that as a result the strengthening 
 of the wider German Confederation may likewise be 
 anticipated in time of danger. . . ." — 
 
 The Customs Union, which now comprised 
 eighteen States, with an area of 7,719 square 
 miles, and a population of 23,000,000, was first 
 concluded for eight years. Before those years 
 had expired there had been added to it Hesse- 
 Homburg, Baden, and Nassau in 1835, Frankfurt 
 in 1836, Waldeck in 1838, and Brunswick, Lippe, 
 and Luxemburg in 1842 ; while Hanover and 
 Oldenburg follow'ed in 185 1 and 1852 respectively, 
 and between 1854 and 1865 the whole of the 
 States of the Empire save Austria, the Mecklen- 
 burgs, and the Hanse Cities belonged to the 
 federation, customs duties being levied on the 
 common account, and being divided amongst the 
 contracting States according to population. Of 
 the Zollverein it need only be said further that its 
 renewal in 1865 was the last that was needed, for 
 its work was well nigh done. In 1867, by treaty 
 between the North German Confederation and 
 the South German States (Bavaria, Wiirtemberg, 
 Baden and Hesse), a new Customs Union was con- 
 cluded, with a Parliament armed with legislative 
 
 c 2 
 
20 PROTECTION IN GERMANY. 
 
 power in customs matters, for a period of twelve 
 years. Two years later the customs laws and 
 ordinances of the Union were modified, and they 
 passed into the legislation of the new Empire, 
 and became substantially the basis of the fiscal 
 system which lasted until 1879. 
 
 In the interval the tariff basis had been modified 
 from time to time. Under the tariff of 1818 the 
 duties on grain had been, per bushel : Wheat, 
 1 1 silver groschen or nearly 2d. ; rye and barley, 
 |- silver groschen ; oats and buckwheat, ^ silver 
 groschen. In 1824 the duties were fixed at 5 
 silver groschen (6^.) on wheat for the Eastern 
 provinces of Prussia, adjacent to corn-exporting 
 Russia, and 2 silver groschen (2^^.) in the West ; 
 and on other kinds of grain i silver groschen. 
 In 1827 a uniform rate of 5 silver groschen was 
 adopted for all Prussia. This rate lasted twenty- 
 five years as the basis of the Zollverein, and 
 under it agriculture developed greatly. There 
 were other modifications. Thus in 1838 the 
 Prussian provision stipulating for a minimum 
 excise of ten per cent, was omitted, and in general 
 a stronger protective tendency set in. In 1843 
 the duty on cigars and snuff was increased. In 
 1844 a duty on pig-iron was imposed for the first 
 time, and some of the duties on iron manufactured 
 goods were increased. In 1846 Protection was 
 made severer, the duty on raw linen yarn, for 
 example, being increased twelve-fold. In 1851 
 the cigar duty was again raised, and that on rice 
 
THE ZOLLVEREIN. 21 
 
 was reduced. Meantime England had gone over 
 to Free Trade by the law of 1846, and the example 
 of the first commercial country of the world was 
 not lost upon German statesmen. In 1853 the 
 duties on coffee, tea and wine were reduced. That , 
 year also a more deliberate step was taken towards 
 Free Trade, when, by the commercial treaty of 
 February igth, Prussia and Austria agreed to 
 levy no corn duties against each other. In 1856 
 the Verein tariff was further revised, the rates 
 being reduced to 2 silver groschen for wheat, 
 and ^ silver groschen for other kinds of corn. 
 Thus Schaffle writes : — 
 
 "Until the beginning of tlie 'sixties, under a largely \ 
 bureaucratic treaty system of administration, the Zoll- 
 verein maintained a commercial policy which, while 
 moderately protective and fairly stable, yet slowly 
 and cautiously aimed at freedom of trade." 
 
 It was, however, the conclusion by Prussia in « 
 1862 of the treaty of commerce with France, 
 which came into operation throughout the entire 
 area of the Zollverein in 1865, that gave the 
 greatest practical stimulus to the new movement. 
 That treaty was not Prince Bismarck's idea, for he 
 found it ready drawn up when he became Minister 
 President in the autumn of 1862. It fell to 
 Bismarck, however, to carry it through Parliament, 
 and while it is true that the treaty belonged to the 
 period of his official life when, as he frequently said 
 in after years, his economic conscience was in the 
 keeping of others, it is fair to add that the reasons 
 
22 PROTECTION IN GERMANY. 
 
 which influenced him were purely political. When 
 the episode was mentioned during a discussion in 
 the Reichstag, on February 21st, 1879, in proof of 
 changed convictions, the Chancellor retorted that 
 convictions had nothing to do with the matter, 
 and frankly avowed that the treaty was meant to 
 be a weapon for use against Austria, and did 
 indeed keep France friendly on the Danish question. 
 
 " In the further struggle with Austria which threat- 
 ened in 1865, and which took place in 1866, the 
 restraint of France would certainly not have con- 
 tinued as far as the point which happily for us it 
 was if I had not cultivated relationships with her in 
 every way open to me." 
 
 Whatever the immediate purpose of the French 
 treaty, it unquestionably committed Germany to 
 further progress on Free Trade lines, while its 
 effects upon her foreign trade were very marked. 
 "Bismarck," writes Schaffle, "was at that time 
 at once the political guardian and the political 
 favourite of the Free Trade party." 
 
 The same year the tariff was again revised by a 
 law of May ist, and a rescript of June 17th, 
 which came into operation on July ist, and now 
 in a decidedly liberal spirit. The duties on corn 
 and flour, cattle and sheep, yarn of flax and hemp, 
 and hand-spun stuffs were repealed altogether, 
 while others were greatly reduced, among them the 
 duties on butter and cheese, cotton yarn, cotton 
 wadding, cotton and woollen goods, dress goods, 
 linen, iron, steel, copper, zinc, tin and lead goods, 
 glass and glass goods, leather and leather goods, 
 
THE ZOLLVEREIN. 23 
 
 silk and silk goods, paper, soap, coal, porcelain, 
 earthenware, beer, wine, vinegar, cider, etc. 
 
 Encouraged by the action of the Government 
 the Free Trade party in commercial and scientific 
 circles redoubled their efforts. At this time the 
 manufacturers of West and South German}' were 
 overwhelmingly Protectionist, while in the textile 
 districts of Saxony the tendency was rather towards 
 Free Trade. Even the agricultural societies of 
 Saxony in 1848 petitioned the Frankfurt Parlia- 
 ment against customs duties of every kind. 
 Amongst publicists and in academic circles there 
 had since 1848 been a vigorous Liberal school, 
 whose leaders included John Prince Smith, who, 
 though an Englishman by birth, settled in Ger- 
 many, first as a teacher of languages, and won 
 great influence there from the 'fifties onward, 
 being elected both to the Prussian Diet and 
 the Imperial Reichstag ; W. A. Lette, a high 
 Prussian State official ; Max Wirth, honourably 
 associated with the Trade Union movement; 
 Otto Michaelis, an able economic writer and 
 publicist, who ended his career in the Ministry 
 of Finance; Schulze-Delitzsch, the founder of 
 co-operation in Germany ; Julius Faucher, for 
 some years a leader of the Progressive party in 
 the Prussian Diet ; and others. At the instiga- 
 tion of Prince Smith and Faucher, a Free Trade 
 party was organised in Berlin, and its influence 
 gradually extended from North Germany to other 
 parts of the country. Prince Smith especially was 
 
24 PROTECTION IN GERMANY. 
 
 unwearied in the agitation which he carried on 
 both by speech and writing on behalf of the 
 economic theories which had just won so signal a 
 triumph in England. He travelled a large part of 
 the country as an apostle of the Free Trade gospel, 
 imparting everywhere some at least of his own 
 enthusiasm and conviction, organising societies, 
 encouraging the establishment of literary sheets in 
 the service of the new faith, and successfully identi- 
 fying economic with political and Parliamentary 
 Liberalism. Not only so, but, like all enthusiasts, 
 he contended for the immediate introduction of 
 unequivocal Free Trade, without half measures or 
 compromise of any kind. To those who, only 
 partially convinced of the unwisdom of a protective 
 policy, pleaded for slow and cautious progress in 
 the new direction, he replied that any dallying 
 with Protection was a mere protraction of economic 
 injury. It was, he quaintly said, like docking a dog's 
 tail an inch a day, just to spare its feelings. To 
 anticipate for a moment, so far did his temporary 
 influence go, that at the beginning of the 'sixties 
 he was able to convince some of the agricultural 
 societies of West and East Prussia — later a hot-bed 
 of extreme Protectionism and agrarianism — that 
 their truest interest was a policy of free imports. 
 It was not long before the heresy was recanted. 
 
 Free Trade principles also found expression in 
 the Economic Congress formed in 1858 by Lette, 
 Wirth, Victor Bohmert, and Pickford, which first 
 met at Gotha, and in the German Commercial Diet 
 
THE ZOLLVEREIN. 25 
 
 (Handelstng), an organisation of Chambers of Com- 
 merce and Industry. Two 3'ears after the conclu- 
 sion of the French treaty a determined effort was 
 made to give the coup de grace to whatever Protec- 
 tionist traditions still lingered in the Government. 
 On August 27th, 1867, an influential congress of 
 political economists and representatives of industry 
 was held at Hamburg, and called for the immediate 
 revision of the customs tariff in a Free Trade spirit. 
 It was recommended that the tariff should hence- 
 forth be restricted to a few articles chosen for 
 their suitability as sources of revenue, that thus 
 " by the abolition of the protective system larger 
 resources might be secured to the community and 
 the State, and more elbow-room be given for the 
 economic activity of the individual." Industry 
 especially should be relieved of all the duties 
 which impeded it, while the revenue of the State 
 should be increased by promoting the consumption 
 of excisable commodities. 
 
 Little now remained to complete the transition ^^ 
 to Free Trade, and that little was done during the 
 succeeding eight years. In 1868 the duties on 
 wine were reduced, in 1869 those on sugar like- 
 wise. Then came in 1873 the reduction of the 
 iron duties, and finally in 1875 their entire dis- 
 appearance was enacted from the first day of 
 1877. This clear abandonment of a Protectionist 
 policy was the work of three Prussian Ministers, 
 Martin Friedrich Rudolf Delbriick, Otto Camp- 
 hausen, and August von der Heydt. 
 
26 PROTECTION IN GERMANY. 
 
 CHAPTER III. 
 THE REACTION. 
 
 It is not strictly accurate to speak of the 
 German Customs Tariff of 1879 as a Protectionist 
 departure.^ Recalling the proposition with which 
 we began, Protection was the German tradition ; 
 Free Trade, whenever it gained expression, 
 whether as the spirit of a general policy or in 
 temporary application to some individual branch 
 of industry, was a plain infraction of that tradition. 
 Moreover, it is necessary to bear in mind that 
 what was done between the years 1S65 and 1875 
 was not the result of a national mandate or of a 
 national change of mind. There were Free Trade 
 schools, parties, and tendencies at all times, as 
 there were in England before the epoch of repeal, 
 » but Free Trade never became in Germany a 
 popular cry and a party policy in the English 
 sense, nor did its success depend at any time in 
 any degree whatever upon the attitude of the 
 great body of the people. 
 
 We transport our English ideas of popular 
 government and the rule of the majority into 
 German affairs, and, led by an entirely imaginary 
 
 ^ Portions of Chapters III. and V. are reproduced from 
 the Economic Journal by permission of the Editor, 
 Professor F. Y. Edge worth. 
 
THE REACTION. 27 
 
 and fallacious analogy, we make great mistakes. 
 Germany — if we mean by that term the nation 
 and not merely the Government — did not adopt 
 Protection in 1879 ^^Y more than it adopted the 
 bureaucracy or the police law. Apart from the 
 will of the Sovereign and the Federal Council, 
 Germany can neither do anything nor undo any- 
 thing : its power is preventive and not initiative ; 
 it may endorse or tt cgoJivc the policy given from 
 above, but it cannot create, still less enforce, a 
 policy of its own. 
 
 If, nevertheless, we are to speak of a Protec- 
 tionist revival, we must add that the revival began 
 immediately Free Trade seemed to have gained 
 a victory. It was in 1875 that the last of the 
 protective duties were abolished, and that year 
 saw Germany already plunged into an agitation 
 having for its end the reintroduction of Protection 
 in a more systematic and more drastic form. 
 
 It has often been suggested by German econo- 
 mists of the Free Trade school that the departure 
 from the old Protectionist lines was made too 
 quickly and at last too completely. The late 
 Professor Albert Schaffle always contended that 
 both sides went to extremes, and that if a 
 moderate course had been taken not only in 1879 
 but earlier the result might have been a wider 
 Customs Union, embracing Austria, on the basis 
 of moderate Protection, instead of the succession 
 of tariff wars which fell to later years. It is 
 certain than when Prince Bismarck determined 
 
28 PROTECTION IN GERMANY. 
 
 to lead Germany back into the old way it soon 
 became evident that a policy of Protection, to be 
 genuine, must be thorough. 
 
 If one were concerned to advance analogies 
 between the national and economic circumstances 
 which were the occasion, if not the cause, of 
 Germany's return to Protection in 1879, after the 
 very briefest trial of Free Trade, and the fiscal 
 controversy which will long make the year 1903 
 memorable in England, the task would be easy 
 and not altogether uninstructive. Two parallel 
 events may be singled out. Germany, like 
 England thirty years later, had emerged from a 
 war which, though successfully waged, had proved 
 a severe drain upon her economic life, had dis- 
 organised many of her trades and industries, and 
 had left her with much lost ground to make up. 
 Then, again, that war had not long been con- 
 cluded before there followed a period of com- 
 mercial depression, which was felt all the more 
 severely since the country's great need was rest 
 and recuperation. That depression reached its 
 climax in 1876 and 1877, when industry stood 
 still and labour walked the streets idle and dis- 
 contented, but the crisis had been ripening for 
 several years, ever since, in fact, the unprece- 
 dented stimulus given by the war to industry, 
 finance, and enterprise generally had become 
 exhausted. Up to 1870 industry had developed 
 gradually but steadily and on healthy lines. Thus 
 the production of pig-iron within the area of the 
 
THE REACTION. 29 
 
 Zollverein was in 1864 905,000 tons. By i86g it 
 had grown to 1,413,000 tons, and, though it fell 
 during the year of the French War to 1,391,000 
 tons, it had by the year 1873 reached 2,241,000 
 tons. Labour, too, had concurrently improved 
 its status. It has been said that in the Paris 
 insurrection of 1848 no single workman with a 
 savings bank book was seen on the barricades. 
 On that principle the accumulated investments of 
 the Berlin working classes in 1871 might have 
 indicated a tolerabl}' contented as well as a 
 tolerably prosperous condition, for nearly three 
 million thalers (equal to 3r45o,ooo) stood to 
 their credit in the State savings banks, and 
 four and a half million thalers (or £675,000) 
 a year later. The deposits for the whole of 
 Prussia in 1871 amounted to 172 million thalers 
 (;£25,8oo,ooo), having increased as follows : — 1835, 
 5*4 million thalers; 1845, 12*5 million thalers; 
 i855> 32*2 million thalers ; 1868, I43'5 million 
 thalers; 1871, 172 million thalers; and 1872, 
 217 million thalers. In the last-named year alone 
 new deposits were made to the extent of 83,600,000 
 thalers, and the number of depositors increased 
 from 1,358,392 to 1,644,480, or 25 per cent. 
 
 After the war industry took a great bound 
 forward, similar to that which followed when the 
 pressure of the War of Liberation, with its terrible 
 drain upon the physical strength and the financial 
 resources of the nation, was relieved early in the 
 century. To the natural influences which favoured 
 
30 PROTECTION IN GERMANY. 
 
 an awakening of economic life came the influence 
 of the French milliards, which, thanks to the 
 wonderful elasticity of the conquered nation, were 
 paid over long before they had been expected, and 
 which had to be expended far too precipitately for 
 Germany's good. Prince Bismarck once spoke of 
 the indemnity as an acute embarrassment for the 
 time being, and a thoughtful German writer has 
 said : " It broke over us like a water-spout, 
 carrying great devastation everywhere, whereas 
 if it had fallen gradually, in the course of time, 
 and in small quantities, it might have been bene- 
 ficial in an extraordinary degree." The dispersal 
 of the milliards upon railways, fortifications, and 
 public works and buildings of various kinds gave 
 for a time great impetus to industry, and the iron 
 and steel trades especially expanded enormously, 
 but the eventual reaction caused wholesale disaster. 
 For a long time money was plentiful, and abun- 
 dant facilities for spending it were not lacking. 
 Speculation reached wild limits ; company pro- 
 moting became the recognised royal road to 
 wealth ; and the notorious Grilndirngsdra had the 
 same sinister ending as the South Sea Bubble of 
 our own annals. It was not long before credit 
 became disorganised, money became hard, the 
 Bankruptcy Court was crowded by unwilling 
 suitors, and wreck and ruin were created whole- 
 sale. Many fortunes were made in that mad 
 scramble for wealth, but far more were lost ; good 
 reputations were compromised and forfeited by 
 
THE REACTION. 31 
 
 the score, but none were created. During the 
 three years 1871 to 1873, 843 new public com- 
 panies were formed in Prussia, or more than four 
 times the number which existed at the formation of 
 the Empire. Of these companies a large number 
 were rotten from the beginning, and soon found 
 their way into liquidation, while in many other 
 cases disaster was only staved off by the reduction 
 of capital, often to the extent of 50 per cent. It 
 was found later that of ig6 companies which 
 reduced their capital between 1874 ^^^ 1879 no 
 fewer than 148 originated in the " flotation era." 
 
 And if capital suffered, so also did labour. For 
 a time the working classes had shared in the 
 general enrichment. Employment was abundant, 
 wages increased, and with larger earnings at their 
 disposal the labourers suddenly developed a con- 
 suming capacity unknown before, insomuch that 
 large food imports from abroad were needed to 
 supplement the production at home. As wages 
 had gone up with a bound, however, so they came 
 down with a crash, and the absolute and perma- 
 nent gain to labour from a period of artificially 
 inflated prosperity was very small. It is fair to 
 remember that the following words of the Con- 
 servative historian Professor Heinrich von Treit- 
 schke, written in 1874, relate to the Free Trade 
 era, and describe the condition of the labouring 
 class before the economic debacle of 1875 to 1877 : — 
 
 " The transformation of our national economy has 
 given to the working class a great increase of wages, 
 
32 PROTECTION IN GERMANY. 
 
 without parallel in German history. Therewith they 
 secured, as aforetime the English working classes, the 
 possibility of permanently improving their standard 
 of life, and of approximating more nearly to the 
 habits of the middle classes." 
 
 That these years were nevertheless years of 
 rapid trade expansion is proved by the compara- 
 tive returns of imports and exports. During the 
 years 1860-1864 Germany imported on an average 
 132,000 tons of pig-iron and exported 9,568 tons ; 
 during the years 1865-1878 she imported on an 
 average 379,214 tons (265,214 tons more) and 
 exported 170,838 tons (161,270 tons more). The 
 average yearly imports of half-manufactured iron 
 increased for the period 1865-1878 I42'6 per cent, 
 beyond those of 1860-1864, the exports 720*2 
 per cent. The imports of iron and steel goods 
 increased for the period 1865- 1872 54*1 per cent, 
 bej^ond those of 1860-1864, and the exports 52*6 
 per cent. ; the imports increased 1377 per cent, 
 in the period 1873-1877 as compared with 1865- 
 1872, and the exports 65*2 per cent. ; and the 
 imports increased 2*6 per cent, in 1877-1878 as 
 compared with 1873-1877, while the exports 
 increased 84*9 per cent. In the imports of 
 machinery and machine parts there was an in- 
 crease of 1987 per cent., and in the exports one 
 of 112*9 per cent, during the period 1873-1876 as 
 compared with 1865-1872, and during the period 
 1877-1878 a decrease of 5*1 per cent, in imports 
 and an increase of 65*9 per cent, in exports, as 
 
THE REACTION. 
 
 33 
 
 compared with 1873-1876. The annual imports 
 of cotton yarns increased 11 '8 per cent, for the 
 period 1865-1878 as compared with 1860-1865, 
 and the exports increased go'G per cent. The 
 imports of cotton goods increased I23'i per cent, 
 during 1870-1878 as compared with 1865-1869, 
 and the exports 33*05 per cent. The imports of 
 woollen goods decreased 247*8 per cent., and the 
 exports increased 27*1 per cent. ; the imports of 
 linen goods decreased 140*07 per cent., and the 
 exports increased 36*4 per cent. ; the imports of 
 silk and half-silk goods increased 29*4 per cent., 
 and the exports increased 52*6 per cent. On the 
 whole, there was a steady " passive '' balance of 
 trade during all the 'seventies, as the following 
 table shows : — 
 
 
 
 
 Excess of 
 
 
 Imports. 
 
 Exports. 
 
 Imports. 
 
 
 Marks. 
 
 Marks. 
 
 Marks. 
 
 1872 
 
 3,468,480,000 
 
 2,494,620,000 
 
 973,860,000 
 
 1873 
 
 4.^57.333.000 
 
 2,488,998,000 
 
 1.768,335,000 
 
 1874 
 
 3.673.059.000 
 
 2,459,880,000 
 
 1,213,179,000 
 
 1875 
 
 3,576,870,000 
 
 2,561,800,000 
 
 1,015,070,000 
 
 1876 
 
 3.913.300,000 
 
 2,605,600,000 
 
 1.307.700,000 
 
 1877 
 
 3,877,080,000 
 
 2,828,560,000 
 
 1,048,520,000 
 
 1878 
 
 3,722,670,000 
 
 2,916,540,000 
 
 806,130,000 
 
 IS79 
 
 3,773,400,000 
 
 2,802,000,000 
 
 972,000,000 
 
 Agriculture w^as not slow to respond to the 
 reaction. Prices fell, and with them land values, 
 and where leases lapsed rents dropped as well. 
 Up to 1874 both values and rent had steadily 
 risen, but then came the climax, and after it the : 
 decline. Apart altogether from the depression in 
 
 P.G. D 
 
34 PROTECTION IN GERMANY. 
 
 domestic industr}' and trade, the corn growers had 
 to contend with severe competition from abroad, 
 favoured by improved ocean transport, by extended 
 railway facihties, and still more by the develop- 
 ment which agriculture was undergoing in Austria, 
 Russia, and the United States. Hence Germany 
 became less an exporting and more an importing 
 countr}'. During the period 1868 to 1872 the 
 average imports of wheat were 415,650 tons and 
 the exports 562,450 tons, an excess of exports of 
 146,800 tons ; but from 1873 to 1877 the average 
 imports were 586,700 tons and the exports 497,750 
 tons, an excess of imports of 88,050 tons. Simi- 
 larly the yearly imports of rye during the years 
 1868-1872 averaged 465,800 tons and the exports 
 164,500 tons, an excess of imports of 301,300 tons, 
 while in the later period the imports averaged 
 955,050 tons and the exports 156,350, an excess of 
 imports of 798,700 tons. The imports from 
 Russia, by land or water, in 1875 were 343,466 tons 
 of rye, 26,500 tons of barley, and 118,433 tons of 
 oats, a total of 488,399 tons ; in 1876 they were 
 566,057 tons of rye, 29,715 tons of barley, and 
 159,802 tons of oats, a total of 755,574 tons ; and 
 in 1877 they were 663,310 tons of rye, 96,038 tons 
 of barley, and 181,022 tons of oats, a total of 
 940,070 tons. This larger import of grain was not 
 only due to the increased consumption but to the 
 less area of land under the plough. While in the 
 beginning of the 'sixties 56 per cent, of the area of 
 Prussia was under corn, the proportion fell by 
 
THE REACTION. 35 
 
 1878 to 5072 per cent. The area under rye was 
 greater, but that under wheat, barley, and oats 
 had dedined. In later years a counter movement 
 set in. 
 
 So, too, in the still more agricultural State of 
 Bavaria the area under rye decreased between 
 1866 and 1878 from 588,479 to 579,416 hectares, 
 the area under barley from 338,863 to 320,534 
 hectares, and that under oats from 451,752 to 
 439,551 hectares. The area under wheat in- 
 creased from 290,255 to 298,779 hectares, but the 
 total result was a decrease from 1,856,577 to 
 1,765,746 hectares, a leakage of 90,831 hectares, 
 or over 226,000 acres, in fifteen years. 
 
 Finally, it is to be noted that simultaneously 
 the products of German manufacture had fallen 
 into a certain disrepute all over the world. In 
 the Philadelphia Exhibition of 1876, German 
 exhibits took great prominence, and deep was 
 the mortification when Professor Reuleux, who 
 had been commissioned by the National Zeitung 
 to report upon them, summarised his impressions 
 in the memorable phrase, " cheap and bad " {billig 
 und schlecht). There was nothing new, however, 
 in the accusation, save its mordant utterance and 
 the untoward circumstances which evoked it. The 
 Consular reports of the period all witness to the 
 same thing, and some months before warning 
 came from Philadelphia, the Imperial Gazette 
 (March loth, 1876) had seriously reviewed the 
 complaints which had long been accumulating 
 
 D 2 
 
36 PROTECTION IN GERMANY. 
 
 from foreign, and especially trans-oceanic, coun- 
 tries of inferior goods, declining sales, and lost 
 markets. A little later the Preiissisches Handels- 
 archiv proclaimed the same disconcerting fact 
 in periods which spared neither the pride nor 
 the feelings of those concerned, German trade, 
 it said, had forfeited its reputation, not only for 
 efficiency, but for honesty. The textile stuffs 
 sent abroad were made contrary to the samples 
 ordered ; they were exported deficient in measure 
 and weight ; qualities were mixed ; and in general 
 they were coarse, clumsy, and tasteless. And, 
 coming to comparisons, it asserted: " The German 
 no longer possesses the capacity of the English 
 manufacturer, who is able to make even cheap 
 goods so efficiently, and to turn them out so 
 attractively, that large repeat orders are regularly 
 given, whereas the German executes commissions 
 of the same kind so faultily that he is seldom 
 able to secure a second order." Moreover, 
 *' the Englishman is always ready to consider 
 a merchant's legitimate complaints, while the 
 German will never make compensation for loss 
 suffered." In reply to these and similar com- 
 plaints, the manufacturer pointed to the un- 
 protected frontiers. " How can we compete 
 abroad," he asked, ** with an older, richer, and 
 better equipped rival like England, so long 
 as even our home market is not preserved to us, 
 and we are compelled to sell to the foreigner, 
 by hook or by crook, in order to dispose of our 
 
THE REACTION. 37 
 
 production at all?"^ Faults which were entirely- 
 due to remediable inefficiency were thus attri- 
 buted to the prevalent fiscal system, and were 
 made a further count in the growing indictment 
 against it. Reading the literature of the time, 
 one notices how great was the influence of 
 the "protection of young industries" argument 
 in converting even theoretical Free Traders to the 
 advocacy of temporary measures of Protection, in 
 view of the peculiar condition of economic life. 
 They regarded such measures as useful educa- 
 tionally, and their purpose once achieved, they 
 assumed that they would promptly be discarded 
 as superfluous and even dangerous. That there 
 was then and later ample room for improvement 
 was shown by a capable German critic of the Berlin 
 Industrial Exhibition of 1879: — 
 
 " While wc are able to detect with joyous satis- 
 faction the progress and tlie high degree of efficiency 
 which some of our products have attained, on the 
 other hand other departments of the exhibition remind 
 us clearly of tlie great work which yet lies before us 
 before we can come abreast of our neighbours." 
 
 But such being the economic condition of 
 Germany in the early seventies, and remember- 
 ing that these years had marked the first clear 
 
 ' An argument which Prince Bismarclc frequent!}' em- 
 ployed, as, for example, in a speech made in the Reichstag 
 on June 14th, 1882 : — " England had the highest protective 
 duties until she had been so strengthened under the pro- 
 tection that she came forward as a herculean fighter and 
 challenged everybody with, 'Enter the hsts with me.' 
 She is the strongest pugilist in the arena of competition, and 
 is ever ready to assert the right of the strongest in trade." 
 
38 PROTECTION IN GERMANY. 
 
 departure from Protection, what was more likely 
 than that, reasoning a priori, so far as reasoning can 
 be said to enter into the judgment of persons who 
 believe themselves to be suffering from injustice, 
 the industries and interests which had fallen on 
 evil days should have united in casting the blame 
 on the new-fangled policy of Free Trade ? And 
 Free Trade being responsible for their misfortune, 
 where else could a remedy be found save in a 
 return to the discarded Protective system ? 
 
 Add to this that the " National" cry was then 
 in the air, as with us the cry of " Imperialism " 
 to-day. Germany had just become a nation, so 
 let her institutions be made truly national as well ; 
 let her become independent, economically as well 
 as politically, a self- controlled, self-supporting 
 Empire ! To that were evidently necessary an 
 all-sufficient industry and an all-sufficient granary, 
 and these, argued the Nationalists, could only be 
 supplied if industry and agriculture were effectively 
 protected against foreign competition. Nor can 
 it be denied that if Protection could be judged 
 capable of rescuing the economy of the country 
 from its apparent condition of decadence, there 
 were reasons specious enough to justify its advocates 
 in demanding that the attempt should be made. 
 
 In passing, it is interesting to remember that it 
 was the condition of the iron and textile trades 
 which determined the return to Protection from 
 the industrial standpoint, and these were the 
 industries which were in a special measure 
 
THE REACTION. 39 
 
 influenced by the political events of 1870 and 187 1. 
 The iron and steel and allied industries, as we 
 have seen, shared liberally in the distribution of 
 the French milliards, but directly the abnormal 
 expenditure on State and public works ceased 
 stagnation began, and many industrialists found 
 themselves in possession of works and plants 
 which had been built or extended on an exces- 
 sive scale in order to meet what had proved to 
 be a temporary and transient spell of prosperity. 
 In 1873 over-production had reached such a limit 
 in the iron trade that it is estimated by Lotz that 
 the smelting and rolling works of Germany were 
 then producing iron enough to cover the demand 
 of the entire world. Prices sank enormously. 
 Having reached their highest point in 1873, they 
 sank more than 50 per cent, the following year, 
 and by 1878 they were barely 30 per cent, what 
 they had been five years before. 
 
 The protection against foreign competition which 
 the iron trade had enjoyed ceased, as we have seen, 
 with the 3^ear 1876, and it is noticeable that the 
 Emperor, and probably his Chancellor as well, 
 doubted from the first the wisdom of Dr. Delbriick's 
 action, though they appear to have raised no pro- 
 test. Writing to Prince Bismarck from Gastein 
 on July 22nd, 1876, the Emperor William said : — 
 
 " As there was so little time at Wurzburg, I was 
 not able again to bring up a subject in connexion 
 with our internal affairs which, in spite of reports 
 by Uelbriick and Camphausen before you came to 
 
40 PROTECTION IN GERMANY. 
 
 Berlin in the autumn, has continually occupied ray 
 attention, and especially during my recent Rhine 
 journey — I mean the stagnation in our iron trade. It 
 was shown to me in those reports that our export of 
 iron still exceeds the imports. I inquired how it 
 happened that one ironworks after another is closing 
 its doors and dismissing its workmen (who can find 
 no employment elsewhere), and that those which con- 
 tinue working do so at a loss, and must also soon 
 blow out their fires. I was told in reply, ' Yes, that 
 is the state of affairs ; but in such general calamitous 
 times individuals must be ruined, and we are more 
 fortunate than other countries ' (Belgium). Is that a 
 politically wise conception of the case ? Matters 
 have, unfortunately, been in this state for several 
 years. And from January ist, 1877, iron is to be 
 imported into Germany free of all duty, whereas 
 France is introducing a premium on her export of 
 iron to Germany. The consequence of such conditions 
 as these can only be that what still remains of our 
 iron trade must be ruined. I by no means desire that 
 the much-praised system of Free Trade shall be given 
 up, but I must request that before the Reichstag 
 reassembles the question be again ventilated ' whether 
 the Bills allowing foreign iron to be admitted into 
 Germany duty-free must not be temporarily postponed 
 for a year ? ' If you agree with me, I await your 
 report as to what arrangements you will make." 
 
 On the other hand the textile trade had been 
 hard hit by the incorporation in the Empire of the 
 large and progressive weaving and spinning indus- 
 tries of Alsace. Hitherto these industries had 
 sold to France almost exclusively ; but now their 
 production was largely thrown upon the German 
 market, so that the less efficient and less wealthy 
 manufacturers of Saxony found themselves face to 
 face with a new and severe competition. 
 
BISMARCK'S THEORIES. 41 
 
 CHAPTER IV. 
 
 PRINCE BISMARCK'S THEORIES OF 
 TAXATION. 
 
 It would be absurd to attempt to bind a states- 
 man to every opinion he may happen to have 
 held from the first days of his public life. Changed 
 conditions require changed policies, and the politi- 
 cal steersman who refuses to accommodate his craft 
 to wind and tide may indeed reach a haven, but 
 it will seldom be the haven which he desired. 
 None the less instructive is it, however, to know 
 that Prince Bismarck's earliest Parliamentary 
 utterances show him to have been a thorough- 
 going Free Trader in practice, however theory 
 may have fared. Speaking in the Prussian Lower 
 House on October 19th, 1849, thirty years before 
 he diverted the policy of the Empire into Pro- 
 tectionist lines, he said : 
 
 " The Deputy for Crefeld regards the protective 
 duty as a protection of the manufactories against 
 foreign countries, while I, on the other hand, regard 
 it as a protection against the liberty of the native 
 population to buy where it may appear cheapest and 
 most convenient, in other words, the protection of the 
 home country against the home country. Protective 
 duties and compulsory guilds impose a sacrifice upon 
 a part of the population for the benefit of the other 
 part, especially the obligation to buy goods at a 
 
42 PROTECTION IN GERMANY. 
 
 higher price than would otherwise be the case, in 
 order that this other part of the population may be 
 ensured bread and be protected. But protective 
 duties have also the disadvantage that in the main 
 they only enrich a few factory proprietors. This is 
 their sole result, for I have never seen that factory 
 operatives have put away large savings or become 
 rich. On the contrary, I have known rural labourers, 
 on manors of the Eastern Provinces thoroughly 
 familiar to me, who have been able, after working 
 during their best years, to buy settlements or small 
 peasant holdings. I know of no poor on the manors 
 of the Eastern Provinces, but 1 wish I could say the 
 same of the Western factory districts." 
 
 Doubtless it was the ardent agriculturist who 
 spoke here, the advocate of the country as against 
 the town, of the plough as against the loom. Did 
 he not once say that if he had his way the large 
 towns should be swept from the face of the earth ? 
 And yet if it be conceded that young Herr von 
 Bismarck had not reasoned himself into this atti- 
 tude by the study of economic text-books, he had 
 certainly arrived at the very definite conclusion 
 that protective laws are partial laws, which 
 promote the material interest of the few at the 
 expense of the resources and the convenience of 
 the many. Not only so, but it is an arguable 
 contention that Prince Bismarck never became 
 genuinely convinced of the economic wisdom of 
 Protection. To the last he protested that he was 
 " never passionately attached " to protective 
 duties, and his favourite arguments were always 
 the political and financial arguments — expediency 
 on the one hand and revenue on the other — while 
 
BISMARCK'S THEORIES. 43 
 
 on the question of principle he was always ready 
 to make concessions to his opponents which 
 really involved the very substance of their 
 objections. 
 
 Coming to a later period, when he had already 
 been in office some years, we find him objecting 
 to all duties which were not levied for purely 
 fiscal purposes, and especially those duties which 
 inflicted a disproportionate amount of hardship 
 upon the poor. 
 
 " I am always seized with a certain feeling of 
 regret," he said in the Customs Parliament on June 21st, 
 1869, " that we do not express ourselves with full and 
 real candour when I hear pathetic laments about the 
 ' poor man ' who sees his petroleum, his light, his 
 intelligence, and his tobacco taxed, coming from the 
 very lips that say ' Yes ' to the taxation of flour, 
 bread, even fuel, meat, and salt at the expense of the 
 same ' poor man ' without any qualms of conscience 
 whatever. I do not deny that a harsh expression 
 hovers on m}- lips when I hear that kind of lament. I 
 am not able to follow such reasoning, and I doubt 
 whether the common people, for whom you are so 
 solicitous, can follow it either." 
 
 And again on the same occasion : — 
 
 " I think that our customs legislation should be 
 developed in the direction of the ideal of pure 
 financial duties, not, perhaps, attaining this ideal, 
 but striving to approach it. I call it an ideal because 
 it will perhaps prove to be unattainable. It is the 
 common task of yourselves and the Federal Council 
 to prevent this approach from taking place too 
 precipitously, so as to expose to injury the native 
 industries which have hitherto been fostered and 
 protected by legislation. I own that in aiming in 
 
44 PROTECTION IN GERMANY. 
 
 this direction we should conserve rightful interests. 
 If, however, we would revert to financial duties we 
 must seek out the proper objects for taxation, and 
 among these I unreservedl}' give to petroleum the 
 ^ first place. It is one of those articles of consumption 
 which are not so absolutely indispensable as bread, 
 salt, and meat — which, however, we likewise tax — 
 and which have already, or promise to have, so 
 extensive a consumption that a moderate duty affords 
 at once the prospect of considerable revenue." 
 
 But, in truth, Bismarck never made any conceal- 
 ment of the fact that upon economic as upon 
 political questions he was an opportunist of the 
 first water, and that his course was invariably 
 dictated by practical considerations alone, so that 
 if national expediency and interest, as he conceived 
 them, required that principle and theory should 
 be abandoned, abandoned they must be. Speak- 
 ing on February 21st, 1879, during a debate on 
 the Austrian treaty of commerce, he said : — 
 
 " If I were to contradict myself I should for appear- 
 ance sake very much lament it, but if I saw that it 
 was necessary in the national interest to retrace a 
 way which I acknowledged to be fallacious I should 
 not hesitate for a moment to confess my error openly 
 and either to make room for someone who would 
 manage matters better than I, or, if required, to do 
 better myself." 
 
 One of his biographers, Dr. Poschinger, writing 
 of him during his lifetime, said truly : — 
 
 " Bismarck the economist has passed through a 
 certain course of development, always guided by 
 circumstances, which seemed to require now this, now 
 that, line of action. One would not be justified in 
 
BISMARCK'S THEORIES. 45 
 
 tracing his economic views to any certain system, v 
 Were one to say that Prince Bismarck is a Protec- 
 tionist, one would make a great mistake. He will 
 be a Free Trader as soon as his neighbours do away 
 with their customs, perhaps even in a moment when 
 he hopes to influence their commercial policy by / 
 Germany's example. He favours taxation where the 
 financial interests of the country require it, and 
 protective duties where he thinks a country without 
 them is going to economic ruin. Thus he would 
 advocate a tobacco monopoly or a tobacco duty, 
 according as the one or the other proposal had hopes 
 of fulfilment, and according as want of money was 
 greater or smaller. He is opposed to a customs 
 union with Austria, and only sympathises with a 
 similar project when it seems to him to be politically 
 and economicallv useful. The prosperity of his 
 fatherland is his only guiding star. Here we come 
 to a trait of his character which cannot be passed! 
 over. One cannot separate the economist Bismarck 1 
 from the politician, but the former must be subordinate I 
 to the latter." 
 
 This, after all, is but a paraphrase of his own 
 reiterated words. " Since I became Minister," he 
 told the Reichstag in July, 1879, "I have never 
 belonged to a faction, and I would not. I have 
 been hated by all in turn and loved by several. 
 That has gone on a tour de role.'' But he, for his 
 part, hated and loved in turn, using or discarding 
 party after party just as they showed themselves 
 willing to assist him in carrying out his tasks. 
 He had to pay their price, which was sometimes 
 usurious, but having bought his support he deemed 
 it fair to refuse to continue the contract when its 
 time had expired. 
 
46 PROTECTION IN GERMANY. 
 
 " I have never had but one compass, one pole star, 
 after which I have steered, salus piiblica," he said in 
 the Reichstag on February 24th, 1881, " I have often, 
 perhaps, acted rashly and indiscreetly ; but when I 
 have had time to reflect I have always subordinated 
 myself to the question ; what is useful, expedient, and 
 right for my fatherland — for my dynasty, so long as 
 I belonged to Prussia only, and nowadays for the 
 : German nation? Never in my life have I been a 
 doctrinaire : all systems by which parties are divided 
 and bound together are of secondary importance for 
 me ; the first place I give to the nation, its position 
 abroad, its independence, the organisation necessary 
 in order that we as a nation may breathe freely in 
 the world." 
 
 Such being the principles of his public action, it 
 is no surprise to find that the economic policy 
 which he pursued during the first decade and a 
 half of his Ministerial life was in general sympa- 
 thetic to Free Trade, for the interests of the 
 country at that time seemed to require that it 
 , should be so. The commercial treaty which he 
 .( concluded with France in 1862 was distinctly 
 Free Trade in principle, yet, as we have seen, the 
 motives which prompted him to this step were 
 political rather than economic. In 1873 he agreed 
 to the abolition of the remaining iron duties, and 
 they did in fact disappear from January ist, 1877. 
 In 1875 he advocated the restriction of the tariff 
 to ten or a dozen articles, with a view to the 
 retention of merely fiscal duties. Holding theory 
 so lightly, and insisting that practical considera- 
 tions, as he recognised and interpreted them, must 
 be the sole determinative of his action, it was not 
 
BISMARCK'S THEORIES. 47 
 
 difficult for Prince Bismarck to detach himself 
 from his earlier traditions and to come forward as 
 a Protectionist. On April 28th, 1877, the Govern- 
 ment were asked by interpellation to institute an 
 investigation into the state of industry and agri- 
 culture, so far as related to the conditions of pro- 
 duction and sale, but the invitation was not sym- 
 pathetically received at the time. And yet Prince 
 Bismarck has named the year 1877 as that of his 
 formal, or more truly official, conversion. Speaking 
 in the Reichstagon November 2gth, i88i,hesaid: — 
 
 " During the first fifteen years of my Ministerial 
 life I was absorbed by foreign politics, and I did not 
 feel called on to trouble myself much with the 
 internal politics of the Empire, nor indeed had I the 
 necessary time. I took it for granted that our 
 domestic concerns were in good hands. Afterwards, 
 when I lost the help that I thought reliable, I was 
 compelled to look into matters myself and I found 
 that while I had up to then sworn in verba mogistri, 
 the actual results did not support the theories upon 
 which our legislation was based. I had the impression 
 that under the Free Trade system introduced in 1865 
 we fell into a condition of decline, which was indeed 
 staved off for a time by the new blood which came 
 with the five milliards, and that it was necessary to 
 find a remedy." 
 
 Asked by an opponent on February 21st, 1879, 
 whether in 1862, when concluding the commercial 
 treaty with France, he shared the "economic 
 [Protectionist] tendencies" of his later years, he 
 replied with characteristic candour : — 
 
 "I should be proud if, as is alleged, I had had 
 ' economic tendencies ' of the kind, but I must confess 
 
48 PROTECTION IN GERMANY 
 
 to my shame that I had not. . . . Had I really been 
 convinced that the policy of the President of the 
 Chancellery [of the North German Confederation] 
 was disastrous for our economic life, I should have 
 been justified in counteracting it. It might have led 
 to the President's earlier withdrawal, but my formal 
 right was beyond doubt. But when for a task like 
 that of the consolidation of the German Empire in 
 its first beginnings, or of the North German Con- 
 federation, as a prelude to the German Empire, I secured 
 the co-operation of a statesman of the importance in 
 his own domain of Deputy Delbriick, it is clear that 
 I could not pretend to require that President Delbriick 
 should conduct economic policy, in which he was the 
 first authority in all Germany, according to my direc- 
 tions ; but it was naturally understood cum gvano salis 
 that (as was in reality the case) I should with con- 
 fidence leave matters with him, and I am far from 
 saying that I regret this confidence. ... I did not 
 mix in economic questions, but tried to secure the 
 most prominent men and statesmen who were willing 
 to help me in carrying out the work which I had 
 undertaken. It is beyond doubt that I did not hold 
 the economic views of the then President, and when 
 I did not follow them I do not know how matters 
 were arranged, though I fancy I must in most cases 
 have given in, because politically I was glad to sacri- 
 fice my own opinions in order to retain so valuable 
 co-operation for the cause I had in hand." 
 
 And again he said in the Prussian House of 
 Deputies on February 4th, 1881 : — 
 
 " Before I went into customs questions myself I had 
 no special opinions of my own, but fell in with those 
 of my colleague Delbriick, whom I regarded as the 
 right man in the right place. At that time I had no 
 time to form any definite conception of commercial 
 policy. I deny that my earlier views were different 
 from those of to-day, for in truth I had none at all ; 
 
BISMARCK'S THEORIES. 49 
 
 I was the diligent disciple of Herr Delbriick, and 
 when I have avowed any views at all they were his 
 views. When he left me I was compelled to form my 
 own; they are perhaps in many respects different from 
 his, but I did not formerly hold antagonistic views 
 which I have since changed." 
 
 It was thus natural that when at last Prince < 
 Bismarck resorted to Protection it was under the 
 spur of financial necessity rather than of economic 
 conviction. No one who has waded through the • 
 Parliamentary proceedings of that time can resist 
 the conclusion that the reform of Imperial taxa-; 
 tion was the Chancellor's underlying motive, and' 
 that this reform of taxation was primarily under- . . 
 taken with the object of providing the Empire ' - 
 with a sufficient independent revenue, so that it 
 need no longer rely on the States and their 
 Legislatures. In the forefront of domestic needs 
 he had for years placed fiscal reform. "The 
 entire reform of taxation, inclusive of the customs 
 duties — who does not wish it ? " he said in the 
 Reichstag on November 22nd, 1875. " But it is 
 a Herculean work which one must have touched 
 experimentally as a comparative layman in these 
 matters, such as I am, in order to really com- 
 prehend its difficulties." Moreover, so long as 
 the pressure of foreign questions continued, it had 
 been impossible to essay this great task, inherited 
 from the very establishment of the Empire. 
 
 The Imperial Constitution adopted in 1871 had ■ 
 provided that in so far as the expenditure of the 
 Empire was not covered by revenues set apart for 
 
 P.G. E 
 
50 PROTECTION IN GERMANY. 
 
 its special use the deficienc)' should be made up 
 by contributions from the Federal States accord- 
 ing to population. These were known as matri- 
 cular contributions, and their aggregate amount 
 was fixed each year in the Imperial budget. 
 Prince Bismarck always chafed under this system 
 of State maintenance, which he regarded as 
 undignified and as partaking of the character of 
 a species of poor relief, while at the same time 
 holding that the disproportionate incidence of 
 the matricular contributions created a rightful 
 feeling of injustice and inequality on the part of 
 those populations which bore too large a share. 
 It was undignified, because it made the Empire 
 and those responsible for the transaction of its 
 affairs dependent upon the good-will of the 
 various States, which meant in the last resort the 
 humour of their Legislatures and the caprice of 
 the electors. It was unjust, because it was based 
 on taxation according to population, irrespective 
 of the considerations of wealth and ability to pay. 
 To this aspect of the question he referred on 
 November 22nd, 1875, in the speech already 
 named : — 
 
 " Speaking entirely from the standpoint of the 
 Empire, I seek as great a reduction as possible, if not 
 the complete abolition, of the matricular contribu- 
 tions. It is scarcely disputed that the form of the 
 matricular contributions is one that does not fall 
 upon the contributary States in proportion to their 
 capacity. 1 might say that it is a crude form, which 
 may serve as a makeshift so long as we are not able 
 
BISMARCK'S THEORIES. 51 
 
 to provide the Empire, in its early youth, with revenues 
 of its own. If, however, it is acknowledged that it is 
 a tax which is not just in its incidence, it cannot be 
 regarded as a means of consolidating the Empire." 
 
 He had always held it to be unreasonable that, 
 to cite his favourite illustration, 30,000 inhabitants 
 of agricultural Thuringia or Waldeck should pay 
 as much as the same number of citizens of wealthy 
 mercantile towns like Hamburg and Bremen. 
 
 Earlier than this — on May ist, 1872 — he had 
 told the Reichstag, when speaking of the salt 
 tax: — 
 
 "The position of the Imperial Chancellor is pri- 
 marily determined by the consideration whether the 
 political condition of the Empire would be made 
 better or worse by the abolition of an Imperial tax, 
 and whether the responsibility to the Empire which 
 rests upon him is so heavy as to compel him to resist 
 its abolition on political grounds. I regard the 
 Empire's independent revenues as so important that 
 I do not believe a Chancellor conscious of his respon- 
 sibility, and actuated by a proper concern for the 
 stability and development of the Empire, could con- 
 sent to the diminution of these revenues unless an 
 adequate substitute were provided. Dependence upon 
 other taxes is problematic, and dependence upon 
 matricular contributions I cannot accept at all. The 
 great cement of a strong common financial system is 
 lacking to the Empire so long as it is founded only 
 on matricular contributions. That these contribu- 
 tions fall unequally is a question of justice, but to 
 diminish them is in my opinion the task of a well- 
 considered Imperial policy." 
 
 Above all there was the political aspect of 
 the question. Prince Bismarck lived in constant 
 
 E 2 
 
52 PROTFXTION IN GERMANY. 
 
 '' dread of the "centrifugal elements" which did 
 not share his own attachment to the Empire or 
 his own conviction of its permanency. The spirit 
 of particularism was not dead — is not dead to- 
 day — and he desired to make the Empire as 
 independent as possible by placing it in possession 
 of ample and elastic resources. He did not want 
 the citizens of the new Confederation to be per- 
 petually asking themselves, as they reckoned out 
 the incidence of the matricular contributions, 
 "What does the new Empire cost me, and is it 
 worth the price?" The financial aspect of the 
 Empire he therefore wished once for all to force 
 into the background. These were not appre- 
 hensions which so shrewd a statesman as he 
 could safely avow, for to have done so would 
 have encouraged the forces which were ranged 
 against him, and might at the same time have 
 defeated his entire scheme ; and one of the 
 secrets of successful statesmanship is to get your 
 own way while allowing your opponents to believe 
 that they are getting theirs. 
 
 " The Imperial contribution," he told the Reichstag 
 on one occasion, " presupposes that the condition of 
 matricular contributions will be a transitional one, 
 lasting only until Imperial taxes shall have been 
 introduced. . . . The consolidation of the Empire 
 will be promoted when the matricular contributions 
 are replaced by Imperial taxes ; it would not lose if 
 these taxes were so prohibitive that the individual 
 States received from the Empire instead of their 
 having to give in a way that is not always computable 
 and is for them inconvenient." 
 
BISMARCK'S THEORIES. 53 
 
 Besides, as he reminded the same pugnacious 
 body at another time, the Empire " had not yet 
 grown strong enough to be made the arena for 
 trials of strength " between State and State. 
 
 Further, Prince Bismarck was powerfully 
 influenced by his conviction, in which he never 
 wavered, of the inexpediency of direct taxation, 
 and the political wisdom as well as the personal 
 convenience of the policy of raising revenue by 
 indirect means — on the one hand by financial 
 customs duties and on the other by excise dues 
 on articles of internal production and consump- 
 tion. A volume would be taken up by the 
 speeches which he made in the Reichstag alone 
 upon this, one of his favourite themes. For years 
 the basis of taxation in Prussia had been the land, 
 income, class, building, and trade taxes, all of 
 which had existed since 1861 and several for a 
 much longer time. For not one of these taxes 
 had Bismarck a good word to say, and if he never 
 made any serious attempt to abolish them it was 
 because he saw no hope of obtaining a satisfactory 
 equivalent elsewhere. His idea, however, w-as 
 indirect taxation as far as possible, and direct 
 taxes on income and capital only to the extent 
 that they fell upon the very rich, and even then 
 only by way of public recognition of their splendid 
 material isolation from the rest of their fellow- 
 men. His own term for imposts of this kind, so 
 emphatically partial and class in character, was 
 "honorary taxes" {Ehrensteuei'). 
 
54 PROTECTION IN GERMANY. 
 
 As early as May 21st, 1869, we find him telling 
 the Prussian Diet that it was his desire so to 
 arrange taxation that it might be levied with the 
 least possible pressure upon those liable, hence to 
 rely as little as possible upon direct taxes. 
 
 " Direct taxes," he said, " always press on the tax- 
 payers with a certain angular brutality. I do not 
 count amongst these taxes the tax on light (petro- 
 leum), nor yet those on the necessaries of life, like 
 bread and salt, and if I cared to talk about the cruelty 
 of embittering ' the poor man's ' pipe of tobacco or 
 invigorating drink, and yet were conscious at the 
 same time that I still required from him the poll-tax 
 and the bread-tax, I should be honest enough to ask 
 myself ' What do you really mean by such hypocrisy ? ' 
 So long as we tax bread, so long as we continue to 
 demand the bread-penny from every member of the 
 labourer's family, yet tax but slightly or not at all 
 those luxuries which, indeed, I would concede to every 
 man, even the poorest, yet which, when he has no 
 money, he must for a time at least dispense with, so 
 long do I hold the complaint about the flour tax, 
 the meat tax, and the bread tax to be absolutely 
 justified." 1 
 
 Hence, too, in a speech made in the Reichstag 
 on November 22nd, 1875, he said : — 
 
 " I declare myself as essentially favourable to the 
 raising of all possible revenue by indirect taxes, and I 
 hold direct taxes to be an onerous and awkward 
 makeshift. . . . Indirect taxes, whatever may be 
 said against them theoretically, are in fact less felt. 
 It is difficult for the individual to calculate how much 
 he pays, and how much falls upon Itis neighbours, 
 but he knows how much income tax he pays. . . . 
 
 ' The Mahlsteuey, a tax on ground corn, and the Schlacht- 
 stener, a tax on live stock killed for food, were a1)olishcd 
 January ist, 1875. 
 
BISMARCK'S THEORIES. 55 
 
 With direct taxes a man is not asked : Can you on a 
 pinch do without }-our beer ; can you smoke less ; 
 can you use less light (petroleum) of an evening ? 
 No, he must pay the direct tax whether he has 
 money or not, whether in debt or not ; and what is 
 worse, distraint follows, and nothing has a greater 
 effect on a man's disposition than execution on 
 account of a few pence which cannot at the moment 
 be extorted from the one who owes them." 
 
 Holding thus the view that direct taxation and 
 discontent went hand in hand, it is hardly a wonder 
 that he later went a step further and came to 
 identify the advocacy of such taxation with 
 hostility to authority and to attribute to it mis- 
 chievous political intent. 
 
 " Those who want to see the electors dissatisfied \ 
 with the Government will hold fast to the direct taxes ; 1 
 those who seek to promote content in the population 1 
 will be more for indirect. That is the result of practice \ 
 and experience, and I need not develop the psychologi- 
 cal reason for it. Whoever offers opposition wants to 
 see discontent amongst the people, and will devise 
 means to find it and to excite it, by representing the 
 Government as incapable, malevolent, and perhaps 
 only as clumsy." 
 
 In a speech made on February 22nd, 1878, in 
 which he contended that " at this moment every 
 hundred million marks levied in England and 
 France are raised with less pressure on the popula- 
 tion than with us," he justified direct taxes on 
 other grounds — whether conclusively or not is a 
 question apart : — 
 
 " Indirect taxes are preferable to direct not merely 
 because of the advantages in the mode of raising 
 them, the superfluity of executions and distraints, and 
 
56 PROTECTION IN GERMANY. 
 
 the fact that the taxpayer fixes both the time and 
 measure of his taxation ; tlieir great superiority is to 
 be sought in their counterbalancing effect, by virtue 
 of which the indirect pressure of taxes is distributed, 
 in a manner varying according to local circumstances 
 and the conjunctures of trade, among all those per- 
 sons who are affected, from the production or import 
 of the object taxed to its consumption. While direct 
 taxes, for the most part, fall entirely and immovably 
 upon those liable, who cannot transfer them to others, 
 and are often threatened v-'ith distraint, an indirect tax 
 is primarily taken from the one liable, but he is able, 
 so far as home products are concerned, to transfer 
 the tax he has paid to the buyers of his goods, while 
 as for taxed articles imported from abroad the pro- 
 ducing countr}" wholly or partially bears the tax. 
 Since the indirect tax is, as a rule, incorporated with 
 the other competing factors which go to the forma- 
 tion of price, as one of the less important elements of 
 a now indivisible whole, its burdensome effect upon 
 the individual, not apparently, but to a great measure 
 actually, disappears. Thus all the advantages ad- 
 vanced on behalf of direct taxes can at the most 
 claim a theoretical value. In theory the tendency to 
 affect the individual in proportion to his capacity, 
 which lies at the basis of these taxes, may be esti- 
 mated too high ; the practical form of such taxes 
 very seldom fits in with this theory. The financial 
 capacity of the individual taxpayer is not always 
 expressed in his income, apart from the general 
 impossibility of calculating that income even approxi- 
 mately. Family position, health, and local and other 
 circumstances, which direct taxation disregards and 
 must disregard, create the greatest diversity in actual 
 financial position even among persons of equal 
 income." 
 
 It is noteworthy also that Prince Bismarck was 
 a decided advocate of the exemption of small 
 incomes from taxation of all kinds. 
 
BISMARCK'S THEORIES. 57 
 
 " I hold in general," he said on February 4th, i88r, 
 "the principle that the man who has nothing but 
 liis two hands — untrained hands, that is, wliich have 
 learned no industry — wherewith to earn his liveli- 
 hood, should be entirely exempted from taxation — 
 not only from State taxation, but from communal 
 imposts as well — and that taxation should only begin 
 when another capital exists. This capital may take 
 the form of physical or mental skill, but it should in 
 my opinion be above the level of the simple artisan, 
 who has not been able to learn anything, not because 
 of his own fault, but from lack of means for his 
 education. ... He whose means are such that he 
 has nothing in the world to depend upon but uncer- 
 tain employment — as in Berlin here, clearing away 
 snow in winter and digging in summer — should, in 
 my opinion, be required by the State to do nothing 
 but help in time of war to defend against the stranger 
 the roof which protects him. He should not be called 
 upon to pay money." 
 
58 PROTECTION IN GERMANY. 
 
 CHAPTER V. 
 
 THE TARIFF OF 1879. 
 
 Nothing can be clearer or more indisputable 
 than that up to 1878 Prince Bismarck and the 
 Federal Government entertained no idea whatever 
 of industrial and agricultural Protection. The 
 revision of the tariff was already determined on, 
 but the revision was to be undertaken solely in the 
 interest of revenue ; the duties to be imposed or 
 increased, as might happen, were to be regarded 
 as fiscal, not protective duties. The Govern- 
 ment's position was sketched by the semi-official 
 Provinzial-Corrcspondenz as follows : — 
 
 " The Government seek no reaction in the domain 
 either of politics or of taxation and economics, but 
 merely a rational development. Instead of anarchy 
 and tlie subversion of monarchical, constitutional and 
 social institutions, as well as the institution of pro- 
 perty, they desire the energetic interference of the 
 State for the protection of our culture and our civili- 
 sation and the progress of our industrial activity. 
 While in regard to taxation 'they aim at a rational 
 reform, which will promote the interests of the 
 Empire as well as of the individual States, and 
 alleviate the burdens which fall upon the nation, in 
 regard to mercantile questions they seek to protect 
 national interests on the lines of the development 
 which has taken place since 1818 and the found- 
 ing of tho Customs Union, and that without any 
 
THE TARIFF OF 1879. 59 
 
 prepossession for the doctrines of those politico-econo- 
 mical parties which, out of regard for a supposed 
 consistency of opinion, have overlooked the practical 
 interests of the nation." 
 
 In August the Finance Ministers of the various 
 States met in conference at Heidelberg, and here 
 likewise the same views were represented, the 
 same intention adhered to. Their report merely 
 recommended the increase of the Imperial revenue 
 by means of a tobacco duty and of duties on 
 certain suitable fiscal articles. 
 
 It was at this point that the question was taken 
 out of Bismarck's hands to be developed and 
 settled in a way w'hich he had hitherto never 
 seriously anticipated. For the party of reaction in 
 the Reichstag had meantime been active. They 
 recognised that the moment was propitious for 
 a return to the policy discarded under the 
 influence of Minister Delbruck, and thanks to 
 the promptitude, urgency, and vigour of their 
 interposition they were able to create the impetus 
 which sent the Chancellor, while still wavering 
 with open mind, clear across the border line which 
 divided fiscal from protective policy. Already he 
 had reconstituted his Ministry, which was a task 
 of no great difficulty. Alluding once to the inci- 
 dent in a conversation with myself, Prince 
 Bismarck said that his Free Trade colleagues of 
 that day " left him." Minister Delbruck, it is 
 true, had already gone voluntarily, for he took his 
 leave in June of 1876, and he was now a member 
 
6o PROTECTION IN GERMANY. 
 
 of the Reichstag. The only serious obstacle to 
 the new policy was Camphausen, Vice-President 
 of the Prussian Ministry of State, who had suc- 
 ceeded Von der Heydt as Minister of Finance in 
 i86g. His retirement, voluntary or not, took 
 place in March, 1878. Now the Chancellor took 
 the helm in his own hand, and more than the 
 helm, for he made himself responsible henceforth 
 for Germany's policy in every detail, both at home 
 and abroad. Like the survivor of the famine- 
 stricken craft of the ballad, he was captain, mate, 
 boatswain, cook and all. For many years to 
 come Bismarck was literally the State. 
 
 The political portents of the time were favour- 
 able to reaction. The re-election of the Reichstag 
 which followed the two attempts of May nth and 
 June 2nd, 1878, upon the life of the Emperor Wil- 
 liam I. placed the Liberal fractions in a minority. 
 The two Conservative groups numbered 78 in the 
 House of 1877, 116 in that of 1878, and while the 
 National Liberals fell from 128 to 99, the Radicals 
 and the Socialists fell from 51 to 36. The Ultra- 
 montane Centrum, the most unvarying of all 
 parties, added one to its- earlier 93. Liberalism 
 was in bad case. The Conservatives and Clericals 
 alone would have outnumbered the popular parties 
 and the mildly progressive National Liberals 
 combined by 76 votes (210 to 135), even had a 
 grouping so favourable to Liberal policy been 
 possible. It soon appeared, however, that Free 
 Trade would have to contend against odds far more 
 
THE TARIFF OF 1879. 61 
 
 desperate, which made the issue of the fiscal en- 
 counter from the very beginning a foregone conclu- 
 sion. In the course of the new session 204 Conserva- 
 tive, Clerical, National Liberal, and other deputies, 
 forming a majority of the House, consorted in the 
 ''Free Economic Union of the Reichstag," with a 
 view to deciding upon joint action on the impend- 
 ing fiscal reforms, and on October 17th they 
 published a formal declaration of Protectionist 
 faith and policy. This declaration was believed 
 to have previously received the sanction, and it was 
 certainly issued with the knowledge of the 
 Imperial Chancellor, whose hand it unques- 
 tionably strengthened. It stated : — 
 
 " Throughout the German Empire a clear and 
 definite decision regarding the basis of German com- 
 mercial relationships is awaited from the Federal 
 Governments with suspense. It was therefore both 
 desirable and essential that tlie Reichstag now 
 assembled should weigh the questions connected with 
 the Imperial Government's attitude towards com- 
 mercial policy. The undersigned members of the 
 Reichstag express regret that such a course was not 
 possible inasmuch as the only purpose of the convo- 
 cation of the Reichstag was the consideration of the 
 Socialist Bill, and the inquiries into the economic 
 position and the vital conditions of several of the 
 principal industries of Germany are not yet com- 
 pleted. In order, however, to remove the erroneous 
 impression that the Legislature lacks the necessary 
 interest in the nation's rightful claims in the domain 
 of commercial policy, and a resolute will to give 
 effect to these claims, we feel bound to declare that 
 we have been solely prevented by the reason stated 
 from taking the initiative as expected by the country, 
 
62 PROTECTION IN GERMANY. 
 
 and that, in view of the mercantile policy adopted 
 by mobt of the countries adjacent to Germany, of the 
 injury caused to the national welfare by the de- 
 ficiencies of the German customs tariff, and of the con- 
 tinuance of the crisis in German industry and agri- 
 culture, we regard as necessary a reform of the tariff 
 based on careful investigation and deliberation, and we 
 are therefore resolved to advocate the same in the next 
 ordinary session of the Reichstag. Although viewing 
 the question from various commercial-political stand- 
 points, the undersigned are agreed in the fundamental 
 idea that the difficult questions comprehended in 
 German mercantile policy are not altogether to be 
 settled by the watchwords of ' Free Trade ' and 
 ' Protective Duties,' but that what must be done 
 is to reconcile real and supposed conflicts of inte- 
 rests by the display of knowledge, discretion and 
 patriotism." 
 
 While the country was pondering the signifi- 
 cance of this unexpected move, and was wondering 
 what would happen next, Prince Bismarck was in 
 bus3^ correspondence with Baron von Varnbiiler, 
 a prominent member of the Economic Union and 
 formerly a Wiirtemberg Minister, who had sought 
 the formal avowal of his views and intentions. 
 Writing on October 25th, Bismarck informed his 
 correspondent that it was '' certainly m}^ intention 
 to proceed to a thorough revision of our customs 
 tariff and in the first place to lay proposals before 
 the Federal Governments for prior examination. 
 The preparations to this end have already begun. 
 I shall not be prepared to consider the conclusion 
 of new commercial treaties with conventional 
 tariffs until the revision of our tariff is completed." 
 
 Accordingly the Chancellor on November 12th 
 
THE TARIFF OF 1879. 63 
 
 brought the question before the Federal Council, 
 which at his proposal appointed a committee of 
 fifteen members to revise the tariff and to call in 
 the aid of such experts as they might desire to con- 
 sult in so doing. In justifying this course Prince 
 Bismarck now frankly avowed his acceptance of 
 the Protectionist position, though his first public 
 utterance on the subject was contained in a letter 
 of December 15th, which he addressed from 
 Friedrichsruh through the Federal Council to the 
 Revision Committee before it began its work. 
 
 " For myself the interests of financial reform take 
 the first place," he still took care to say, " the 
 diminution of the weight of direct taxation by the 
 increase of the revenue of the Empire which is based 
 on indirect taxes. How far Germany lags behind 
 other States in the financial development of its 
 customs system is shown by the accompanying com- 
 parison, and this comparison would show Germany 
 in a still more unfavourable light if to the revenues 
 from customs and duties credited to Austria, Hungary, 
 France, and Italy were added the sums which these 
 States levy in the form of a tobacco monopoly, 
 instead of a duty on foreign tobacco, and those which 
 are raised for the benefit of the communes as octroi. 
 It is no accident that other great States, and especially 
 those of a very advanced political and economic 
 development, seek by preference to cover their 
 expenditure by the proceeds of duties and indirect 
 taxes. ... In the greater part of Germany the direct 
 taxes, including the communal imposts, have reached 
 a height which is oppressive and appears to be 
 economically unjustifiable. The people who suffer 
 most from them at present are those members of the 
 middle class whose income ranges up to 6,000 marks 
 (^300). . , Should the taxation reform which I regard 
 
64 PROTECTION IN GERMANY. 
 
 as necessary offer ameliorations tlial reat li to this 
 limit, it must begin with the revision of the customs 
 tariff on as broad a basis as possible. The more pro- 
 ductive the customs system is made financially, the 
 greater can and must be the relief in direct taxes, for 
 it is self-evident that the increase of the indirect 
 revenues of the Empire cannot imply an increase of 
 the aggregate burden of taxation. 
 
 " Not in the increase of the burdens which are 
 necessary for the purposes of the Empire and the 
 States, but in the transformation of a larger part of 
 these unavoidable burdens into the less oppressive 
 form of indirect taxes, consists the financial reform 
 which it is the purpose of the revision of the customs 
 tariff to effect. In order to obtain a basis for such 
 revision consonant with this standpoint it is in my 
 opinion desirable not merely to impose higher duties 
 upon those articles which are specially suitable, but 
 to go back to the principle of the taxation of all 
 imported articles which is laid down in the Prussian 
 customs legislation of the year 1818 and later found 
 expression in the universal import duty of the tariff 
 of the ZoUverein until the year 1865. From this 
 general liability to duty those raw materials indis- 
 pensable to industry would be excluded which are 
 either not produced at all in Germany, like cotton, or 
 are not produced in sufficient quantity or quality. 
 All articles not specially excluded should be subject 
 to an import duty graded, according to the value of 
 the goods, in various percentages according as they 
 are necessary for home production." 
 
 Questions of economic theory had no value for a 
 
 statesman who carried his disregard for theory of 
 
 every kind to the point of pedantry ; a statesman 
 
 whose prejudice against everything that was 
 
 doctrinaire made him doctrinaire himself. 
 
 " I leave undecided," proceeded the letter, " the 
 question whether complete mutual freedom of 
 
THE TARIFF OF 1879. 65 
 
 international commerce, such as is contemplated by the 
 theory of free trade, would not serve the interests of 
 Germany. But as long as most of the countries with 
 which our trade is carried on surround themselves 
 with customs barriers, which there is still a growing 
 tendency to multiply, it does not seem to me justifi- 
 able, or to the economic interests of the nation, that 
 we should allow ourselves to be restricted in the satis- 
 faction of our financial wants by the apprehension 
 that German products will thereby be but slightly 
 preferred to foreign ones. The existing \'erein tariff 
 contains, together WMth the purely fiscal duties, a 
 series of moderate protective duties intended to 
 benefit certain branches of industry. The abolition 
 or decrease of these duties does not appear advis- 
 able, especially in the present position of industry. 
 Perhaps, indeed, it would be well to re-introduce 
 duties on a number of articles or to increase the 
 present rates in the interest of various depressed 
 branches of home industr}-, in accordance with the 
 results of the investigation now in progress. Yet 
 protective duties for individual industries, when they 
 exceed the limit imposed by regard for their financial 
 proceeds, act as a privilege and arouse on the part of 
 representatives of unprotected industries the antipathy 
 to which every privilege is exposed. A customs 
 system which secures to the entire home production 
 a preference before foreign production in the home 
 market, while keeping within the limits imposed by 
 financial interests, will not run the risk of this anti- 
 pathy. Such a system will in no way appear partial, 
 because its effects will be more equally spread over all the 
 productive circles of the land than is the case with a 
 system of protection for isolated branches of industry. 
 The minority of the nation which does not produce 
 at_ all, but exclusively consumes, will apparently be 
 injured by a customs system favouring the entire 
 national production. Yet if by means of such a 
 system the aggregate sum of the values produced in 
 the country increase and thus the national wealth 
 
 P.G. F 
 
66 PROTECTION IN GERMANY. 
 
 be on the whole enhanced, the non-producing parts of 
 the po])ulation — and especially the State and com- 
 munal officials who are dependent upon a fixed 
 money income — will eventually be benefited ; for 
 means of counterbalancing hardships will be at the 
 command of the community in case the extension 
 of customs liability to the entire imports should 
 result in an increase of the prices of the necessaries 
 of life. Yet with low duties such an increase will in 
 all probability not take place to the extent which 
 consumers are accustomed to apprehend, just as, on 
 the other hand, the prices of bread and meat have 
 not fallen to an appreciable degree in consequence of 
 the abolition of the duties on corn-grinding and 
 cattle-killing in the parishes where these used to 
 exist. The real financial duties, imposed on articles 
 which are not produced at home, and the import of 
 which is indispensable, will in part fall upon the 
 consumer alone. On the contrary, with articles which 
 the country is able to produce in quantity and quality 
 adequate to the home consumption the foreign pro- 
 ducer will alone have to bear the duty in order that 
 he may compete in the German market. Finally in 
 cases in which part of the home demand must be 
 covered by foreign supply, the foreign producer will 
 in general be compelled to bear at least a part, and 
 often the whole of the duty, and thus to reduce his 
 profit to the extent of this amount." 
 
 Meantime, the Radicals and Free Traders — the 
 "Manchester men" of that day — were on the 
 alert. An Association for the Advancement of 
 Free Trade {Vcrein zur Fordenmg der Hmidels- 
 freiheit) was formed under the presidency of Dr. 
 Bamberger, a member of the Reichstag and a high 
 authority on finance. The first clause of its 
 statute ran : — " The Association for the Ad- 
 vancement of Free Trade seeks the maintenance 
 
THE TARIFF OF 1879. 67 
 
 of the measure of free international trade so far 
 reached and its extension by means of commercial 
 treaties," and in this sense it addressed a pressing 
 memorial to the Federal Council on December 28th, 
 1878. The memorial came too late. With the 
 publication of the Chancellor's letter the Govern- 
 ment were committed, and from the position 
 and policy therein outlined there was no with- 
 drawal. In full sympathy with it was the speech 
 from the throne which opened the following 
 session of the Reichstag, on February 12th, 
 1879. 
 
 " The Federal Governmenls," ran this utterance, 
 " are considering legislative measures for the removal, 
 or at least the diminution, of the economic evils from 
 which we are suffering. The proposals which I have 
 made, and still intend to make, to my allies aim, by 
 providing the Empire with new sources of revenue, 
 at placing the Governments in a position to desist 
 from levying the taxes which they and their legis- 
 latures recognise as the hardest to enforce. At the 
 same time I am of opinion that the country's entire 
 economic activity has a right to claim all the support 
 which the legislative adjustment of duties and taxes 
 can afford, and which in the lands with which we 
 trade is, perhaps, afforded beyond actual requirement. 
 I regard it as my dut_y to adopt measures to preserve 
 tlie German market to national production so far as 
 is consistent with tlie general interest, and our customs 
 legislation must accordingly revert to the tried 
 principles upon which the prosperous career of the 
 ZoUverein rested for nearly half a century, but which 
 have in important particulars been deserted in our 
 mercantile policy since 1865. I cannot admit that 
 actual success has attended this change in our customs 
 policy." 
 
 F 2 
 
68 PROTECTION IN GERMANY. 
 
 A few days later (February 21st) Prince Bis- 
 marck reconnoitred the ground on the occasion of 
 a discussion of a projected commercial treaty with 
 Austria-Hungary. It should be said that the 
 treaty of March, 1868, between that country and 
 the old ZoUverein had been denounced in October, 
 1876. It had contained reciprocal ameliorations 
 of the general tariffs of the contracting States, but 
 Austria had declined to renew it on the old basis. 
 On December i6th, 1878, the treaty was prolonged 
 for one year pending the settlement of a new treaty 
 and its due ratification by the Reichstag. The 
 treaty was accepted, but the discussions to which 
 it gave rise covered a far wider area. The entire 
 question of fiscal policy was thrown into the 
 controversial arena, and was debated by both sides 
 with a vigour and at times a bitterness which 
 faithfully reflected the temper of national opinion. 
 
 " I propose to return to the time-honoured ways 
 of from 1823 to 1865," declared the Chancellor to 
 the delight of the members of the Protectionist 
 Economic Union, while Radical deputies like 
 Bamberger, Lasker, and Richter joined issue in 
 uncompromising spirit, predicting the ruin of 
 German commerce and industry, and accusing 
 Bismarck in sharp words of being a renegade. 
 
 Outside there was the same ferment, the same 
 passion, the same resolute contest of forces which 
 recognised that a fateful issue hung in the 
 balance. Combination was answered by com- 
 bination, manifesto by manifesto, demonstration 
 
THE TARIFF OF 1879. 69 
 
 by demonstration. On the Free Trade side the ' 
 most striking pubhc protest was that of a congress 
 of representatives of all the large towns in the 
 Empire, held in Berlin on May 17th. That, too, 
 was unavailing. 
 
 Before this a Bill had been laid before the House 
 on lines recommended by the Tariff Committee of 
 the Federal Council, and the Chancellor, with un- 
 wearied energ}', consummate tact, and marvellous 
 resource, himself piloted it safely through the more 
 than usually stormy waters of Parliamentary 
 debate. 
 
 In the speech with which he opened the 
 discussion on the Bill on May 2nd, 1879, ^^^ 
 said : — 
 
 " The more I have gone into the question the more 
 have I become convinced of the necessity and the 
 urgency of reform. The present condition of German 
 finance — by which I mean the finance not onl_v of the 
 Empire but of the individual States as well — is such 
 that in my opinion it imperatively calls for a speedy 
 reform. The first motive which impels me in my 
 political position as Im])erial Chancellor to enter 
 upon such a reform is the need of the financial 
 independence of the Empire. This need was recog- 
 nised when the Imperial Constitution was drawn up. 
 That Constitution presumes that the system of matri- 
 cular contributions should be a temporary one, and 
 should only last until Imperial taxes were introduced. 
 . . . Certainly it is undesirable that the Empire should 
 be a burdensome boarder or a dunning creditor, while 
 it might be the liberal provider of the individual 
 States if only proper use were made of the revenues 
 which the Constitution put in the Empire's way, yet 
 which hitherto have, been disregarded. To this" state 
 
70 PROTECTION IN GERMANY. 
 
 of things I maintain an end should be made, since the 
 matricular contributions are unjust in their distribu- 
 tion. , . . The consolidation of the Empire after which 
 we all strive will be furthered when these contribu- 
 tions are replaced by Imperial taxes ; it would not 
 lose if these taxes were so abundant that the individual 
 States received from the Empire instead of giving to 
 it as hitherto in a way not always computable and at 
 the same time inconvenient. 
 
 " A second reason why a change of the present 
 system seems necessary lies in the question — Is the 
 burden, which must necessarily be imposed in the 
 interest of the State and the Empire, imposed in the 
 form in which it can most easily be borne, or is it 
 not ? This question must, according to my convic- 
 tion, be answered in the negative. . . . We do not by 
 any means seek for larger revenues in so far as the 
 Reichstag and the Diets do not agree with us in 
 voting expenditure to meet which income would have 
 to be found. Indeed, I do not know what the Empire 
 would do with a superabundance of money ; we had 
 it when the French milliards came to us, and in the 
 spending of them we got ourselves into a certain 
 amount of perplexity. . . . We ask no more than we 
 now have or than you and the Diets may be pleased to 
 vote us ; but we do wish that that revenue which is 
 proved necessary may be raised in the form in which 
 it can be borne most easily by the taxpayers. The 
 Federal Governments are convinced that indirect 
 taxes — that source of revenue so long neglected by 
 the ZoUverein — are the form in which the burden that 
 we may have to bear will fall most lightly. . . ." 
 
 And turning to the question of protection for 
 industry : — 
 
 " It is a reproach to our existing legislation . . . 
 that the incidence of our indirect taxes does not afford 
 to our national labour and production the measure of 
 Protection which can be given to it without danger 
 
THE TARIFF OF 1879. 71 
 
 to the interests of the community. I am not going 
 to enter into any contention about Protection and 
 Free Trade. Hitherto we have all been Protectionists, 
 even the greatest Free Traders amongst us, for no one 
 has been wishful to go below the present tariff, which 
 remains moderately protective, and such is also the 
 proposal that we make to you. We ask for a moderate 
 protection of national labour. We are far removed 
 from any system of prohibition such as exists in most 
 neighbouring countries, as, for example, in America, 
 which was formerly our principal buyer, where the 
 duties average from 60 to 80 per cent, ad valorem. 
 All that we propose by way of Protection keeps within 
 the limits of financial taxation except where the omis- 
 sion of higher duties would entail great present injury 
 upon larger classes of our fellow citizens." 
 
 Casting doubt upon the probability of any 
 further Free Trade development for years to 
 come, he added : 
 
 " The only exception is England, and that will not 
 last long. France and America have both completely 
 forsaken that direction. Austria, instead of reducing 
 its protective duties, has increased them ; Russia has 
 done the same, not only through the gold coinage, but 
 in other ways. Therefore no one can expect Germany « 
 to remain permanently the dupe of an honest convic- 
 tion. Hitherto the wide-opened gates of our imports - 
 have made us the dumping-place (Ablagevungsstdtte) of 
 all the over-production of foreign countries. At present • 
 they can deposit everything with us, and their goods, 
 when once in Germany, have always a somewhat 
 higher value than in the land of origin — at least our 
 people think so — and it is the surfeiting of Germany 
 with the over-production of other lands which most 
 depresses our prices and checks the development of 
 our industry and the restoration of our economic con- 
 dition. Let us once close the door and erect the 
 somewhat higher barriers which are proposed, and 
 
72 PROTECTION IN GERMANY. 
 
 let us see that we at any rate preserve the German 
 market — that market which, thanks to our good 
 nature, is now exploited by foreign lands — for German 
 industry. The question of a great export trade is 
 always exceedingly precarious. There are no longer 
 any great countries to discover ; the globe is circum- 
 navigated, and we cannot find any new mercantile 
 nations of any great extent to which we can export. 
 The policy of commercial treaties is, I grant, under 
 certain circumstances very favourable, though when- 
 ever such a treaty is concluded it is a question of 
 Qui trompe-t-on ici? and it is only seen some years 
 later who is really the victim." 
 
 In a speech made on May 2ist, Prince Bismarck 
 developed his views on agricultural protection. 
 His thesis was that low corn prices were an 
 unmixed evil, yet that the taxation of imports 
 would leave the consumer no worse off, since the 
 duty would be borne by the foreigner. Here he 
 joined issue with Dr. Delbriick, his late colleague 
 in the Ministry, who had contended that the duty 
 would only have the effect of making corn dearer, 
 without benefiting agriculture at all. 
 
 " If cheap corn is the goal at which we have to aim 
 we ought long ago to have abolished the land tax, 
 since it burdens the corn-growing industry at home, 
 which produces 400 million cwts., against the 27 or 
 30 millions which we import. But no one has ever 
 thought of such a thing ; on the contrary, the tax has 
 been gradually increased throughout all Germany, so 
 far as I know, and in Prussia it has increased 30 per 
 cent, since 1861, viz., from 30 to 40 millions." 
 
 It was his ideal to secure to the farmers a 
 certain sale for their corn by closing the markets 
 
THE TARIFF OF 1879. 73 
 
 against the foreigner. He regarded as unjust a 
 
 system under which agriculturists were on an 
 
 average taxed for State and communal purposes 
 
 to the extent of 20 per cent, of their incomes, and 
 
 yet, owing to the free admission of corn, foreign 
 
 countries were enabled to cripple them at every turn. 
 
 " It is not our intention to require of the entire corn 
 consumed a higher financial obligation than now. All 
 we intend to do is to commute a part of the direct 
 taxes which now fall on the agriculturist into the 
 form, if you will, of a duty on consumption levied on 
 the frontier, and there imposed on foreign corn, so 
 that there will not necessarily be an increase in the 
 price of the entire com supply, but only a slight 
 attempt at compensatory justice in view of the dis- 
 advantages under which the producers of corn have 
 hitherto suffered at home as agai-nst the exemption 
 from taxation and other privileges which foreign corn 
 producers enjov. I am of opinion that this duty will 
 have no influence on prices, but while the previous 
 speaker (Dr. Delbruck) would regard that as a good 
 fortune which he dare not anticipate, I contemplate 
 it wiih a certain regret, for I must ask myself the 
 question : Is not the moment approaching when our 
 agriculture will no longer be able to exist because 
 corn is pressed down to a price at which it cannot be 
 remuneratively produced in Germany ; taxation, the 
 cost of living, and the debts on land being as they 
 are ? When that moment comes, then not only agri- 
 culture but the Prussian State and the German Empire 
 will go to ruin as well. . . . But I need not picture 
 the way in which agriculture, and with it our State 
 and national existence, might decay, for it will not 
 happen ; twenty million German farmers will not 
 allow themselves to be ruined ; it is only necessary 
 that they should become conscious of what is before 
 them, and they will seek to defend themselves by all 
 legal and constitutional means," 
 
74 PROTECTION IN GERMANY. 
 
 So, too, he defended the timber duties on the 
 ground that they would keep out Russian and 
 Swedish wood, and enable the home forester to 
 earn a tolerable return without being under the 
 necessity of hacking down all his trees in order to 
 make ends meet. But whether the interest to be 
 protected was agriculture or forestry or industry, 
 the one thing certain was that nobody would be 
 injured, but everybody benefited. The foreigner 
 would, as a matter of course, bear the duties on 
 industrial imports, and as for corn the home 
 country would grow all that was needed without 
 anyone having to pay a penn}^ more. Deputy 
 Delbriick, the ex-Minister, calculated that the corn 
 duties would actually cost the army administration 
 more than they would bring to the treasury in 
 revenue, but at that time the Chancellor's theory 
 of the incidence of taxation held the charmed ear 
 of country party and town party alike, and 
 Delbriick could only challenge the verdict of 
 experience. 
 
 It is superfluous to follow the fortunes of the 
 Tariff Bill before it emerged from debate, a com- 
 pleted measure, very much in the form proposed 
 by the Government, whose difficulty in the then 
 constitution of parties was not to persuade the 
 Reichstag to adopt Protection sufficient but to 
 persuade it to be moderate in its demands. It 
 was inevitable, too, that interest should have 
 played against interest in the universal scramble 
 for gain. Referring to the insidious way in 
 
V 
 
 THE TARIFF OF 1879. 75 
 
 which this was done, Professor Walther Lot2 
 writes : 
 
 " Deputy Fliigge characterised the negotiations 
 which led to the increase of the majority and to the 
 strengthening of Protection in words which are very 
 familiar : ' If, (he said) the members present were 
 behind the scenes in the House during the negotia- 
 tions over the iron duties, then perhaps they had the 
 same experience as 1 when I saw the " honourable 
 brokers " come in. The one bid, " If you will give 
 50 for rye I will give you a full iron duty," or, " If 
 you will reject von Weddell's amendment I will give 
 you the rye duty," and so forth. Gentlemen, one 
 doubted at the time whether one was not in the 
 Leipzig Street rather than in an otherwise so honour- 
 able assembly as this.' " Lotz himself adds : " Eye- 
 witnesses assure us that very American-like methods 
 were used at that time in the land of poets and 
 thinkers, that in order to strengthen the majority for 
 the entire tariff protective duties were bandied about 
 very liberally so long as the desire for them could be 
 realised without offence to powerful interests. It 
 was said, indeed, upon the Opposition side that the 
 German Hamlet had become a Richard III." ^ 
 
 The Bill received Imperial assent on July 7th, 
 1879, and under it part of the new tariff came 
 into operation at once, part on October ist, 
 1879, and the remainder on January ist, 1880. 
 All the duties imposed were intended to be revenue- 
 producing, though some articles were singled out 
 for special taxation on account of their proved 
 productiveness, such as Colonial goods, and 
 
 1 " Die Ideen der deutschen Handelspolitik von i860 bis 
 1891" (pp. 169 and 174), Dr. Walther Lotz, Leipzig, 1892. 
 
76 
 
 PROTECTION IN GERMANY. 
 
 especially coffee and tea, with petroleum, tobacco, 
 wines, and spirits. 
 
 The corn duties were fixed as follows : 
 
 Wheat, rye, oats and legumes .. 
 Barley, maize and buckwheat 
 
 Malt 
 
 Rape and rapeseed 
 
 Anise, coriander, fennel, cummin 
 
 Per ton. 
 I OS. 
 
 I2S. 
 
 30S. 
 
 Of industrial raw materials, cotton, wool, ores, 
 and earths were admitted free. Upon manu- 
 factured and partly manufactured goods the 
 following duties were imposed : 
 
 
 
 Per ton. 
 
 Cotton yarn (according to number) 
 
 £^ to ^24. 
 
 Carded wool 
 
 • ■ ■ 
 
 £^- 
 
 Woollen yarn 
 
 • # • 
 
 £1 lOS. 
 
 Cotton goods, rough 
 
 and 
 
 
 bleached ... 
 
 • • • 
 
 £40- 
 
 Knitted goods 
 
 • • • 
 
 ' £^0. 
 
 Pig-iron 
 
 • • ■ 
 
 I OS. 
 
 Manufactured iron 
 
 • • • 
 
 25s. to 30S. 
 
 Rough iron and steel goods 
 
 • . * 
 
 i^i 5s-to ^3. 
 
 Fine 
 
 • • • 
 
 iri2. 
 
 Sewing needles 
 
 • • • 
 
 £30. 
 
 Musical instruments 
 
 • • • 
 
 £15- 
 
 Machinery 
 
 • • • 
 
 il I OS. to £4,. 
 
 Common glass 
 
 « • • 
 
 £1 10s. 
 
 Fine glass ware 
 
 • • • 
 
 A to £5. 
 
 Scientific instruments of every kind were 
 admitted free, as also sea and river-going vessels 
 with their machinery, furniture, and utensils. 
 
 Grateful for the success of a cherished scheme 
 of his own, the Emperor William, who was more 
 
THE TARIFF OF 1879. 77 
 
 Protectionist than his Chancellor, wrote to the 
 latter from Mainau on July 20th : 
 
 " I must now congratulate you on the victory you 
 have gained in the Reichstag on the question of the 
 customs tariff reform. To your many outside victories 
 must now be added this one on internal financial 
 questions. You undertook to stir up a wasps' nest, 
 and I sided with you from conviction, although I 
 feared the result of your enterprise. It is rare that 
 such a complete change of public opinion has been 
 achieved in such a short time, and one sees that after 
 immense work and effort you hit the right nail on 
 the head. Some damage may have been done in the 
 process, but a majority of 160 votes is a triumph 
 which will sweeten many of your bitter hours of 
 preparation and fighting. The Fatherland will bless 
 you for this, although the Opposition may not do so." 
 
78 PROTECTION IN GERMANY. 
 
 CHAPTER VI. 
 
 THE SUPPLEMENTARY TARIFFS. 
 
 Germany has often been blamed — and most of 
 all by her own writers — for the entire Protectionist 
 reaction which took place in the 'eighties. Refer- 
 ring to the movement for the commercial federa- 
 tion of the British Empire and its danger for 
 German foreign trade, Dr. Eugen Moritz writes : 
 
 " But this danger has almost been provoked by the 
 policy which has for many years been followed in 
 Germany, since the policy of high protective duties 
 whose foundation Bismarck laid in 1879 became for 
 all other States in the world either an example 
 worthy of imitation or a terrible warning, so that 
 some of them surrounded themselves likewise with a 
 system of high duties and others endeavoured to form 
 themselves with their colonies into complete territorial 
 unities." 
 
 There is justice in the accusation. With 
 Germany's return to Protection began a general 
 reaction which speedily spread over the Continent, 
 and passed thence to the United States and to 
 the British Colonies, deriving impetus and strength 
 as it progressed. Russia increased her duties in 
 1881 and 1882, Austria and France did the same 
 
 1 " Eisenindustrie, Zolltarif, und Aussenhandel," Berlin, 
 1903. 
 
THE SUPPLEMENTARY Tx\RIFFS. 79 
 
 in the latter 3'ear, and it was not long before 
 customs barriers rose on all hands to a height 
 hitherto unknown. England alone showed an 
 undisturbed faith in the policy of a free market. 
 Meantime Germany's first experiences of her 
 new tariff were not in general encouraging. In 
 the inevitable conflict of interests which was waged 
 over the Bill in Parliament, when everybody wanted 
 something, and was suspicious lest he should 
 be left out in the cold, it happened necessarily 
 that calculations miscarried. For the protection 
 of one industry proved the prejudice of another. 
 It was not to the interest of the producer of raw 
 materials that the industrialist should be able to 
 obtain his wool, his skins, and his ores from 
 abroad as cheaply as possible, nor was it, on the 
 other hand, to the interest of the industrialist 
 that the home stock breeder, miner, and maker 
 of chemicals and dyeing stuffs should command 
 artificial prices, so making dearer the final pro- 
 cesses of manufacture. Those who knew clearly 
 what they wanted and had succeeded in getting 
 it, those who had obtained protection for their 
 monopolies, were well satisfied with the bargain 
 which had been struck, but for a time discontent was 
 wide spread, and disillusionment not uncommon. 
 In the iron trade prices fell in spite of the duties, 
 while in the textile trade the higher duties on 
 yarns led to less work and decreased exports 
 owing to dearer production. One man's medicine 
 was often enough another man's poison. 
 
8o PROTECTION IN GERMANY. 
 
 "What influence," asked the report for iSSi of the 
 Diisseldorf Chamber of Commerce, " has the new 
 customs tariff, which entered into full force at the 
 beginning of this }ear, had on production and prices ? 
 As to this point we can, on the authority of a searching 
 investigation in industrial circles, assert with satis- 
 faction that the influence of the tariff has in general 
 been favourable for the industries of this district. 
 The balance sheets of the larger establishments and 
 the increase of the number of workpeople are visible 
 evidence of it. It is true that some concerns still com- 
 plain of the great foreign competition : yet they do not 
 oppose the principle of the new customs system, but 
 rather regard the protection given as insufficient. 
 Nevertheless, we will not ignore the fact that many 
 industries which use raw materials and half-manu- 
 factured goods from abroad are for the time worse off 
 under the tariff, but no economic reform is conceivable 
 without injury to individuals." 
 
 So, too, the Elberfeld Chamber of Commerce 
 reported : 
 
 " It is unmistakable that individual branches of 
 manufacture have been favourably influenced, par- 
 ticularly in the home market, though on the contrary 
 others, and especially those which have to procure 
 their raw material and half-manufactured goods from 
 abroad, have to contend with great difficulties, so far 
 as the export trade goes." 
 
 One curious miscalculation deserves to be noted. 
 The Government originally proposed to schedule 
 flax amongst the free imports, but, in the prevalent 
 rage for protection, comprehension was judged 
 the only safe principle, and it was saddled with a 
 duty of ten shillings per ton. Directly the tariff 
 came into force, however, it was found that the 
 flax duty would not work at all, and a special Act 
 
THE SUPPLEMENTARY TARIFFS. 8i 
 
 of Parliament was passed in April, 1880, repealing 
 it. In the same way the soap and perfumery 
 industry promptly petitioned for the removal of 
 the duties on tallow and oil ; the machine trades 
 found that the dearer pig-iron and steel obtained 
 from England made it difficult to compete in 
 foreign markets; and the clothing trade, which 
 produced largely for abroad, declared itself to be 
 hopelessly handicapped. In some cases the duties 
 were found to be useless, as there was no competi- 
 tion to be kept out. 
 
 Certainly there was a quick increase in the 
 export trade and a corresponding decline in the 
 imports of manufactured goods, as the following 
 figures show : — 
 
 Iron and iron goods ... 
 Instruments, machines, 
 
 and vehicles 
 Raw lead, copper, tin, 
 
 zinc, and rolled zinc 
 Leather and leather 
 
 goods 
 
 Silk goods 
 
 Yarn, rope, woven and 
 
 knitted goods of 
 
 linen, cotton and wool 
 Paper and cardboard 
 
 goods 
 
 Colonial goods and 
 
 comestibles 
 
 Imports. Exports. 
 
 1878. 1880. I 1878. 1880, 
 
 In 1,000,000 Marks. 
 
 67-0 
 34-8 
 
 307 
 
 3i'3 
 39'6 
 
 213-8 
 
 47 
 148-2 
 
 28-8 
 15-6 
 
 27'3 
 
 24-6 
 26-5 
 
 189-9 
 
 3'3 
 
 84-4 
 
 570-1 1 395-5 
 
 157-3 I 177-4 
 74-1 1 79-3 
 
 50-3 ! 47-3 
 
 69-9 
 70-3 
 
 354"? 
 17-9 
 
 ^y^-5 
 
 1926-5 
 
 125 1 
 181-4 
 
 4i3"2 
 2,19-1 
 
 1368-3 
 
 P.G. 
 
82 PROTECTION IN GERMANY. 
 
 eThus, while the exports of industrial goods 
 increased in two years 341-8 million marks, or 
 33 per cent., the imports decreased i74'6 million 
 marks, or 31 per cent. 
 
 Nevertheless, the immediate prosperity which 
 
 was promised to the working classes does not 
 
 appear to have been realised. The Conservative 
 
 party's programme of 1880 had to confess that 
 
 " 400,000 work-people roam the highways idle 
 
 and unable to find employment." " The working 
 
 man," wrote a Frankfurt journal a little later, 
 
 " was promised a fowl in his pot ; he has not got 
 
 the fowl, and it is likely that he will lose the pot 
 
 as well." There were moderate increases of 
 
 wages in many industries, but they were not equal 
 
 to the increased cost of living. A report of the 
 
 Association of Iron and Steel Manufacturers, 
 
 based on returns of 305 smelting works, foundries, 
 
 and machine building works, set forth that while 
 
 the average weekly wages on January ist, 1880, 
 
 were 15s. 3^. per w^eek, they were only 165.4^. a year 
 
 later. Colliers' wages (hewers) in Westphalia only 
 
 increased from 15s. 5^. in 1878—79 to 15s. yd. in 
 
 187^—80, and by 1884 to i6s. ; while in Silesia they 
 
 were long unchanged and only reached 15s. by 1885. 
 
 Referring to the effect of the high price of corn 
 
 in 1881, when it stood at over £10 a ton, against 
 
 £6 los. before the duties were introduced, Dr. 
 
 Karl von Scherzer wrote : — 
 
 " While the duties fall exclusively on the consumers 
 there are no evidences whatever that with the dearer 
 
THE SUPPLEMENTARY TARIFFS. 83 
 
 price of the articles of daily consumption the wages 
 of labour liave correspondingly increased. ... In 
 1878 and 1879 the average minimum and maximum 
 wages in the most various industries of France ranged 
 from 1 6s. to 28s., in England from 20s. to 33s., in 
 New York from 30s. to loos., in Chicago from 22s, 
 to 36s., 24s. to 42s., and Cos. to lOos. ; but in Germany 
 they were iis. Sd., 12s. 6f/., and i8s. lod. Moreover, 
 in most of the countries named, the articles of daily- 
 use, like flour, bread, beef, milk, cheese, coal, &c., 
 were cheaper than in Germany. Since the coming 
 into operation of the new customs tariff this relation- 
 ship has not become more favourable for Germany. 
 The prices of food are still dearer, and the wages of 
 labour have either not increased at all or have not 
 increased in the same proportion, while in France, 
 England, and especially America, wages have greatly 
 increased during the last ten years. In these 
 countries, too, the purchasing power of the mass of 
 the people, which is of material importance for the 
 sale of industrial products, has increased, while in 
 Germany it has considerably diminished."^ 
 
 The immediate effect of the corn duties had 
 been a general fall in prices, due to the excessive 
 imports and the over - speculation which had 
 preceded the introduction of the tariff. When, 
 however, an equilibrium had been regained prices 
 speedily increased to a height unknown for years. 
 Yet the predictions of both Protectionists and 
 Free Traders were in some respects singularly 
 falsified. The former had justified the corn duties 
 by the low prices which had ruled for a long time. 
 These prices were attributed to foreign competi- 
 tion, facilitated by cheap means of transport, and 
 
 ^ " Wirthschaftliche Thatsachen zum Nachdenken," 
 Leipzig, 1881. 
 
 G 2 
 
84 
 
 PROTECTION IN GERMANY. 
 
 it was contended that Protection would alone 
 prevent a still more disastrous decline. At that 
 time the price of rye in the port of Bremen was 
 under £6 los. per ton. Yet, though the new duty 
 on rye was only los., the price in the same market 
 rose to ;^8 5s. in 1880 and to ;^io in 1881. It was 
 proved also that there never was more corn in the 
 country than was required for the satisfaction of 
 national needs, so that there was no question of 
 retaining the home market for the home producers. 
 In the first year of the tariff the foreign corn 
 trade was as follows : — 
 
 
 
 
 Excess of 
 
 
 Imports. 
 
 Exports. 
 
 Imports. 
 
 
 Tons. 
 
 Tons. 
 
 Tons. 
 
 Wheat . 
 
 .. 227,542 . 
 
 .. 178,17^^ 
 
 ... 49,366 
 
 Rye 
 
 .. 689,598 . 
 
 .. 26,586 
 
 .. 663,012 
 
 Barley 
 
 222,261 . 
 
 .. 154,409 
 
 ... 67,852 
 
 Oats 
 
 .. 161,686 . 
 
 • 43.577 
 
 .. 118,109 
 
 Maize 
 
 .. 340,640 . 
 
 1,369 
 
 .. 339,271 
 
 1,641,727 
 
 404,117 1,237,610 
 
 As before, just half of the total excess of imports 
 fell to rye, the staple food of the people. The 
 extent to which the corn grower benefited in these 
 early years is difficult or impossible to determine, 
 though opinions agree that the small farmer, at 
 any rate, gained nothing. For the fall in corn 
 prices, when it came, was not for a long time 
 accompanied by a proportionate fall in the value 
 of the land and in rents, and to prevent that was 
 the aim of the agrarian party. Both in the 
 Eastern and Western Provinces of Prussia rents 
 
THE SUPPLEMENTARY TARIFFS. 85 
 
 increased even on the fiscal domains with new 
 tenancies between 1880 and 1884, and only after 
 1885 did a decline set in. In Silesia there was no 
 change, and in Pomerania, Brandenburg, and 
 Posen there was a fall. On the other hand, in 
 the Grand Duchy of Baden land values rather 
 increased than decreased during the period 1868 
 to 1888, while leasehold rents declined. 
 
 It is interesting, at this distance of time, to 
 recall the fact that before Protection had been in 
 force three years the Government for a time 
 seemed to waver and weigh the wisdom of revision. 
 In August of 1883 the Reichstag was convened in 
 extraordinary session to confirm a commercial • 
 treaty with Spain. This treaty proposed a sub- 
 stantial reduction of duties, and hopeful Liberals 
 saw in it the sign of a disposition to return to the 
 Delbruck policy of " conventional tariffs." Both 
 sides gave and took — Spain had the duties on 
 wine, oil, rye, fruits, lead, iron and copper ores, 
 skins and furs, and cork goods modified in her 
 favour, and Germany received concessions in 
 respect of iron and steel goods, woollen yarns, 
 aniline dyes, and other products. There wasj 
 reciprocity, but it did not go far. Twelve years 
 were to pass, and another Minister was to come 
 to the helm, before the pressure of the tariff was 
 to be eased all round, and meantime it was for a 
 second and a third time made more severe. 
 
 In 1884 Prince Bismarck publicly claimed that 
 Protection had ** freed the country from economic 
 
86 
 
 PROTECTION IN GERMANY. 
 
 pressure,'' and that its prosperity was steadily 
 increasing. Imports and exports were both 
 advancing, and there was in ever}- port more 
 shipping ; though that drooping flower of the 
 national garden, agriculture, had not yet lifted up 
 its head. In truth wheat in 1885 was lower in price 
 than for 30 years, and rye much below the average. 
 The movement of corn prices may best be 
 shown by a comparison : — 
 
 
 
 
 
 Pric€ 
 
 ; per Ton. 
 
 
 
 
 Wheat. 
 
 Rye. 
 
 Barley. 
 
 Oats, 
 
 
 i 
 
 s. 
 
 d. 
 
 £ ^■ 
 
 d. 
 
 £ s. 
 
 d. 
 
 £ s. d. 
 
 1878 ... 
 
 10 
 
 
 
 
 
 7 3 
 
 0: 7 17 
 
 
 
 6 19 
 
 1879 ... 
 
 9 
 
 16 
 
 
 
 7 4 
 
 0! 7 8 
 
 
 
 6 14 
 
 1 8S0 (first year 
 
 10 
 
 19 
 
 
 
 9 19 
 
 01 8 8 
 
 
 
 7 12 
 
 of duties). 
 
 
 
 
 
 1 
 
 
 
 1881 
 
 II 
 
 
 
 
 
 10 2 
 
 o| 8 6 
 
 
 
 7 19 
 
 1882 ... 
 
 10 
 
 8 
 
 
 
 8 I 
 
 
 
 7 14 
 
 
 
 740 
 
 1883 ... 
 
 9 
 
 5 
 
 
 
 7 7 
 
 7 6 
 
 ° 
 
 6 17 
 
 Average for six 
 years. 
 
 £^0 
 
 5 
 
 
 
 £S 6 
 
 o!i:7 16 
 
 6| 
 
 £744 
 
 It was estimated at that time that the cost of 
 production of a ton of wheat averaged in all 
 Prussia £(^ los., varying from £$ 17s. 6d. in the 
 far East to ;^io los. in the South (Province of 
 Saxony), while the price was in some markets £^ 
 and even less. Even on the intensive farms of 
 Thuringia corn could not be grown for less than 
 £"9 17s. bd., and it only brought the grower £8. 
 
THE SUPPLEMENTARY TARIFFS. 87 
 
 Not only so, but the corn imports had further 
 increased. The following were the imports and 
 exports in 1884 as compared with 1878 : — 
 
 
 In tons. 187S. 
 
 In tons. 1S84. 
 
 Wheat 
 Rye.. .. 
 Barley 
 Oats.. 
 Maize 
 
 Imports. 
 1,055,000 
 
 945,000 
 434,500 
 290,000 
 114,000 
 
 Exports. 
 
 785,000 
 196,000 
 266,000 
 134.500 
 20,650 
 
 Excess of 
 Imports. 
 270,000 
 749,000 
 168,500 
 155,500 
 93,350 
 
 Imports. 
 
 582,530 
 842,530 
 433,540 
 365,960 
 191,990 
 
 Exports. 
 36,190 
 
 6,280 
 
 37,260 
 
 18,520 
 
 410 
 
 Excess of 
 Imports. 
 
 546,340 
 836,250 
 396,280 
 347,440 
 191,580 
 
 Totals . . 
 
 2,838,500 [ 1,402,150 1 1,436,350 
 
 2,416,550 
 
 98,660 
 
 2,317,890 
 
 And while the farmer had not been benefited 
 there was no pretence that his labourers had fared 
 better. 
 
 Once more the cry for help was raised by this 
 depressed industry ; alike in the Reichstag and the 
 federal Legislatures there w^as constant talk of 
 *' threatened existences " and urgent appeal to the 
 all-powerful State to complete the good work of 
 relief and redemption which it began five years 
 before. Prince Bismarck did not hesitate to 
 respond to the call. Early in 1885 he introduced 
 a Bill revising the tariff on both sides. The 
 expose des motifs which accompanied it claimed that 
 the law of 1879 " has in general been attended 
 by beneficial results for our economic life," and 
 that the country's " economic development has 
 been diverted from a false course into one which 
 will enable energetic and discerning effort to com- 
 pete successfully with other countries both in the 
 home and foreign markets." 
 
88 PROTECTION IN GERMANY. 
 
 It was held, however, that '' a natural develop- 
 ment and improvement " of the tariff was neces- 
 sary to the better attainment of the goal then 
 chosen. Once again Prince Bismarck stepped 
 into the arena and championed the cause of Pro- 
 tection against its critics, boldly claiming that, in 
 spite of the necessity for severer duties, the existing 
 tariff had worked well according to its limitations. 
 Agriculture was, as before, his special concern. 
 
 " The fear has been expressed," he said on 
 February loth, 1885, "that the price of corn will in 
 consequence of the higher duties increase very con- 
 siderably, and that social dangers will thus arise. 
 Well, you will remember that six years ago the same 
 prophecies were made in this very hall, and in part 
 by the men who have spoken to-day or who will yet 
 speak. We were told that prices would reach such 
 a height that they would curtail the labourer's 
 earnings and food, and that we were inviting the 
 social dangers which we desired to resist and remove. 
 All these prophecies have proved false ; not one of 
 them has been fullilled. The corn laws of that time 
 have everywhere worked beneficently. Only in one 
 direction have they proved ineffective where the 
 reverse was perhaps expected, though not by me, for 
 I thought otherwise : they have not had the effect of 
 improving the prices of agricultural produce. On 
 the contrary, corn is now cheaper than it has been 
 for a long time, and in proportion to the present 
 value of money cheaper than it has ever been this 
 century. The effect then predicted has in no way 
 been produced. Whether it will be produced when 
 the duty is trebled I will not venture to say with 
 certainty, though I hardly think it probable. It may, 
 however, be the case, and if it is, well and good, for 
 the farmer will benefit by an increase in prices ; but 
 if not, the duties will certainly be borne by foreign 
 
THE SUPPLEMENTARY TARIFFS. 89 
 
 countries, and why should not the Finance Minister 
 of the German Empire accept the duties which 
 America and Russia are willing to pay him ? . . . 
 In any case I should rejoice if the law led to an 
 increase of prices, for the improvement of the position 
 of the farmers would be far from injuring others. 
 
 " I hope that the price of corn may increase. I 
 hold its increase to be necessary. There must be a 
 limit when the State must try to raise the price of 
 corn. Just you imagine the price of rye falling to 
 50 pfennige a hundredweight, or I will name the 
 price which now and again really occurs in the inner 
 Russian Governments, the price of one mark. Is it 
 not quite clear that our agriculture would then be 
 absolutely ruined — that it would not be able to exist 
 any longer — and with it all the labourers and all the 
 capitalists dependent upon it? Quite apart from the 
 farmer — who is, of course, a corpus vile on which 
 the town folk can experiment, tliough it must be 
 remembered that the towns would no longer have 
 bu3-ers in the farmers — the labourers would be with- 
 out employment and would stream to the towns. In 
 short, it is undoubtedly a national calamity when the 
 price of corn, the everyday means of subsistence, falls 
 below the rate at which it can be cultivated with us, 
 I will regard the maxim as admitted, that there is a 
 limit below which the price of corn cannot fall 
 without the ruin of our entire economic life. The 
 question then is : Has this limit been reached or not ? 
 Minister Lucius has given us statistics which must 
 compel us to admit that it has already been reached. 
 Rut it should not be reached ; for when it is reached 
 it will be too late, and we shall already have suffered 
 most enormous losses. . . . When rye with us falls 
 to a price at which it cannot be cultivated, we are 
 living in unsound conditions and are going to decay. 
 This decay may be deferred by the use of the capital 
 we may have laid up, but that we create an unte- 
 nable situation is as clear as that two and two make 
 four." 
 
Bismarck was, as we have seen, quite correct in 
 claiming that the price of corn had not increased, 
 but it is fair to add that the duties deserved no 
 thanks for this, since Germany still paid more for 
 her grain than non-protected countries. The 
 Bill increased the duties on timber and wood ware 
 also, and on a number of industrial articles, chiefly 
 laces and silks. It passed through its various 
 stages without serious opposition, and was Anally 
 accepted on May 13th by a large majority (igg 
 to 105), made up for the most part of the old 
 comrades in arms, the Conservatives, Clericals 
 and National Liberals. The important alterations 
 in the tariff were the following, the duties being 
 per ton : — 
 
 Tariff. 
 
 
 
 1879 
 
 d. 
 
 1885 
 £ 5. 
 
 d. 
 
 Wheat 
 
 
 10 
 
 
 
 I 10 
 
 
 
 Rye 
 
 Oats 
 
 
 10 
 10 
 
 
 
 
 I 10 
 15 
 
 
 
 
 Buckwheat 
 
 
 10 
 
 
 
 10 
 
 
 
 Legumes 
 
 
 10 
 
 
 
 10 
 
 
 
 Barley ... 
 
 Rape and rapeseed 
 
 Maize 
 
 
 5 
 3 
 5 
 
 
 
 
 
 
 15 
 10 
 
 10 
 
 
 
 
 
 Malt 
 
 
 12 
 
 
 
 I 10 
 
 
 
 Ground grain ... 
 
 
 I 10 
 
 
 
 ••• 3 15 
 
 
 
 Timber (where altered) 
 Laces 
 
 IS. to 
 
 6 5 
 
 15s. 
 
 
 2S. to 
 
 ... 8 15 
 
 £3 
 
 
 
 Silk knitted, and la 
 
 ce 
 
 
 
 
 
 clothing goods 
 Ditto of half silk 
 
 • • • 
 
 450 
 225 
 
 
 
 
 ... 600 
 •■■ 338 ^5 
 
 
 
 
 Artificial flowers 
 
 ■ • ■ 
 
 150 
 
 
 
 ... 400 
 
 
 
 Sewing cotton ... 
 
 ... 
 
 18 
 
 
 
 ■•• 35 
 
 
 
v^ V^ J. X 
 
 L 3^a Jk. ^ J. , 
 
 Tarifif. 
 
 Cocoa, chocolate, and 
 
 1879. 
 £ 5. d. 
 
 1885. 
 £ 5. d. 
 
 surrogates 
 
 Mineral oils 
 Silk thread 
 
 40 o o 
 
 500 
 
 100 o o 
 
 30 o o 
 
 300, 
 
 50 10 o 
 
 The duties on live stock were increased as 
 follows : — 
 
 Horses 
 
 Mules and donkeys 
 
 Cattle 
 
 Oxen 
 Calves 
 
 Pigs 
 
 Sheep 
 
 Lambs 
 
 Goats 
 
 each 
 
 1879. 
 £ s. d. 
 
 10 o 
 
 ID O 
 
 4s. to 6s. 
 100 
 
 2 O 
 2 6 
 I o 
 o 6 
 free 
 
 1885. 
 
 £ s. d. 
 
 I p o 
 
 10 p 
 
 5s. to 9s. 
 
 I 10 o 
 
 3 o 
 
 6 o 
 
 I o 
 
 p 6 
 
 free 
 
 The new tariff was thus essentially a sop to 
 agriculture, and the higher duties given to 
 industry were of the nature of an apology and a 
 solatium. Indeed, it was not clear that industry 
 desired them. The Hamburg Borsen Halle re- 
 ported a curious incident : — 
 
 "On the second reading the Clerical Deputy Trim- 
 born brought forward a proposal to increase the 
 duties on silk and half-silk goods ' in the interest of 
 the Crefeld industry,' which, however, telegraphed an 
 emphatic protest, so that on a vote no one, not even 
 the proposer himself, supported these increased duties. 
 In spite of this, the Protectionist Economic Union on 
 the day for taking the third reading again brought 
 forward various proposals for increasing the duties, 
 and this time they were carried without time for 
 
92 PROTECTION IN GERMANY. 
 
 proper discussion being allowed. The Employers' 
 Association of Crefeld had in the meantime, through 
 questions put to its members, proved that ninety 
 manufacturers, who through the importance of their 
 business represented the great bulk of the Crefeld silk 
 industry, were opposed to the increase, while only 
 twenty-five pronounced in its favour." 
 
 The only argument advanced in the Reichstag 
 in support of higher duties was that fifty manu- 
 facturers were " understood " to desire more pro- 
 tection, while nearly twice the number actually 
 petitioned against it. 
 
 Nor afterwards was industry by any means 
 cordial in appreciating the Government's unsought 
 attentions. The Chamber of Commerce of Leip- 
 zig, in their report for 1886, recalled with longing 
 the restful era of Free Trade, when manufacturers 
 and merchants, if unprotected, were at any rate 
 free from disturbance and alarms. They uttered 
 their 
 
 "regrets at the continual proposals for the modi- 
 fication of the customs tariff, which follow one 
 another so rapidly that trade and industry have no 
 longer that peace which is the first condition of a 
 prosperous course of business relationships and of 
 healthy economic development. , . . The degree to 
 which the demands for protection against the natural 
 development of things have graduallv advanced is 
 illustrated by a petition addressed to" the Reichstag 
 by the directors of the Pomeranian Agricultural 
 Society asking, among other far-going claims, for an 
 import duty of 100 marks per double cwt. of washed 
 wool and one of from 60 to 80 marks on raw wool 
 by means of a special emergency law in the interest 
 of agriculture. ... It is more than questionable 
 
THE SUPPLEMENTARY TARIFFS. 93 
 
 whether the petitioners themselves would, even if 
 their demand were granted, be disposed to increase 
 their production of wool to any great extent. That 
 German agriculture, which now only supplies about 
 one-tenth of the total consumption of German 
 industry, could ever again be able to produce the 
 whole both in quantity and quality is inconceivable. 
 A large part of German industry has been built upon 
 the imports of foreign wool, and just as it buys most 
 of its raw material abroad, so it sends abroad a large 
 part of its products. Even the small cloth-making 
 industry, which was formerly the principal customer 
 of the German wool producers, is compelled to buy 
 certain kinds of wool abroad. That the develop- 
 ment of the German woollen industry has taken place 
 at the expense of German sheep breeding is an entirely 
 untenable assertion. The German farmers no longer 
 find it to their interest to produce the kinds of wool 
 which the prevailing factories require. So far as they 
 carry on sheep breeding at all, they attach most 
 importance to the production of meat, as being more 
 remunerative." 
 
 Other Chambers of Commerce received the 
 Government's proposals more sympathetically, 
 but the foregoing episode is a fair illustration of 
 the difficulty which was experienced in conciliating 
 conflicting interests. 
 
 On the other hand, agriculture, which did desire * 
 more Protection, was doomed again to disappoint- 
 ment, for the higher duties were no more successful 
 than the lower in arresting the fall of prices, which 
 continued during the following two years, and 
 reached their lowest point in Germany in 1887, in 
 Austria and Hungary and Holland in 1888, and in 
 England, Denmark and Russia in 1889. According 
 
94 
 
 PROTECTION IN GERMANY. 
 
 to the returns of the Prussian Statistical Office, 
 the following were the average prices for the 
 whole of the monarchy per ton : — 
 
 Only in i8gi did a decided check set in. 
 
 The late Professor Albert Schaffle, writing in 
 
 1892, thus described the operation of Protection 
 
 up to that date : — 
 
 " The quite extraordinary increase in land values 
 from the middle of the 'lit'ties to the middle of the 
 'seventies greatly increased the prices of commodities 
 and leasehold rents as well. When later a strong 
 decline of the net return set in, it was not easy to 
 fall in with the new condition of things. There 
 lived and lives an entire generation of landowners 
 who invested their capital in the land in the expecta- 
 tion of higher net returns and have mortgaged them- 
 selves in so doing. There were also a great many 
 lessees whose eighteen-years' contracts ran on far 
 into the lean years. The population had grown in 
 the earlier favourable times ; a generation, increased 
 in the meantime, is building up families now, indeed, 
 when longer crises and even a condition of need are 
 setting in, and it continually overpays both in land 
 purchase and in rent. Large numbers have fallen 
 into debt more or less in the mere purchase of their 
 land, and the working funds which should have 
 facilitated the transition to a more intensive culture 
 and the necessary uivestments of capital are now 
 
THE SUPPLEMENTARY TARIFFS. 95 
 
 wanting. Nay, these funds are becoming less and less 
 as reduced profits, and even deficits, have to be faced 
 year after year, since losses and interest have consumed 
 the capital itself. Hence the advice that they should 
 immediately adapt themselves to the new conditions 
 is in the case of many people rather superfluous. 
 Those who are already up to the neck in water 
 prefer to clutch greedily at the rope of monetary 
 palliatives if such are offered."* 
 
 Two years passed, and once more the agricul- 
 tural party reminded the Government of their 
 obligation, and 1887 saw a further increase of the 
 corn and live stock duties. The duty upon wheat 
 and rye was raised from £1 los. to £2 ids. 
 per ton, a rate then equalled by no other 
 European country. The duty in Spain was 
 £2 2s. 6d. for wheat and £1 10s. lod. for rye, in 
 France it was £2 and 8s. ^d. respectively ; in 
 Austria-Hungary it was £1 lys. 6d. for both ; 
 while in Russia, Roumania, Belgium and Holland, 
 as in England, corn remained free. The duty on 
 oats was increased from 15s. to £2 per ton, and 
 that on buckwheat and legumes from los. to £1. 
 
 Side by side with the protection given by the 
 tariff the revision of the railway tariff was demanded 
 at this time, so that the administrations of the 
 important State lines might no longer neutralise 
 the economic policy of the Government to the 
 prejudice of agriculture. Soon another form of 
 protection was sought and obtained in the form of 
 
 1 "Zur wissenschaftlichen Orientierung liber die neueste 
 Handelspolitik," in Tiibingcr Ztitschrift, 1892. 
 
94 
 
 PROTECTION IN GERMANY. 
 
 to the returns of the Prussian Statistical Office, 
 the following were the average prices for the 
 whole of the monarchy per ton : — 
 
 Wheat. 
 
 Rye. 
 
 Barley. 
 
 Oats. 
 
 Potatoes. 
 
 Hay. 
 
 £. s. d. 
 
 £, s. d. 
 
 C s. d. 
 
 £ s. 
 
 d. 
 
 £ s. d. 
 
 £ s. d. 
 
 1S71 -7. 
 
 
 .11 5 
 
 8 19 
 
 8 II 
 
 8 S 
 
 
 
 300 
 
 3 12 
 
 r88i . 
 
 
 . 1 II 
 
 10 2 
 
 860 
 
 7 19 
 
 
 
 2 17 
 
 3 14 
 
 1S82 . 
 
 
 . 1 10 8 
 
 S I 
 
 7 14 
 
 7 4 
 
 
 
 290 
 
 3 9" 
 
 1883 . 
 
 
 •'950 
 
 7 7 
 
 7 6 
 
 6 17 
 
 
 
 3 I 
 
 340 
 
 188.1 ■ 
 
 
 . 1 8 13 
 
 770 
 
 790 
 
 7 4 
 
 
 
 290 
 
 3 I 
 
 1885 . 
 
 
 .820 
 
 7 3 
 
 730 
 
 7 3 
 
 
 
 260 
 
 2 14 
 
 1886 . 
 
 
 7 17 
 
 6 14 
 
 6 15 
 
 6 13 
 
 
 
 210 
 
 300 
 
 1887 . 
 
 
 840 
 
 650 
 
 680 
 
 5 13 
 
 
 
 260 
 
 300 
 
 1888 . 
 
 
 8 14 
 
 6 15 
 
 6 15 
 
 6 10 
 
 
 
 2 12 
 
 380 
 
 i88q . 
 
 
 930 
 
 7 16 
 
 7 II 
 
 7 II 
 
 
 
 2 12 
 
 360 
 
 Only in i8gi did a decided check set in. 
 
 The late Professor Albert Schaffle, writing in 
 
 1892, thus described the operation of Protection 
 
 up to that date : — 
 
 " The quite extraordinary increase in land values 
 from the middle of the 'lifties to the middle of the 
 'seventies greatly increased the prices of commodities 
 and leasehold rents as well. When later a strong 
 decline of the net return set in, it was not easy to 
 fall in with the new condition of things. There 
 lived and lives an entire generation of landowners 
 who invested their capital in the land in the expecta- 
 tion of higher net returns and have mortgaged them- 
 selves in so doing. There were also a great many 
 lessees whose eighteen-years' contracts ran on far 
 into the lean years. The population had grown in 
 the earlier favourable times ; a generation, increased 
 in the meantime, is building up families now, indeed, 
 when longer crises and even a condition of need are 
 setting in, and it continually overpays both in land 
 purchase and in rent. Large numbers have fallen 
 into debt more or less in the mere purchase of their 
 land, and the working funds which should have 
 facilitated the transition to a more intensive culture 
 and the necessary mvestments of capital are now 
 
THE SUPPLEMENTARY TARIFFS. 95 
 
 wanting. Nay, these funds are becoming less and less 
 as reduced profits, and even deficits, have to be faced 
 year after year, since losses and interest have consumed 
 the capital itself. Hence the advice that they should 
 immediately adapt themselves to the new conditions 
 is in the case of many people rather superfluous. 
 Those who are already up to the neck in water 
 prefer to clutch greedily at the rope of monetary 
 palliatives if such are offered."* 
 
 Two years passed, and once more the agricul- 
 tural party reminded the Government of their • 
 obligation, and 1887 saw a further increase of the 
 corn and live stock duties. The duty upon wheat 
 and rye was raised from £1 los. to £2 ids. 
 per ton, a rate then equalled by no other 
 European country. The duty in Spain was 
 £2 2s. 6d. for wheat and ;^i los. 10^. for rye, in 
 France it was £2 and 8s. 4^. respectively ; in 
 Austria-Hungary it was £1 17s. 6d. for both; 
 while in Russia, Roumania, Belgium and Holland, 
 as in England, corn remained free. The duty on 
 oats was increased from 15s. to £2 per ton, and 
 that on buckwheat and legumes from los. to ;^i. 
 
 Side by side with the protection given by the ' 
 tariff the revision of the railway tariff was demanded 
 at this time, so that the administrations of the 
 important State lines might no longer neutralise 
 the economic policy of the Government to the 
 prejudice of agriculture. Soon another form of ^ 
 protection was sought and obtained in the form of 
 
 ' "Zur wissenschaftlichen Orientieriing iiberdie neueste 
 Handelspolitik," in Tiihinger Zdtschrift, 1893. 
 
96 PROTECTION IN GERMANY. 
 
 veterinary measures aiming at the exclusion of 
 foreign live stock, and with these the agrarians 
 may be said to have avowed the egoism of their 
 endeavours and to have reduced fiscal policy to a 
 calculated system of direct State relief. And the 
 result for the consumer ? Conrad has estimated 
 that from 1851 to 1870 the price of wheat was 
 ^2 2S. less per ton in Prussia than in England ; 
 from 1871 to 1880 the difference had sunk to 3s. ; 
 then from 1881 to 1885 the price in Prussia was 
 gs. higher, from 1886 to 1889 it was £1 12s. 
 higher, and in 1890 it was £2 4s. higher. In 
 some parts of Germany the difference in 1889 
 was as much as £2 i8s., and in 1890 £^ 6s. 
 Again, while in the later 'eighties the price of wheat 
 in Prussia, Bavaria and Baden fell 12 per cent, 
 as compared with 1879 to 1883, it fell in England 
 32 per cent., in Denmark 34, in Odessa 31, and in 
 Pesth 29 per cent. So with oats, while the price 
 before 1879 was more in England than in Prussia, 
 it was equal in 1888; then in 1889 it was 
 13s. dearer in Prussia, and in 1890 it was ^i 
 dearer. According to Matlekovits, the price of 
 wheat increased in Germany with a duty of los. 
 per ton (1879) ys. ; with one of £1 10s. (1885) £1 ; 
 and with one of £2 los. (1887) £2, as compared 
 with Free Trade countries generally. 
 
 If the agriculturist, however, had to lament low 
 prices, so also had the industrialist, and they con- 
 tinued to decline from 1880 almost throughout 
 the whole of the decade. According to Soetbeer 
 
THE SUPPLEMENTARY TARIFFS. 97 
 
 (Conrac 
 
 I's" 
 
 Jahrbucher," i8go),the 
 
 prices of com- 
 
 modities from 
 
 1882 to i88g compared 
 
 as follows 
 
 with those 
 
 of 
 
 1881, the latter being 
 
 taken as 
 
 100 : — 
 
 
 
 
 
 
 
 Imports, Exports. 
 
 In general. 
 
 1881 .. 
 
 Index 
 
 100 ... Index 100 ... In 
 
 dex 100 
 
 1882 .. 
 
 
 
 99-8 ... 
 
 1007 . 
 
 
 100-3 
 
 1883 .. 
 
 
 
 98-2 .. 
 
 98-5 
 
 
 98-4 
 
 1884 .. 
 
 
 
 93"3 •• 
 
 92-8 
 
 
 93-I 
 
 1885 .. 
 
 
 
 85-8 .. 
 
 85-8 
 
 
 85-8 
 
 18S6 .. 
 
 
 
 85-4 .. 
 
 83-8 
 
 
 84-6 
 
 18S7 .. 
 
 
 
 85-5 •• 
 
 83-5 
 
 
 84-5 
 
 1888 .. 
 
 
 
 85-4 .. 
 
 847 
 
 
 85-0 
 
 1889 .. 
 
 
 
 88-6 .. 
 
 87-2 
 
 
 87-9 
 
 The wages of the working classes, meantime, 
 slightly increased, though less because of the 
 "protection of national labour" than because of 
 the higher cost of living, and even so the conces- 
 sions made were rarely volunteered ; they were 
 won by coalition and by strike. Moreover, dearer 
 food, rising rents, and heavier taxation combined 
 to nullify the advantage of freer earnings, and the 
 actual condition of labour was no better. In 1891 
 and 1892 the cost of living was higher in Germany 
 than ever since Protection was re-introduced. 
 
 P.G. 
 
 H 
 
98 PROTECTION IN GERMANY. 
 
 CHAPTER VII. 
 
 THE COMMERCIAL TREATY ERA. 
 
 *' A CERTAIN weariness of the universal rivalry in 
 national trade exclusiveness has now, after twelve 
 years, set in, and that not only in trade, but even 
 in industry, which more and more recognises that 
 the modern protective system cuts both ways, and 
 also amongst the Governments who struggle for 
 commercial-political ' stability ' and would like 
 to lower the barriers somewhat." So wrote in 
 1892 the late Professor Albert Schaffle, a political 
 economist who was detached from all hide-bound 
 theories of Free Trade and who never hesitated to 
 defend protective measures as an educational 
 expedient and as a means of staving off economic 
 crises. It was a view of the position which had 
 forced itself upon most thoughtful and disinterested 
 observers, and not least upon the head of the 
 Imperial Government himself — at that time Count 
 von Caprivi. True, Germany had not gone so far 
 in Protection as some other countries, save in her 
 corn duties, for here only America and France 
 equalled her. Taking European countries only, 
 France could claim to be the most protected of all, 
 then came Austria, then Italy, and Germany made 
 a good fourth. Still, for her own interests 
 
THE COMMERCIAL TREATY ERA. 99 
 
 Germany had gone too far, and she had come 
 to know it. The fruit of this knowledge was the 
 series of commercial treaties which fell to the years ^' 
 1892-94, and which lasted until the end of 1903. 
 
 Various moments combined to bring about a 
 reaction against the exaggerated system of Protec- 
 tion which had been built up in the course of 
 twelve years. On the agricultural side it was 
 attacked by those potent influences to which sec- 
 tional legislation has again and again had to 
 succumb — popular discontent and hostility. The 
 year 1891 saw Germany exposed to a condition of ^ 
 scarcity. The harvest had failed ; the price of 
 corn rose to an alarming height ; hunger stalked 
 through the streets gaunt and menacing. In 
 Prussia the price of wheat between 1886 and 1890 
 averaged £8 15s. per ton ; in 1891 it rose to 
 jTio i8s. Similarly the price of rye increased from 
 £y 3s. during the preceding five years to j^io 4s. 
 In Berlin the prices of these cereals rose to £"11 4s. 
 and ;£"io IIS. respectively. 
 
 " How will the introduction of a corn duty benefit 
 the peasant class ? " asked an economic writer before 
 the tariff of 1879 came into operation. "This duty 
 has existed until twenty years ago, and when it was 
 abolished no one shed a tear, and least of all the 
 peasants. But even the great landowners should bear 
 in mind that the corn duty was suspended at least in 
 all years in which scarcity threatened, because the 
 home harvest proved insufficient to feed our people, 
 and that is the rule, for we cannot live without corn 
 imports."^ 
 
 » Karl Braun, " Der Staat und die Volkswirthschaft," 1879. 
 
 H 2 
 
loo PROTECTION IN GERMANY. 
 
 Once more history repeated itself. The corn 
 duties were suspended in the presence of an 
 imminent famine, and so impressed were they by 
 the anomaly of their position that the very leaders 
 of the agrarian party in the Reichstag voted for the 
 reversal of their own policy. It was the low corn 
 prices of 1878 that made protective duties possible ; 
 the high prices of 1891 made them for the time 
 being impossible. Nevertheless, the crisis did 
 not pass over without violence. Not since the 
 memorable " March days " of 1848 had Berlin been 
 the scene of such alarming popular demonstrations 
 and riots as took place there in the closing days of 
 February, 1902. Hunger and want of work were 
 the main causes of the outbreaks, and for several 
 days a veritable reign of terror prevailed in certain 
 quarters of the city. Some of the streets fell into 
 the hands of the mob ; shops and houses were 
 looted ; property was destroyed wholesale ; ob- 
 noxious persons were victimised ; the police were 
 set at defiance ; and the wildest elements in the 
 population for a time had things their own way. 
 
 On the industrial side also the tariff had proved 
 no less vulnerable, no less irksome, no less imprac- 
 ticable. " The system of a general State guarantee, 
 by means of customs duties, of industrial interest 
 and agricultural rent," wrote Schaffle in 1892, 
 '* has not succeeded, but has disappointed almost 
 all the expectations based upon it." Germany's 
 foreign trade had greatly increased — her imports 
 between 1881 and i8go advancing from 14,800,000 
 
THE COMMERCIAL TREATY ERA. loi 
 
 tons, of value £"114,500,000, to 28,100,000 tons, 
 of value 3^213,600,000, and her exports from 
 16,600,000 tons, of value ;£*i52,ooo,ooo, to 
 19,300,000 tons, of value £"170,450,000 — but it 
 was impossible to attribute this increase to Pro- 
 tection. " So far as the effect of the increased 
 industrial duties in their protective aspect goes," 
 said the same writer, " while they have not 
 prevented the growth of imports, they have had 
 but the slightest demonstrable influence on the 
 increase of exports. Even without these duties it 
 is doubtful whether the movements of imports and 
 exports would have taken a different form." 
 Examining the course of trade in various staple 
 industries during the 'eighties, Schaffle came to the 
 following conclusions. We have seen that it was 
 the assumed needs of two great industries, the iron 
 and textile industries, which gave to the protective 
 movement its strongest impetus. After ten years 
 of a severe tariff it was found that imports and 
 exports equally had increased in some branches of 
 these industries and had decreased in others. The 
 imports of pig-iron in 1881 were 244,601 tons, and 
 though they fell 157,162 tons in i88g it was to rise 
 again to 385,328 tons in i88g. The imports of 
 malleable bar-iron increased from 14,198 to 28,942 
 tons. For a time the imports of iron wire and iron 
 goods generally fell, but by 1890 they had exceeded 
 the amount of 1881 to the extent of 100, 150, 200, 
 and (in the case of fine wire) 400 per cent. The 
 exports of angle iron, railway rails, sleepers, and 
 
102 PROTECTION IN GERMANY. 
 
 plates, and both rough and fine iron goods^ 
 increased, though not equally. The value of the 
 exports of iron wire fell from £2,200,000 in 1881 to 
 £900,000 in 1890. Schaffle claims that neither the 
 import nor the export movement in this industry 
 can be called in evidence in support of Protection. 
 " It is notorious that the iron rings and rail cartels, 
 which were favoured by the protective system, 
 compelled even the railway administrations at 
 times to purchase abroad." 
 
 The same story was told by the textile trade. 
 The imports of cotton yarn increased from 
 16,475 tons in 1881 to 18,808 tons in 1890, 
 though in some intervening years they were still 
 more, while the exports fell from 18,371 tons to 
 7,180 tons, and at times even lower. The imports 
 of cotton goods increased from 1,392 tons to 
 1,462 tons, with fluctuations in the interval, and 
 the exports of heavy goods increased from 14,460 
 tons to 15,458 tons. "This movement in the 
 cotton yarn and cotton goods trade would perhaps 
 have been the same even without the revision of 
 the tariff in 1879. In any case it has not pro- 
 moted any special development of the trade, 
 while on the contrary it has, by inviting tariff 
 retaliation, more and more led to decreased 
 exports, and by inducing over-production has 
 caused crises in the home market." The imports 
 of woollen yarn and woollen goods increased 
 slightly between 1882 and 1890, the exports very 
 largely. " Here the protective duties were of 
 
THE COMMERCIAL TREATY ERA. 103 
 
 some effect, though in the end it was greatly 
 neutrahsed by foreign retahation." Of hnen 
 yarn and linen goods there was an increased 
 import until 1885, when the duties were increased, 
 and after then a decline. The exports of the 
 same increased considerably in quantity, but little 
 in value. Finally, the imports of the silk trade 
 increased but little, while the exports fell off 
 slightly. 
 
 Schaffle adds by way of summary : — 
 
 " The position of these two great branches of 
 industry showed unquestionably in 1890 a greater 
 export capacity. The imports of finished iron manu- 
 factures of all kinds had a value of i8'4 million 
 marks, and the exports one of 1587 millions. The 
 imports of textiles of all kinds had a value of only 
 46*4 million marks, and the exports one of 425"2 millions ; 
 the imports of hosiery had a value of i'7 million 
 marks, and the exports one of 1067 millions ; the 
 imports of dress goods, finished personal linen, and 
 millinery a value of 5"2 million marks, and the exports 
 one of i2i"3 millions. It would, however, be very 
 presumptuous to ascribe this to Protection. At the 
 end of the fifteen years' epoch of Free Trade the 
 exports of iron manufactured and half-manufactured 
 goods and of finished textile goods increased likewise 
 far beyond the imports." 
 
 Coming to smaller industries, the imports of 
 glass largely increased in quantity and for the 
 most part in value as well, while the exports 
 increased to a greater degree both as to quantity 
 and value. The same thing happened in the case 
 of musical instruments, also of rubber goods, "but 
 certainly not in consequence of the protective 
 
system." The imports of cork goods largely 
 increased, the exports were stationary. The 
 exports of leather and leather goods decreased, 
 but the contrary was the case with paper and 
 paper goods. The imports of porcelain increased 
 more than the exports, while both the imports 
 and exports of earthenware increased. The 
 imports of watches increased four-fold in value, 
 while the exports of clocks largely increased. 
 On the whole, Schaffle concludes, the imports 
 increased in hardly less degree than the exports, 
 and towards the end of the first decade of Protec- 
 tion there was a falling off in many classes of 
 exports due to the retaliation of foreign countries. 
 The effect of Protection upon agriculture so far 
 had been a negative one, for the price of corn had 
 greatly decreased, while the corn grower had no 
 greater monopoly of the home market than before. 
 The imports of wheat increased from 1881 to 1900 
 from 391,949 to 672,587 tons, and the exports fell 
 from 53,338 to 206 tons, with fluctuations in the 
 intervening years. The imports of rye increased 
 from 575,454 to 879,903 tons, and the exports fell 
 from 11,564 to 119 tons. The imports of oats 
 were fairly stationary, and the exports sank from 
 31,591 to 451 tons. Before duties were re-intro- 
 duced, in 1875, 473,500 tons more wheat and 
 rye were imported than were exported ; in 1881 
 (the first annual year after the duties came into 
 force) the excess was 957,858 tons; in 1889 it 
 was 1,574,247 tons. As to other branches of 
 
THE COMMEKCIAJL i KEATY EKA. 105 
 
 agriculture, the prices of live stock and of meat 
 increased all round during the 'eighties, and that 
 not only absolutely, but relatively to other countries 
 which were either without Protection or did not 
 increase their duties during that decade after 
 Germany's example. 
 
 Schaffle's general conclusion was as follows : — 
 
 " That Germany's national production has been 
 prejudiced under this system cannot be concluded 
 from the available figures ; it has in nearly all 
 branches been developed. Whether, however, in 
 spite of or because of protective duties is a point 
 upon which whole columns of controversy might be 
 written. So far as positive proofs are possible in 
 special cases it cannot be denied that the protective 
 system is able successfully to promote trade and pro- 
 duction. . . . On the other hand, we are as opposed 
 now as before to the restrictive application of Pro- 
 tection in the sense of early theory and practice, that 
 is, beyond actually demonstrable needs, and a very 
 different conclusion must be drawn when we consider 
 the effect of the general protection of all branches of 
 national production and trade, amounting to a 
 universal State guarantee of industrial interest and 
 agricultural rent, which has been claimed since 1879. 
 The best that can be said is that our foreign trade, 
 including that in manufactures, has neither in import 
 nor export stood still, but this fact must not as a 
 matter of course, if at all, be claimed to the credit of 
 the system of high Protection. The transit trade and 
 the commission trade in corn, timber, and colonial 
 goods have unquestionably, and in part irremediably, 
 suffered, and with them the railway returns. Industry 
 has on the whole prospered in a gratifying measure, 
 but so it did during the fourteen years of Free Trade 
 prior to 1879. Isolated textile duties, particularly 
 those in the interest of the fine cotton and linen 
 
io6 PROTECTION IN GERMANY. 
 
 spinning industry, have proved a fiasco. The aim of 
 supplying our own needs in corn and timber at home 
 has as little been attained as the stability in prices 
 and rents which was expected from the protective 
 system and indeed predicted of it. Agriculture is 
 more in debt than ever under this system. The 
 imports of cattle have largely declined, but so also 
 have the exports, in part perhaps to the advantage of 
 more intensive cattle breeding and meat farming, 
 but in part with certainty to the injury of agriculture 
 itself." 
 
 If it be objected that these statements refer to 
 a past decade, and deal with matters of ancient 
 history, the answer is that they have been recalled 
 because of their direct bearing upon the com- 
 mercial treaty policy inaugurated by Count von 
 Caprivi. The true verdict upon the tariffs of 
 1879, 1885, and 1887 is contained in the simple 
 fact that the welfare of German industry required 
 in 1892 that the protective barriers should be 
 lowered. However trade had developed at home, 
 
 >J the effect of Protection abroad had been to bring 
 about the old condition of " war of all against 
 all." Directly one country revised its duties its 
 neighbours retaliated. Russia and America had 
 
 -si virtually closed their doors altogether to the out- 
 side world, the latter by the McKinley Tariff of 
 October 6th, 1890, and Russia by her tariff of 
 July, 1901. In England also the growth of the 
 
 ■•i Colonial federation movement gave rise in German 
 minds to the apprehension that one of the most 
 promising of markets might soon be placed under 
 embargo. The uncertainty of international trade, 
 
THE COMMERCIAL TREATY ERA. 107 
 
 the perpetual unrest, and the indefinite fears as 
 to the future conspired to make the German com- 
 mercial world not merely ready but willing to 
 bargain with any country which was prepared to 
 meet concession by concession. It was found, in 
 fact, that tariff warfare was the least practical of 
 all methods of promoting the essentially pacific 
 pursuit of trade. 
 
 Speaking in the Reichstag on December loth, 
 1901, the Chancellor said : — " In this everything 
 that has been written on industry agrees, from 
 the scientific text book to the reports of the 
 Chambers of Commerce, that the first require- 
 ment of every industry is stability, that it may 
 know what are the conditions with which it has 
 to deal." It is the great merit of Count von 
 Caprivi to have recognised the weakness of the 
 fiscal system which he had inherited and to have 
 had the courage to modify it according to the 
 altered conditions and needs of his day. Germany 
 had had commercial treaties for a generation, but 
 the treaties of the Caprivi regime marked a novel 
 departure from past custom. The old treaties "^ 
 were based on fixed, invariable, autonomous 
 tariffs, and most of them included the " most- 
 favoured-nation " clause ; the new ones, while con- 
 taining this clause, were based on " conventional " 
 tariffs, each with certain limitations created ad hoc 
 as the result of special bargaining with the State 
 affected. Germany had hitherto received on the 
 whole better terms than she had given. For 
 
io8 PROTECTION IN GERMANY. 
 
 example, Roumania and Servia did not even 
 enjoy most-favoured treatment. Again, Italy had 
 in 1883 conceded to Germany the reduced rates 
 already given by treaty to Austria and France 
 without receiving much in return. The Spanish 
 treaty of July i2th, 1883, and the Greek treaty 
 of July 4th, 1884, were also in Germany's favour. 
 In his treaty-making the "honest broker" had 
 exacted a rather high commission, and many of 
 the patrons who remained on his successor's books 
 were dissatisfied with the terms. 
 
 In 1891 most of the existing treaties, which 
 included nearly all European States, would expire, 
 and some of these States — Russia, Italy, Switzer- 
 land, and Spain— in anticipation of the necessity 
 of concluding new ones, had already notified their 
 intention to increase their tariffs. It was either 
 a case of renewed retaliation or reciprocity, and 
 Caprivi chose reciprocity. In December, i8gi, 
 
 J. the Chancellor laid before the Reichstag a series 
 of treaties, with Austria-Hungary, Italy, Switzer- 
 land, and Belgium, intended to come into force 
 on February ist, 1892, and to last until December 
 31st, 1903, and thereafter from year to year unless 
 either of the contracting States notified its desire 
 to withdraw twelve months beforehand. They 
 
 ^ all introduced the most-favoured-nation clause, 
 and by special tariffs fixed the duties on both 
 sides for the entire period of twelve years. In 
 every case there was mutual concession, even to 
 
 J the extent of admitting some articles free of duty. 
 
THE, COMMERCIAL TREATY ERA. 109 
 
 In their expose des motifs, published on December 
 7th, the Government enforced the necessity for J 
 stabihty and security of foreign trade, which they 
 admitted to be impossible under existingconditions, 
 and urged the Reichstag to accept these four 
 treaties in the behef that they would ensure more 
 harmonious commercial relationships with an 
 immense market specially interesting, owing to 
 the geographical circumstances, to German enter- 
 prise. Reviewing the events which had led to the 
 adoption of the reciprocity treaty polic)', the 
 Government said : — 
 
 " The commercial and customs policy of Europe 
 has in the last decade been regulated by a far- 
 reaching system of tariff conventions, of which the 
 treaties of France with Belgium, Portugal, and 
 Norway were the starting point. Italy, Austria, and 
 other nations some time later joined the movement 
 and entered into treaties by which the customs tariffs 
 were laid down for a number of years. Germany, 
 however, had taken but little part in the movement. 
 Special treaties by which mutual customs concessions 
 were made were only concluded with Italy, Greece, 
 Spain, and Switzerland. Vis-a-vis the other nations 
 Germany had contented herself with obtaining and 
 granting the general concession of the most-favoured- 
 nation clause and entering into an arrangement with 
 Servia and Roumania regarding the duties on certain 
 specified articles. By the nth Article of the Treaty 
 of Frankfurt Germany and France agreed on com- 
 mercial relations to place each other on the same 
 footing as Great Britain, Belgium, the Netherlands, 
 Switzerland, Austria, and Russia. It will thus be 
 seen that, while Germany preserved a free hand 
 in fixing her own customs duties, she enjoyed, 
 in consequence of the most-favoured-nation clause, 
 
no PROTECTION IN GERMANY. 
 
 the full advantages of the European conventional 
 tariffs. 
 
 " In France, however, where the development of 
 the economic condition of affairs has given rise to 
 great discontent, a strong Protectionist tendency has 
 in the last few years gained the upper hand. It could, 
 therefore, hardly be doubted that the French com- 
 mercial treaty would not extend beyond February ist, 
 1892. This danger exercised more or less an influence 
 on the other treaty-bound nations of Europe, and their 
 desire to protect their home production became more 
 and more clearly apparent. 
 
 " The nearer the critical point — the expiration of 
 the existing European treaties — approached, and the 
 more certain it became that the advantages of auto- 
 nomy in its own tariffs, coupled with participation in 
 the treaty concessions of other States, hitherto enjoyed 
 by Germany, would at that time come to an end, the 
 more the necessity of taking a decision in regard to 
 its future action was imposed upon the German 
 Government. Germany had to decide whether she 
 would follow the example of other States in their 
 Protective tariffs and on her side close the market to 
 foreign goods, thereby considerably contributing to 
 increase the Protectionist movement, or whether she 
 should intervene in time to hinder its further develop- 
 ment, and to obtain a decisive influence over the 
 coming reorganisation of the European customs 
 tariffs in the sense of international arrangement. The 
 decision could only be in favour of the latter course." 
 
 And of the advantages of the new departure the 
 Government said : — 
 
 " These treaties, in their negotiation and in their 
 end, form an inseparable whole, and in the delibera- 
 tions on the concessions made by Germany and the 
 advantages given in exchange therefor, must be 
 regarded as a unity. In the conclusion of these 
 treaties, the object of the Government has been, 
 
THE COMMERCIAL TREATY ERA. iii 
 
 while reserving to Germany the benefit of the neces- 
 sary protection for national industries, to keep open 
 as far as possible foreign markets for her commerce. 
 The concessions which Germany has had to make 
 are, when regarded as a whole, not inconsiderable. 
 The Federated Governments are, however, completely 
 aware of their commercial and financial importance, 
 and have in the negotiations striven successfully to 
 limit them as much as possible. The concluding of 
 the treaties for a term of twelve years will bring about 
 the stability in the customs duties earnestly desired 
 by the business world, and the Government entertain 
 the conviction that they will not only do away with 
 the former dangerous fluctuations in the commercial 
 relations of the Empire, but also tend to increase the 
 volume of its trade and commerce." 
 
 Having in an earlier chapter followed in detail 
 the arguments by which Prince Bismarck justified 
 his adoption of a policy of high Protection, it is 
 interesting to compare those advanced by his 
 successor in office in defence of a fundamental 
 departure from that policy. And first, argued 
 Caprivi, Protection, in the form of fixed auto- 
 nomous tariffs (1879, 1885, and 1887), had proved 
 a double-edged weapon, for directly Germany had 
 erected higher barriers her neighbours did the 
 same : — 
 
 " As soon as other States began to make attempts 
 to obtain the same advantages, the wished-for benefits 
 were rapidly turned into disadvantages. These fixed 
 autonomous tariffs helped to favour home industries 
 at a time when technical skill was undergoing great 
 development, but Germany was restricted to her own 
 markets, which became replete with over-production. 
 Industry, therefore, soon began to suffer for want of 
 
112 PROTECTION IN GERMANY. 
 
 outlets for its goods. Most States began to acquire 
 the advantages of the most-favoured-nation clause, 
 and France and Germany profited in this respect by 
 the article of the treaty of Frankfurt, until Germany 
 at last began to feel the unfavourable side of the 
 arrangement. The most - favoured - nation clause 
 gradually became a cause of general detriment and 
 injury. France then decided upon a maximum and 
 minimum tariff, by w^hich she still profits. Germany 
 feels limited and restricted in her output on foreign 
 markets. The continual increase of imports is a 
 calamity which, in the circumstances, seriously affects 
 German industries, and not only the masters, but also 
 the workmen. The dilhculty had to be dealt with. 
 It is not a question of Free Trade or Protection. These 
 are dogmas and the battle cry of parties, which do 
 not apply to the situation. It is not a question 
 of equalising, balancing, and reconciling opposing 
 interests. It was necessary by means of customs 
 treaties to extend Germany's markets abroad for her 
 exports. This has always been the main object in 
 view throughout the policy of the last twelve years, 
 although obscured by the dispute between the 
 doctrines of Free Trade and Protection. If Germany 
 had continued to favour the policy of the closing up 
 of States against one another it would soon have come 
 to a general conflict. States can shut themselves up 
 one against another, but they will not satisfy them- 
 selves in this way, and are naturally called upon to 
 offer a fair exchange of their products with mutual 
 concessions." 
 
 After declaring that it was his principle to 
 concede nothing without obtaining a full equiva- 
 lent, he referred to the agricultural aspect of the 
 treaty question : — 
 
 " The situation of German agriculture is at pre- 
 sent a most unfavourable one. The corn laws were 
 necessary for its protection, and they are still indis- 
 
thp: commercial treaty era. 113 
 
 pensable. On the other hand, it is certain that in 
 general they have not had the effect expected from 
 them. It is, nevertheless, certain that their existence 
 prevents an agricultural crisis, of which it would 
 be impossible to overrate the evil consequences. A 
 parallel with English conditions is not possible. 
 There it is a question of agricultural magnates, but 
 in Germany a landed proprietor means someone who, 
 with difficulty, extracts an existence from the soil. 
 The chief reason, however, for the necessity for the 
 maintenance of agriculture is exclusively a question 
 of State. I am convinced that such a cultivation of 
 grain is indispensable to us as will, in case of need, J 
 suffice to feed even our increasing population in time 
 of war, and that the State which cannot exist from 
 its own agricultural produce is on the downward 
 path. There may, it is true, sometimes be a bad 
 harvest, but in order to provide against such a con- 
 tingency, especially in war time, we can take the 
 precaution of allying ourselves with grain-growing 
 States on whom we can count even in time of war. 
 I have heard it said that this is an exaggerated view, 
 and that in case of a war with France and Russia 
 we could obtain corn by sea. I would not like to 
 base the existence of the State on such factors. We 
 cannot know what the maritime Powers would, in 
 case of a European conflagration, term contraband of 
 war. In my past life as a soldier I acquired the un- 
 shakable conviction that in the future war the feeding 
 of the army and the nation would be the deciding 
 factor. This deciding factor is affected if agriculture 
 is injuriously affected. But agriculture is able to 
 bear a reduction of the grain duties and yet to 
 prosper. These duties are a heavy burden for the 
 State, as they entail a rise of prices in the necessities 
 of life. The raising of these duties to five marks (per 
 double cwt.) strained the bow too much. Their J 
 existence thereby became a danger to the State, as 
 they formed a reason for popular agitation. The 
 Government, therefore, decided to reduce them." 
 P.G. I 
 
114 PROTECTION IN GERMANY. 
 
 Coming, then, to the interests of industry, he 
 said : — 
 
 " The Government have not neglected the claims 
 of German industries, but have in the new tariff done 
 everything to aid their development. To assure the 
 maintenance and prosperity of the working classes 
 markets must be found. The movement of the work- 
 ing population from east to west, from the country 
 to the town, proves that well-paid work is an equiva- 
 lent for the increased cost of living. Well-paid work 
 will be found if the treaties are accepted. Germany 
 must either export wares or men. With the increas- 
 ing population a corresponding increase of national 
 industry is a necessity. . . . When we hear such 
 things as were said at Erfurt [referring to the Social 
 Democratic Congress], one is involuntarily inclined 
 to regard the people there assembled with a certain 
 amount of dislike. We must not, nevertheless, be 
 blind to the value for Germany of a strong labouring 
 class. We must accustom ourselves to regard the 
 workman less pessimistically, and must not abandon 
 the hope of winning him back to us. Herr Stocker 
 has said in this Assembly that we must not only 
 advance towards the workman, but meet him half 
 way. To do this is the object of these treaties. We 
 still take our stand on the basis of the Imperial 
 Message of 1881, in which it was declared that the 
 reparation of social detriment was not to be effected 
 solely by means of repressive measures, but also by 
 increasing the well-being of the working classes. We 
 consider that in these treaties we have been animated 
 by an equal interest in the well-being of both work- 
 men and employers." 
 
 Speaking, finally, of the political significance of 
 the treaties, he said : — 
 
 " With regard to the political side of the treaties, 
 in the case of Belgium and Switzerland we have 
 
THE COMMERCIAL TREATY ERA. 115 
 
 simply been actuated by an earnest desire to live on 
 friendly and neighbourly terms with those countries. 
 It is otherwise, however, with the Triple Alliance. 
 This has been concluded for the preservation of peace, , 
 and without the least aggressive aim. But when we 
 conclude such an alliance of peace, we cannot carry 
 on a commercial war with our allies. It is our inte- 
 rest to strengthen our allies, so that if, in spite of all 
 our efforts, the peace of Europe should be broken, 
 they may be powerful and able to bear the necessary 
 armaments. We must, therefore, desire that a State 
 with whom we stand in friendly relations should not 
 be permanently in an unfavourable position. The 
 Governments of these States have mutually taken 
 pains to lind a means of effecting an exchange of 
 products. We desire that these treaties should make 
 a deep impression on the population. At the time 
 of Frederick the Great Princes decided questions of 
 peace and war. Even under Frederick the Great, it 
 was more the policy of that great man that carried 
 away the people than the feeling that Prussia was in 
 danger. The secession of a province excited at that 
 time no emotion. The people lived under the new 
 Prince as under their former master. This state of 
 things is a matter of the past. Since the end of last 
 century wars have been wars of nations, and nowa- 
 days nations must aid their rulers, not only with the 
 hand, but also with the heart. War must be a con- 
 sequence of national feeling. This is the ruling 
 spirit of these treaties. Formerly treaties of Cabinets 
 were negotiated Prince with Prince. To-day the 
 principles of these treaties must be incorporated with 
 the soul of the nation. This, let me hope, will be 
 the result and the action of the commercial treaties 
 in question."' 
 
 As a complement to this may fitly be added 
 
 * Speech of December loth, 1891, reported as above in 
 The Times of the following day. 
 
 I 2 
 
ii6 PROTECTION IN GERMANY. 
 
 the estimate which Prince Bismarck, then Hving 
 in restless retirement, passed upon the treaties : — 
 
 " The ex-Chancellor said that more than thirty 
 industries were affected by the reduction of the tariff. 
 If these treaties were properly examined it would be 
 seen that not only Austria and Italy had had con- 
 cessions made to them, but also England, France, 
 and America. . . . And who prepared the treaties ? 
 Privy Councillors and officials who are exclusively 
 consumers, and of whom may be repeated the words 
 of the Bible — ' They sow not, neither do they reap.' 
 Those who do not feel the shoe pinch are the gentle- 
 men who have been entrusted with the preparation 
 of these treaties. The bureaucracy of Germany is a 
 national calamity. I would never have had the 
 courage thus to take a leap in the dark which is to 
 produce results for the next twelve years. The hard- 
 ships of the new treaties will first make themselves 
 apparent after they have been put in force, and then 
 it will be too late to alter them. Everything has till 
 now been prepared in secret. It has been said that 
 under the former regime the same tactics of secrecy 
 were observed, but this is a fiction. In 1878 we 
 began to discuss the tariff question in public ; we 
 observed what the English call ' fair play,' and the 
 French cartes sur table. This time, however, secrecy 
 has been observed throughout, and now the Reichstag 
 is called upon to dispose of the whole matter in a 
 few days."^ 
 
 During the discussions in the Reichstag the 
 treaties received from the Protectionist parties 
 much more opposition than fell to them when the 
 time came for a definitive vote, while the popular 
 parties of all shades welcomed them enthusiastically 
 
 ^ A speech at Friedrichsruh, reported in The Times of 
 December 15th, 1891. 
 
THE COMMERCIAL TREATY ERA. 117 
 
 as an instalment of Free Trade. Nevertheless, 
 there was the inevitable conflict of interests, 
 agriculture pitting itself against industry, and 
 vice versa ; varied now and then by recrimination 
 and protest where suspicion arose that raw 
 materials were being favoured at the expense 
 of manufactured goods or manufactured goods at 
 the expense of raw materials. It was not with- 
 out reason that the Government had, in their own 
 words, " declined to consult the various industries 
 concerned, believing that in not obtaining the 
 advice of interested parties they would be less 
 biassed than they might otherwise have been." It 
 is significant of the prevalent state of political 
 feeling and of the tension which tariff warfare had 
 produced that the first of these reciprocity treaties, 
 that with Austria, was approved in the Reichstag 
 on December i8th by a majority of 243 against 
 48, and that 28 members of the Conservative 
 party voted for it. The treaties with Italy and 
 Belgium were then accepted in the same sitting 
 without opposition. It was the great triumph of 
 Caprivi's Ministerial career, and industrial and 
 commercial Germany was not slow or ungrudging 
 in awarding him the thanks and admiration which 
 his achievement deserved. The Emperor's recog- 
 nition of this successful inauguration of the " new ^ 
 course " took the form of a title, and the soldier 
 statesman became henceforth a Count. The words 
 in which, on December i8th, the Sovereign signi- 
 fied the bestowal of this dignity did not exaggerate 
 
ii8 PROTECTION IN GERMANY. 
 
 the merits of one of the most faithful, most 
 conscientious, and most straightforward Ministers 
 who has ever served the Empire : — 
 
 " That simple, homely Prussian General has in two 
 years succeeded in making himself conversant with, 
 and in mastering, problems of extreme difficulty, 
 with a rare political insight. He has, at the right 
 moment, saved the Fatherland from evil consequences. 
 I believe that the achievement represented by the 
 introduction and conclusion of the treaties of com- 
 merce will prove for posterity one of the most impor- 
 tant historical events, and is literally an act of vital 
 moment. I am convinced that not only our Father- 
 land, but millions of the subjects of other countries, 
 which are united to us in the great Customs League, 
 will sooner or later bless this day." 
 
 In dealing with Austria-Hungary, Germany 
 reduced her corn duties, that on wheat and rye 
 from 50s. to 35s. per ton, that on oats from 40s, to 
 28s., that on barley from 22s. 6^. to 20s., on maize 
 from 20s. to i6s., on malt from 40s. to 36s., and on 
 flour from 105s. to 76s. The duties on dead meat 
 were likewise reduced — from ids. to 8s. 6d. and 
 ys. 6d. per cwt. ; those on horses from 20s. to ids. 
 each, on oxen from 30s. to 25s. each, on cattle 
 from 6s. to 5s. each, pigs 6s. to 5s. each ; those on 
 figs, currants and raisins from 12s. to 4s. per cwt. ; 
 those on fresh oranges and lemons from 6s. to 2s. 
 A number of industrial duties were also reduced — 
 for example, those on iron, cotton, linen, glass, 
 leather goods, watches, paper, oil, porcelain, 
 earthenware and stoneware, and roofing slates. 
 Austria, on the other hand, reduced many of 
 
THE COMMERCIAL TREATY ERA. 119 
 
 her duties on articles important for the German 
 export trade. 
 
 The Swiss treaty conceded to Germany reduc- 
 tions averaging 35 per cent, on 293 out of a total 
 of 476 articles scheduled, though many of them 
 were already covered by the most- favoured-nation 
 clause. 
 
 Treaties were concluded in the autumn of 1893 ^ 
 with Roumania and Servia, and one was concluded J 
 with the Government of Spain, but it was not 
 ratified by the Spanish Cortes, whose pride had 
 not forgotten the Caroline Islands episode. The 
 consequence was that Germany put the legislative 
 tariff in operation with full duties. Spain did the 
 same, whereupon Germany, not to be outdone, 
 added 50 per cent, to many duties on June 30th, 
 1895, though these increases were abolished on 
 July 25th, 1896. A most-favoured-nation treaty 
 was not concluded with Portugal, which was not 
 particular about commercial complications, and 
 here the tariff of 1887 continued. ^_/ 
 
 Matters were not so easily arranged with Russia, 
 for before the treaty with that country had been 
 arranged there was waged a tariff war marked by 
 great tenacity and obstinacy, a war in which 
 neither side conquered, yet in which both were 
 vanquished. Before the negotiations had got far, 
 and during an adjournment of the plenipotentiaries, 
 the Russian Government suddenly introduced a 
 new tariff imposing at once upon German manu- 
 factures imported into Russia duties higher by 
 
120 PROTECTION IN GERMANY. 
 
 15, 20, and even 30 per cent, than hitherto. Bedin 
 answered St. Petersburg by putting 50 per cent. 
 > on Russian produce from August 1st, 1893.^ 
 Industry and agriculture were embarrassed in 
 both countries while the contention lasted, which 
 was until the very conclusion of a treaty on 
 March 22nd, 1894. By this treaty Russia secured 
 a number of modifications of the old duties of 
 1887, and Germany was conceded the full advan- 
 tage of the tariff reductions made in favour of 
 France the year before, including those on iron 
 and steel manufactures, worked cast-iron, wire, 
 chemicals, pianos, paper, bottled wine and cham- 
 pagne, agricultural machinery, and woollen goods 
 woven with carded yarn. In addition to these 
 concessions shared with France, Germany also 
 received reductions on steel, coal, woollen goods, 
 and leather goods. The beneficial effects of this 
 treaty were soon seen. In 1894 the value of 
 the goods imported by Russia from European 
 countries was 92,000,000 roubles more than in 
 1893, and of this increase 45 per cent, fell to 
 Germany, which for the first time took the posi- 
 tion hitherto held by England as Russia's largest 
 provider. 
 
 Meantime, a more distant country, which had 
 
 ^ All such emergencies are now effectively covered by a 
 law of May i8th, 1895, which gives the Government power 
 to impose a higher duty up to 100 per cent, beyond the 
 existing tariff, or, in case of duty-free imports, a duty up to 
 20 per cent, ad valorem, where countries do not give to 
 Germany the most-favoured-uation treatment. 
 
THE COMMERCIAL TREATY ERA. 121 
 
 entered the path of development with singular 
 success, was causing increasing anxiety both to 
 the German agriculturist and the manufacturer. 
 It was Argentina, which, not satisfied with having 
 become a serious rival in corn and cattle, had 
 erected almost insuperable barriers against indus- 
 trial imports, less for the purpose of protecting 
 native enterprise than of compelling the foreigner 
 to keep her in revenue. The last revision of 
 Argentina's tariff dealt a heavy blow at German 
 cotton goods, cloth, paper, wire nails, starch, 
 spirit, malt, and — most audacious cut of all — 
 beer. On December 7th, 1894, a section of the 
 National Liberal party brought forward a resolu- 
 tion in the Reichstag calling on the Government 
 summarily to denounce the most-favoured-nation 
 treaty with this troublesome country. The pro- 
 posal was discussed on March 13th and 14th, 
 1895, and was referred to a committee by the 
 votes of the Conservative, Catholic, and Polish 
 parties, and the authors of the resolution. The 
 result of the following inquiry was a recommenda- 
 tion, on May 24th, that the Government should 
 denounce not only the treaty with Argentina but 
 all other treaties which were unfavourable to 
 Germany. The committee also urged that 
 measures should be taken to draw together Con- 
 tinental countries in a Customs Union. To the 
 latter suggestion the Secretary of State for 
 Foreign Affairs gave an unsympathetic reception, 
 telling the committee point-blank that they did 
 
 ■J 
 
124 PROTECTION IN GERMANY. 
 
 5>93i459 dollars in 1896, and 6,493,368 dollars 
 in 1897, her imports in 1898 were 5,584,014 
 dollars, in 1899, 7,393,456 dollars, in 1900, 
 ^^383, 498 dollars, and in 1901, 7,021,405 dollars. 
 InGermanythere is nodifference of opinion what- 
 ever as to the immense value of the commercial 
 treaties of the Caprivi regime. By general consent 
 the remarkable expansion of industrial production 
 at home and trade abroad is attributed largely to 
 the policy of freer exchange which was introduced 
 between 1892 and 1894. Herr Eugen Richter, 
 voicing the Liberal view of the question, says : — 
 
 " The commercial treaties have not by far regained 
 for Germany the measure of Free Trade which had 
 been exhibited by the earlier commercial treaties up 
 to the commencement of the Protective era in 1879. 
 Their principal significance lies in the reversal of the 
 customs policy of the latter year which they imply, 
 and in the practical recognition that nations have a 
 reciprocal interest in facilitating commercial dealings, 
 instead of isolating themselves, as by a sort of Chinese 
 wall, by the erection of the highest possible tariff 
 barriers." 
 
 Testimony to the same effect abounds in the 
 reports of the German Chambers of Commerce, 
 the reports of foreign Consuls, and in the Press 
 both of Germany and other countries. Thus the 
 Berlin Merchants' Association reported in 1896 : — 
 " It must be conceded that the treaties have 
 certainly had those favourable consequences for 
 Germany's export trade which impartial judges 
 predicted would result from them. In fact, the 
 commercial and industrial activity which has been 
 
THE COMMERCIAL TREATY ERA. 125 
 
 so apparent in Germany since 1894 is directly due 
 to these treaties." 
 
 " In their impotent wrath at the conchision of the 
 commercial treaties," wrote the Berlin correspondent of 
 The Times on February 4th, 1896, " the agrarians have 
 always seized upon isolated complaints in the reports of 
 the German Chambers of Commerce as a proof that not 
 only agriculture but industry also had been injured 
 by the recent economic policy of the Empire. 
 Though it could not be expected, perhaps, that the 
 influence of the commercial treaties would be visible 
 at once in the trade returns, the ofhcial statistics of 
 Germany's foreign commerce during 1895 afford a 
 striking refutation of tlie agrarian contentions and an 
 equally striking justification of the supporters of the 
 treaties. Apart from precious metals, the value of 
 the German export trade in 1895 amounted to 
 ;^ 1 6 5, 500, 000, while in 1894 it only amounted to 
 ;f 148,050,000, thus showing an increase of ^17,450,000. 
 At least two-thirds of this increase is due to the aug- 
 mented exportation of purely industrial products, 
 especially of ironware, and though a small decrease 
 is visible in some departments it is of such a trifling 
 character as to be scarcely worthy of notice. As 
 might be expected, this large development of the 
 export trade is accompanied by a considerable increase 
 in the import returns, due to the greater demand for 
 raw material for industrial purposes. In 1895 the 
 value of the imports amounted to ;^204, 600,000, or 
 ;^39, 100,000 more than the value of the exports during 
 the same period." 
 
 How the trade of later years has more than 
 borne out this early promise will appear from a 
 comparison. During the six years which preceded 
 the coming into operation of the existing treaties 
 of commerce, Germany's exports had amounted to 
 -{■972,600,000, an average of ^^162, 100,000 per 
 
126 PROTECTION IN GERMANY. 
 
 annum, but during the following six years they 
 amounted to ;^i, 194,900,000, an average of 
 3^199,150,000, an increase of ;^37j050,ooo a year, 
 and that in spite of an intervening period of 
 commercial depression. The import trade showed 
 the same movement. While the aggregate im- 
 ports for the six years preceding the treaties were 
 ;^i, 270,500,000, an average of ;^2ii, 700,000 per 
 annum, the imports for the six succeeding years 
 were ^£'1,536,260,000, an average of £256,040,000 per 
 annum, showing a yearly increase of ;^44,340,ooo. 
 Taking individual countries, while in 1890, just 
 before the treaty era opened, Germany sold goods 
 to Austria-Hungary to the value of ^17,550,000, 
 equal to 10-3 per cent, of her entire export 
 trade, she sold her goods in 1900 to the value 
 of ;^25, 536,000, or 10-8 per cent, of the whole; 
 she sold goods to Russia in 1890 to the value of 
 ;^io,3oo,ooo, or 6-i per cent, of the whole, but in 
 1900 to the value of ;£i7,243,90o, or 6*8 per cent, 
 of the whole; she sold goods in 1890 to Switzer- 
 land to the value of ^£9,000,000, or 5-3 per cent, of 
 the whole, but in 1900 to the value of £14,602,700, 
 or 6-1 per cent.; she sold goods to Belgium in 
 1890 to the value of £7,540,000, or 4*4 per cent., 
 but in 1900 to the value of £12,655,000, or 5-3 per 
 cent. In each case there has been a considerable 
 increase, both absolutely and relatively, and this 
 increase, in Germany at any rate, is universally 
 placed to the credit of the enlightened policy of 
 Count von Caprivi. Upon this subject. Professor 
 
THE COMMERCIAL TREATY ERA. 127 
 
 Lujo Brentano wrote while the fate of the new 
 tariff (of 1902) was still uncertain : — 
 
 " Germany changed Free Trade for a system of 
 Protectionist solidarity {Anglice, ' a self-contained 
 Empire') in 1879, and if German economy has never- 
 theless advanced it is, thanks to science, to the 
 chemical laboratories of our Universities and the 
 technical instruction of our Polytechnics. Even so, 
 Germany's share in the trade of the world remained 
 stationary during the 'eighties and in most years was 
 behind even that of France. To-day it is different. 
 France fell back in the 'nineties into the same system 
 of Protectionist solidarity. In Germany, on the other 
 hand, what progress since we began with the beginning 
 of the 'nineties to approximate Free Trade again ! 
 ... In fact, since the conclusion of the Caprivi com- 
 mercial treaties the wealth of Germany has increased 
 as in no equal period of its long history before ; the 
 population has rapidly grown ; emigration has fallen 
 to a figure unknown in the whole history of the 
 nineteenth century, and other nations, full of astonish- 
 ment, envy us this. Does it not seem as though some 
 evil fate had blinded us, that so many of our people 
 should to-day be crying down these commercial 
 treaties, while others, standing indolently aside, are 
 shortsightedly vying with each other, by strengthening 
 the Protectionist system, in destroying that which has 
 brought us such great prosperity." 
 
128 PROTECTION IN GERMANY. 
 
 CHAPTER VIII. 
 THE AGRARIAN MOVEMENT. 
 
 With the passing of the Caprivi treaties there 
 came into prominence a political movement which 
 has since disputed with Social Democracy both 
 for fame and notoriety. It is the movement 
 known as agrarianism, whose demand is that 
 agriculture shall be regarded by the State as its 
 primary concern, and shall be given preference over 
 every other economic interest. Manufactures may 
 be crippled ; commerce may be destroyed ; the ship- 
 yards may be deserted ; the mines may stand still ; 
 the great export trade which has been built up 
 during the past twenty years may go to ruin ; 
 labour may be depressed ; the loaf of the poor 
 may be diminished ; but the welfare of the land 
 must be maintained at all risks and at all costs. 
 That, in effect, is the contention of the modern 
 agrarians, the successors of the feudalists whom 
 the laws of Stein and Hardenberg dethroned, 
 whose agitation and influence are as much a 
 power as a perplexity in contemporary German 
 politics. 
 
 Early in the history of the present Reichstag 
 there was a country party which kept a careful 
 eye upon the interests of agriculture, and especially 
 
THE AGRARIAN MOVEMENT. 129 
 
 of the large corn producers, and its organ, the 
 Association of Taxation and Economic Reformers, 
 was in the habit of holding periodical congresses 
 before the era of Protection opened, for the dis- 
 cussion of questions of the land and the promotion 
 of legislation favourable to owner and cultivator. 
 It was an exclusively Conser\-ative organisation, 
 though not as yet quite identical with the Con- 
 ser\ative Parliamentary- party, and even then it 
 made no secret of its antagonism to industn,- and 
 " capitalism." And yet these Taxation Reformers 
 originally were not Protectionists at all, but Free 
 Traders. •• Taking our stand on the basis of Free 
 Trade," ran one of the articles in their statutes, 
 " we are opposed to protective duties, though, on 
 the other hand, we regard the question of import 
 duties and excise duties as an open one. With 
 all financial duties and indirect taxes care must 
 always be taken that they do not exert a specially 
 injurious influence on individual districts and 
 classes of the population." It was not long, how- 
 ever, before the Grst part of this article was excised, 
 and the world saw no more of it. Nevertheless, 
 as late as 1S76, though the return to Protection 
 was so near, the official programme of the Con- 
 servative and agrarian fractions made no reference 
 to the re\"ision of the customs tariff. 
 
 " In oppcsition to the unrestricted freedcn: of 
 Liberalistic theory-.'" said a manifesto o* -"--- year, 
 " we desire for the Life of :ndu5tr\ ? - :? an 
 
 ordered freedom. We require 
 
 P.G. iL 
 
128 PROTECTION IN GERMANY. 
 
 CHAPTER VIII. 
 THE AGRARIAN MOVEMENT. 
 
 With the passing of the Caprivi treaties there 
 came into prominence a poHtical movement which 
 has since disputed with Social Democracy both 
 for fame and notoriety. It is the movement 
 known as agrarianism, whose demand is that 
 agriculture shall be regarded by the State as its 
 primary concern, and shall be given preference over 
 every other economic interest. Manufactures may 
 be crippled ; commerce may be destroyed ; the ship- 
 yards may be deserted ; the mines may stand still ; 
 the great export trade which has been built up 
 during the past twenty years may go to ruin ; 
 labour may be depressed ; the loaf of the poor 
 may be diminished ; but the welfare of the land 
 must be maintained at all risks and at all costs. 
 That, in effect, is the contention of the modern 
 agrarians, the successors of the feudalists whom 
 the laws of Stein and Hardenberg dethroned, 
 whose agitation and influence are as much a 
 power as a perplexity in contemporary German 
 politics. 
 
 Early in the history of the present Reichstag 
 there was a country party which kept a careful 
 eye upon the interests of agriculture, and especially 
 
THE AGRARIAN MOVEMENT. 129 
 
 of the large corn producers, and its organ, the 
 Association of Taxation and Economic Reformers, 
 was in the habit of holding periodical congresses 
 before the era of Protection opened, for the dis- 
 cussion of questions of the land and the promotion 
 of legislation favourable to owner and cultivator. 
 It was an exclusively Conservative organisation, 
 though not as yet quite identical with the Con- 
 servative Parliamentary party, and even then it 
 made no secret of its antagonism to industry and 
 " capitalism." And yet these Taxation Reformers 
 originally were not Protectionists at all, but Free 
 Traders. " Taking our stand on the basis of Free 
 Trade," ran one of the articles in their statutes, 
 " we are opposed to protective duties, though, on 
 the other hand, we regard the question of import 
 duties and excise duties as an open one. With 
 all financial duties and indirect taxes care must 
 always be taken that they do not exert a specially 
 injurious influence on individual districts and 
 classes of the population." It was not long, how- 
 ever, before the first part of this article was excised, 
 and the world saw no more of it. Nevertheless, 
 as late as 1876, though the return to Protection 
 was so near, the official programme of the Con- 
 servative and agrarian fractions made no reference 
 to the revision of the customs tariff. 
 
 " In opposition to the unrestricted freedom of 
 Liberalistic theory," said a manifesto of that year, 
 " we desire for the life of industry and trade aa 
 ordered freedom. We require of economic legislation 
 
 P.G. K 
 
130 PROTECTION IN GERMANY. 
 
 that it shall pay equal attention to all productive 
 activities and take just account of the now inade- 
 quately regarded interests of the larger landowners, of 
 industry, and of handicrafts. In this sense we call 
 for the gradual removal of the privileges accorded to 
 the great capitalists. We call for the amelioration 
 of the grave injuries which exaggerated economic 
 centralisation and the lack of systematic regulations 
 for agriculture and the small industry have produced. 
 In particular we call for the revision of the law of 
 maintenance domicile and of the Industrial Code 
 which experience shows to be necessary." 
 
 To recall a programme so moderate is to indicate 
 the distance which the agrarian movement has 
 travelled in the interval. So long, however, as 
 there remained at the helm a Chancellor so 
 favourably disposed to agriculture as Prince 
 Bismarck, the agrarians were relieved from 
 anxiety and apprehension. Only when there 
 came to office a Minister free from prejudices 
 in favour of the landed class, or of any single 
 class whatsoever, did the agrarians form themselves 
 into a solid party, and determine systematically 
 to pursue a purely personal and interested policy. 
 
 The first clear departure from the Bismarck 
 tradition took place, as we have seen, when Caprivi 
 decided at the beginning of the 'nineties to modify 
 the existing agricultural duties, as fixed by the 
 revised tariff of 1887, with a view to affording 
 industry fair play and an opportunity of gaining 
 an entrance to markets — Russia and Austria in 
 particular — then closed owing to Germany's em- 
 bargo, on agricultural imports. It was Caprivi's 
 
THE AGRARIAN MOVEMENT. 131 
 
 declaration, in a speech in which he commended 
 the treaty policy to the Reichstag, that "Germany 
 is no longer an agricultural but an industrial 
 country," that for the first time opened the eyes 
 of the agrarians to the economic revolution which 
 had passed over the country. So direct a chal- 
 lenge to fight for their position and privileges the 
 agrarians could not well have resisted, and if they 
 failed to prevent the conclusion of the commercial 
 tariffs of 1892 to 1894 it was not from lack of 
 effort. No sooner, however, had the treaties been 
 ratified than they began a vehement agitation 
 against them in agricultural circles, and the rural 
 constituencies suddenly became the scene of un- 
 wonted political activity. " We must tear up 
 the treaties with Austria and Italy," said the 
 frantic Kreuzzeitung, that time-honoured champion 
 of law and order, on November 24th, 1893, and 
 later, when the treaty with Russia came into 
 existence amid Imperial felicitations, the organ 
 of the rural party came perilously near to Vese- 
 majeste, by flatly declaring that "the German 
 farmer will now be inclined to regard the Emperor 
 as his political enemy." 
 
 From that time the agrarians closed their ranks 
 for the strenuous defence of their threatened 
 privileges, and the course of later domestic politics 
 has to a large extent been determined by their 
 influence and action. The first concrete expression 
 of the more aggressive spirit which gained ascen- 
 dency at the beginning of the 'nineties was the 
 
 K 2 
 
132 PROTECTION IN GERMANY. 
 
 formation of the Farmers' League, more commonly 
 known as the Agrarian League,^ the originator of 
 which was a Silesian tenant farmer named 
 Ruprecht. 
 
 " What I propose," said this spokesman of the 
 smaller cultivators, in a fiery oration which woke up 
 the sluggish spirits of the peasantry of the South, 
 " is no less than this — that we join with the Social 
 Democrats and seriously make common cause against 
 the Government and show them that we are not 
 prepared to tolerate our present bad treatment, and 
 let them feel our power. It is necessary at last to 
 give expression in plain words to the justifiable dis- 
 content which is heard wherever farmers meet 
 together. We must cry so that the whole country 
 hears. We must cry so that our voice reaches the 
 halls of Parliament and of the Ministries. We must 
 cry until our voice is heard on the steps of the throne 
 itself. We must strike out of the statutes of our 
 agricultural associations all the paragraphs that 
 exclude politics, for we must carry on politics, and 
 politics, moreover, in our own interest. Let us have 
 but the courage to take the name 'agrarians' which 
 newspapers antagonistic to agriculture have often 
 unjustifiably given us. For only by carrying on an 
 uncompromising and unequivocal policy of interests 
 can the existence of the present generation of farmers 
 be saved." 
 
 The new agrarian movement thus set on foot 
 
 dates from the end of 1892, though it was February 
 
 of the following year before the League was 
 
 formally constituted at a national conference held 
 
 ^ The Build der Landwirthe, literally, League of Farmers, 
 and alternatively spoken of in the English Press as the 
 Landlords' League and the Agrarian League. The last 
 variant is truest to the composition of this combination, in 
 which landowner and cultivator consort indiscriminately. 
 
THE AGRARIAN MOVEMENT. 133 
 
 at the Tivoli Assembly Hall in Berlin — ever since 
 the Mecca of a yearly pilgrimage of agrarians from 
 all parts of the Empire. Meantime, the landowners 
 and Junkers of North and East Prussia had taken 
 up the idea, and it was under their patronage that 
 the League was launched, while from that time to 
 this it has proved the advocate and the mouthpiece 
 far more of the interests of the great corn growers 
 than of the small peasants, whose principal occupa- 
 tion is grazing and cattle breeding. The League, 
 as a propagandist organisation, was a signal success 
 from the first. It speedily won a membership of 
 200,000, and encouraged by abundant funds it has 
 since maintained a large staff of itinerant lecturers 
 whose business it is to organise the agricultural 
 classes, to instruct them in their grievances, and 
 to see that they apply to the Government effective 
 and continuous pressure, so supporting the hands 
 of the party which exists to protect and to promote 
 their special interests in Parliament. The formal 
 programme of the League embraces the following 
 demands : — 
 
 I. Adequate customs protection for the produce 
 of agriculture and its dependent industries. 
 2. No reduction of the existing duties, no com- 
 mercial treaties with Russia and other countries 
 which might have the result of a reduction of the 
 German agricultural duties, and a re-adjustment, 
 in the interests of agriculture, of the treaty 
 with the United States. 3. More protection for 
 agricultural and particularly peasant auxiliary 
 
134 PROTECTION IN GERMANY. 
 
 industries, such as sugar and spirit manufacture, 
 in the matter of taxation. 4. Prohibition of the 
 import of cattle by sanitary measures from countries 
 where disease is suspected. 5. Introduction of 
 bimetallism as a protection against the fall of the 
 price of agricultural produce. 6. Legislation for 
 the formation of Chambers of Agriculture. 
 7. Revised legislation upon the subject of domicile, 
 free migration, and breach of contract on the part 
 of labourers (this demand, indeed, going so far as 
 to require that agricultural labourers should be 
 prevented from leaving their native districts even 
 when discontented with the conditions of their 
 employment). 8. Revision of the insurance legis- 
 lation for the benefit of the working classes with 
 a view to transferring the contributions from 
 employers to the whole community, g. Severer 
 State control of the Produce Exchanges in order 
 to check the natural arrangement of prices. 
 10. Revision of the land laws and the laws relating 
 to mortgage and credit in the interest of landowners 
 and agriculture. 11. The amelioration of local 
 taxation for the benefit of the agricultural classes. 
 These, however, are but the main principles of 
 agrarian policy ; in practice agrarianism means 
 preferential treatment for the landed and agricul- 
 tural classes whenever their interests and those of 
 industry and the consuming public appear to con- 
 flict. Germany has hitherto been an agricultural 
 State, and the status quo must be maintained not 
 only for all future time but at all costs, and to that 
 
THE AGRARIAN MOVEMENT. 135 
 
 end State policy must be unflinchingly directed. 
 Pages would be needed to record the long list of 
 exceptional laws which have actually been passed 
 in sympathy with this standpoint, and the still 
 longer list of schemes and proposals which, owing 
 to their transparent unreasonableness, have failed 
 to be reaHsed in legislation. To the first list 
 belong, above all, the further revision of the 
 customs tariff in 1902, which remains to be 
 considered ; then laws prohibiting the import of 
 live cattle on pretence of veterinary precautions, 
 although when the disease dreaded had disappeared 
 the restrictions remained ; laws aiming similarly 
 at the exclusion of dead meat by means of a costly 
 and absurdly pedantic system of inspection ; laws 
 regulating the manufacture and sale of margarine ; 
 and the Stock Exchange Act, prohibiting dealings 
 in futures in corn and flour, a measure which has 
 injured the landowners more than any other class, 
 since it has, by restricting the flow of money, made 
 dearer its price at home, and so influenced loans 
 and mortgages unfavourably. So, too, in taxation 
 the agrarians have secured special privileges in 
 connexion with the duties payable on home- 
 produced spirit, and until the conclusion of the 
 Sugar Convention those of their number who 
 cultivated the sugar beet had the benefit of a 
 liberal export premium on every ton of sugar sent 
 abroad, the aggregate bounty running to £"1,500,000 
 annually. Want of power and not want 
 of will prevented the passing of many other class 
 
136 
 
 PROTECTION IN GERMANY. 
 
 measures which were pressed in vain upon a 
 Parliament never disposed to be too punctiHous 
 in weighing agrarian demands. 
 
 The most daring proposal which has been made 
 by the agrarians, however, is that which bears the 
 name of Count Kanitz, an East Prussian nobleman 
 who typifies the Junker class and its ideals. This 
 proposal is no less than that the State shall pur- 
 chase outright all the corn imported into the 
 countr}' and retail it at prices which should not 
 be below a favourable average of past years, the 
 idea being, of course, that the market price of the 
 corn thus sold out of the public granaries would 
 determine the price of the entire amount of grain 
 produced at home. When this curious project 
 was first commended to an incredulous and 
 unsympathetic Reichstag on April 7th, 1894, 
 Count Kanitz suggested the average prices which 
 had ruled during the period between 1855 and 
 that year, with a view, of course, of taking advan- 
 tage of the period which preceded the stress of 
 foreign competition. These prices were as follows 
 per ton, and for convenience are given the prices 
 at which corn sold in the open market in Germany 
 in 1894 : — 
 
 
 Kanitz 
 
 Market prices 
 
 Amount of 
 
 
 prices. 
 
 at Stettin. 
 
 artificial excess. 
 
 
 I 5. <?. 
 
 i s. d. 
 
 £ i- '^• 
 
 Wheat 
 
 10 15 
 
 6 13 
 
 420 
 
 Rye 
 
 850 
 
 5 16 
 
 290 
 
 Barley 
 
 7 15 
 
 750 
 
 10 
 
 Oats 
 
 7 15 
 
 6 9 
 
 160 
 
THE AGRARIAN MOVEMENT. 137 
 
 Only forty-six Conservative deputies supported 
 the proposal, and it was defeated by a majority of 
 113 in a small house. Undaunted, Count Kanitz 
 and his friends tried their luck again on March 13th, 
 1895, and now proposed that the average prices of 
 the years 1850 to iSgo should be the basis of sale. 
 This time the proposal was referred to a special 
 committee, whose decision was unfavourable, even 
 to the extent of its underlying principle. The 
 Chancellor of that da}-, Prince Hohenlohe, offered 
 it unreserved opposition, and declared it to be an 
 insidious and dangerous step towards Socialism, 
 an assertion which caused the Social Democratic 
 leader, Bebel, to retort that no more anti-social 
 measure could be conceived than one which pro- 
 posed to enrich a single class at the expense of 
 the community, and especially of the workers and 
 the poor. Since then the proposal has been 
 further discussed by the Reichstag, yet though it 
 has been resolutely negatived by a m.ajority suffi- 
 ciently large to show that its chances of success 
 are extremely remote, the agrarians refuse to 
 abandon hope and insist that it is the only cure 
 for their woes. The effect of the proposal would, 
 of course, be that in times of abundant harvests 
 an artificially inflated price would be paid at home 
 — a price far above that ruling in the world market 
 — while in times of insufficient harvests the highest 
 import price would have to be paid. That an idea 
 so quixotic should not merely be seriously enter- 
 tained, but after a succession of rebuffs should still 
 
136 
 
 PROTECTION IN GERMANY. 
 
 measures which were pressed in vain upon a 
 Parliament never disposed to be too punctilious 
 in weighing agrarian demands. 
 
 The most daring proposal which has been made 
 by the agrarians, however, is that which bears the 
 name of Count Kanitz, an East Prussian nobleman 
 who typifies the Junker class and its ideals. This 
 proposal is no less than that the State shall pur- 
 chase outright all the corn imported into the 
 country and retail it at prices which should not 
 be below a favourable average of past years, the 
 idea being, of course, that the market price of the 
 corn thus sold out of the public granaries would 
 determine the price of the entire amount of grain 
 produced at home. When this curious project 
 was first commended to an incredulous and 
 unsympathetic Reichstag on April 7th, 1894, 
 Count Kanitz suggested the average prices which 
 had ruled during the period between 1855 and 
 that year, with a view, of course, of taking advan- 
 tage of the period which preceded the stress of 
 foreign competition. These prices were as follows 
 per ton, and for convenience are given the prices 
 at which corn sold in the open market in Germany 
 in 1894 : — 
 
 
 Kanitz 
 
 Market prices 
 
 Amount of 
 
 
 prices. 
 
 at Stettin. 
 
 artificial excess. 
 
 
 £ ^- rf- 
 
 £ s. d. 
 
 £ s. d. 
 
 Wheat 
 
 10 15 
 
 6 13 
 
 420 
 
 Rye 
 
 830 
 
 5 16 
 
 290 
 
 Barley 
 
 7 15 
 
 750 
 
 10 
 
 Oats 
 
 7 15 
 
 690 
 
 160 
 
THE AGRARIAN MOVEMENT. 137 
 
 Only forty-six Conservative deputies supported 
 the proposal, and it was defeated by a majority of 
 113 in a small house. Undaunted, Count Kanitz 
 and his friends tried their luck again on March 13th, 
 1895, and now proposed that the average prices of 
 the years 1850 to 1890 should be the basis of sale. 
 This time the proposal was referred to a special 
 committee, whose decision was unfavourable, even 
 to the extent of its underlying principle. The 
 Chancellor of that day. Prince Hohenlohe, offered 
 it unreserved opposition, and declared it to be an 
 insidious and dangerous step towards Socialism, 
 an assertion which caused the Social Democratic 
 leader, Bebel, to retort that no more anti-social 
 measure could be conceived than one which pro- 
 posed to enrich a single class at the expense of 
 the community, and especially of the workers and 
 the poor. Since then the proposal has been 
 further discussed by the Reichstag, yet though it 
 has been resolutel)' negatived by a m.ajority suffi- 
 ciently large to show that its chances of success 
 are extremely remote, the agrarians refuse to 
 abandon hope and insist that it is the only cure 
 for their woes. The effect of the proposal would, 
 of course, be that in times of abundant harvests 
 an artificially inflated price would be paid at home 
 — a price far above that ruling in the world market 
 — while in times of insufficient harvests the highest 
 import price would have to be paid. That an idea 
 so quixotic should not merely be seriously enter- 
 tained, but after a succession of rebuffs should still 
 
138 PROTECTION IN GERMANY. 
 
 be given a leading place in the demands of the 
 Conservative landowners, affords striking evidence 
 of the unpractical and even predatory counsels 
 which to-day have the upper hand in the agrarian 
 party. 
 
 Meantime, the famous League has continued its 
 agitation with a persistence and a vigour which 
 prove that abundant zeal, if not equal discretion, 
 is behind the agrarian movement. In the early 
 days of each recurring February a great conference 
 is held in the metropolis, and the heat and energy 
 there generated serve to carry the movement 
 through the year. The speeches made are not 
 always marked by studied regard for propriety, 
 but at least the orators are desperately in earnest. 
 Summing up the proceedings at one of these 
 agricultural reunions, the official organ, the Agyar- 
 Korrespondenz, declared : — '' The League enters 
 upon the new year joyfully confident that the 
 struggle which it is determined to carry on must 
 end in victory if the German nation is not to 
 be ruined. The God of ancient days will not 
 abandon His German people." As a counter- 
 judgment the words of the Liberal-Conservative 
 National ZeiUmg suggested inexplicable paradox : 
 " The meeting was from beginning to end a 
 series of mad orgies and a specimen of the most 
 unwarrantable agitation." Perhaps the most 
 remarkable political characteristic of agrarianism 
 is the new spirit of independence which it has 
 evoked in the Conservative party. Of old the 
 
THE AGRARIAN MOVEMENT. 139 
 
 Conservatives could always be counted on to 
 support Government polic}- through thick and 
 thin. That the Chancellor of the Empire or 
 the Prussian Minister President, as the case 
 happened, was bent on a certain course of action 
 or inaction was enough to secure from them, as 
 the one, true, and only loyal, Imperialistic, 
 "State-maintaining" party, unreserved approval 
 and support. 
 
 The alliance presumed reciprocity of interest, 
 as all such arrangements do, and so long as the 
 reciprocity lasted so also did the alliance. When, 
 however, both the Emperor and the Government 
 showed a disposition to shrink from the agrarians' 
 extremer demands, and to regard the conditions of 
 union as unequal, the traditional devotion of the 
 Conservative party to throne, altar, and Fatherland 
 stood revealed in its true light as a very human 
 and very unamiable piece of egoism. Thereupon 
 were developed a discrimination of judgment and 
 an independence of action which had never been 
 exhibited before by the same politicians. The 
 " Mannerstolz vor Konigstronen " (" manly pride 
 before royal thrones") of which Schiller speaks 
 acquired an impressive dignity when exercised by 
 men who had deemed the slightest questioning of 
 the divine right and diviner wisdom of the Crown 
 to be almost treasonable. If Radical and Socialist 
 cruelly hinted that this change of front pointed 
 the moral of an old story, stranger, perhaps, to 
 
I40 PROTECTION IN GERMANY. 
 
 the annals of Prussia than to those of more 
 
 progressive countries : 
 
 " Der Konig absolut, 
 
 Wenn er unseren Willen thut," ^ 
 
 such unseemly scoffing only proved that the one 
 lacked a proper public spirit and the other good 
 manners. 
 
 To trace the influence of the agrarians on the 
 later career of Count von Caprivi,- and in 
 compassing his eventual resignation in October, 
 1894, when he was still believed to be in the enjoy- 
 ment of his Sovereign's confidence, would take us 
 beyond the scope of fiscal history and into the 
 domain of political intrigue. Caprivi's successor, 
 Prince Hohenlohe, fared better, for happily for him 
 the last close encounter between agriculture and 
 industry was staved off until his term of office 
 was ended by death. Into the custody of Count 
 von Bulow fell, therefore, in the year 1900, a 
 Pandora's casket which two successive Chancellors 
 had, indeed, handled, yet had never opened. 
 Amongst the other winged woes which then 
 issued from it all too soon was the customs tariff 
 of 1902. 
 
 1 " Absolute the King be still, 
 Let him only do our will ! " 
 
 " Caprivi died on February 6th, 1899, at his country seat 
 near Krossen, on the Oder. 
 
THE TARIFF OF 1902. 141 
 
 CHAPTER IX. 
 y THE TARIFF OF 1902. 
 
 ./- 
 
 The Customs Tariff which was adopted at the 
 close o 1902 was as to form a consequence of 
 the necessary revision of the commercial treaties 
 whose formal duration expired with the year 1903 ; 
 as to substance it was a product of agrarianism. 
 The question of prolonging these treaties began 
 to be discussed in the Reichstag as early as 1897, 
 at which time the Government set on foot the 
 preparatory inquiries. 
 
 For the conduct of these an Economic Committee 
 of the Reichstag was appointed, consisting of 
 thirty persons, fifteen nominated by the Executive 
 and five each by the Central Association of German 
 Industrialists, the German Agricultural Council, 
 and the German Commercial Diet (Handehtag). 
 This revisory committee, the great majority of 
 whose members were avowed Protectionists, met 
 for the first time on November 15th, 1897, and 
 one of its earliest decisions was to elaborate the 
 tariff in far more detail, with a view to greater 
 differentiation as between various classes of goods 
 belonging to the same group.^ 
 
 ^ German ofBcial trade statistics give imports and 
 exports separately in two groups, Waarengruppeji and 
 Waarcngattungen. 
 
142 PROTECTION IN GERMANY. 
 
 Upon the basis of this highly speciaHsed " auto- 
 nomous " tariff, fixing maximum rates, negotiation 
 was to take place in every individual case. Hence 
 it came about that when the tariff was issued in 
 draft form it particularised 946 classes of goods. 
 
 Maximum rates were well enough. But now 
 the agrarians came forward in their new strength 
 and raised the cry of minimum rates as well. 
 What was the good, they asked, of enacting maxi- 
 mum duties when it was known well enough that 
 they would not be maintained against a single 
 State ? It was cold comfort to talk to the farmer 
 of a protection which was beyond his reach ; he 
 would much prefer to know the protection of 
 which he could be quite certain. This demand of 
 minimum duties the Government eventually con- 
 ceded in the case of agriculture alone, and hence- 
 forth it became the purpose of agrarian agitation 
 and pressure to get the irreducible duties fixed as 
 high as possible. In this they were aided by a 
 formal concordat with the Central Association of 
 German Industrialists, a Protectionist organisa- 
 tion representing especially the large iron and 
 textile trades, the terms of which were that the 
 country party should support higher industrial 
 duties, in return for which the Association would 
 not be found averse to an increase of the agricul- 
 tural duties. The pressure which assailed the 
 Government was thus pressure from two sides. ^ 
 
 ^ Towards the close of 1900 an unpleasant incident came 
 to light, which illustrated the disadvantage of any 
 
THE TARIFF OF 1902. 143 
 
 Count von Caprivi, as we have seen, had resisted 
 the agrarians until his position became unbear- 
 able and he resigned. During his successor 
 Prince Hohenlohe's tenure of office, the treaties 
 of commerce were in full operation, and impotent 
 to undo Caprivi's policy the agrarians were com- 
 pelled to bide their time. On Count von Biilow 
 becoming Chancellor in October, igoo, the agita- 
 tion and pressure redoubled in intensity, and with 
 the fate of Caprivi to warn him he soon capitu- 
 lated. Early in January, igoi, the agrarians gave 
 the Government to understand that when the 
 commercial treaties came to be revised they would 
 expect a substantial increase of the duties on 
 corn, live stock, and all agricultural products. 
 Later in that month (the 27th) Count von Biilow 
 formally gave the desired assurances on the point. 
 Intervening in a debate in the Prussian Diet, he 
 said : — 
 
 " Fully recognising the difficult situation in which 
 agriculture is placed, and inspired by the desire 
 effectively to improve that situation, the Prussian 
 Government is resolved to exert its influence in order 
 
 arrangement which made it possible for the Government and 
 a protected interest to stand in intimate relationship. A 
 high official of the Imperial Home Office was proved to 
 have accepted a contribution of ;^6oo from the Central 
 Association of German Industrialists for use in the pro- 
 motion of anti-Socialistic measures. Count Posadowsky, 
 the Secretary of State for the Home Department, when 
 interrogated in the Reichstag, acknowledged the truth of 
 the allegation, and for form's sake accepted responsibility 
 for the act of a subordinate, but discreetly declined to 
 discuss the question. 
 
144 PROTECTION IN GERMANY. 
 
 to obtain adequate protection for agricultural produce 
 by means of the customs duties, which must be raised 
 to an extert calculated to attain that object. The 
 Prussian Government is, moreover, doing all it can 
 to accelerate the production of the new scheme of 
 tariffs." 
 
 A Bill was produced on July 27th, and it proved 
 to be as highly protective to industry as it was to 
 agriculture. The expose des motifs which accom- 
 panied the Bill — a feature of German parlia- 
 mentary procedure which is admirably designed 
 to furnish the anti-Ministerial parties and critics 
 with argumentative weapons which they might 
 otherwise have lacked — professed to attribute the 
 revision of the tariff purely and simply to the 
 force of changed economic conditions. 
 
 " The policy of tariff conventions," said the docu- 
 ment, " has materially contributed to the prosperity 
 of industry and commerce, but in connexion with this 
 prosperity a dislocation in the distribution of the 
 wage-earning classes has taken place, to the detri- 
 ment of agriculture. For the increased wages earned 
 by the industrial classes have led to a constant and 
 growing migration to the towns of agricultural 
 labourers no longer contented with the smaller 
 earnings of the land. Between the years 1882 and 
 1895 the number of persons employed in agricultural 
 pursuits has decreased from 43*38 per cent, of the 
 population to 36'i9, which is equal to a numerical 
 reduction of 700,000. A collateral effect of the 
 industrial expansion has been the larger demands 
 made by the agricultural labourers who have with- 
 stood the movement to the towns, thus greatly 
 increasing the working expenses of agriculture, and 
 making that industry in most of its branches less 
 profitable. Hence the necessity for more protection." 
 
THE TARIFF OF 1902. 145 
 
 It was not pretended that Germany could ever 
 be made independent of foreign grain, but it was 
 said to be " highly desirable to have a permanent 
 home for the production of foodstuffs sufficient to 
 satisfy the greater part of the nation's require- 
 ments." On the other hand, industry had also 
 fallen on evil days, for a check on its onward 
 movement had of late set in, and in order to 
 counteract this it was necessary to give the manu- 
 facturer, too, the benefit of higher duties. The 
 peculiar feature of the agricultural duties was, 
 however, the introduction of minimum rates. 
 
 Of the 946 classes of imports specified 200 
 were allowed to remain free of duty ; in a 
 number of cases — notably of raw materials and 
 partially manufactured articles — the existing 
 duties were reduced ; in the great majority, how- 
 ever, increases were introduced, many almost pro- 
 hibitive. The duties on corn, live stock, and meat 
 were greatly increased, and the agrarians were 
 relieved of duties on certain goods of use to 
 agriculture. Artificial manures of all kinds were 
 as before to be admitted free, and it was also pro- 
 vided that substances ordinarily dutiable might be 
 passed free by the customs authorities should 
 they be intended for use as manures. In the 
 textile industries the principle was continued of 
 exempting altogether from duty, or taxing on a 
 very moderate scale, both raw materials and 
 materials in the first stages of manufacture, though 
 even here there were alterations corresponding to 
 
 P.G. L 
 
146 PROTECTION IN GERMANY. 
 
 the ability of German manufacturers to dispense 
 for the future with the foreigner's " first aid," but 
 the duties on half-manufactured and manufactured 
 goods were increased. It is significant that in 
 justifying the higher duties on iron the preamble 
 of the Bill asserted that while the German iron 
 industry had reached a high degree of technical 
 perfection, this alone did not suffice to counter- 
 balance the economic advantages of foreign 
 countries. Nevertheless, the changes were here 
 fewer. The duty on pig-iron remained as before 
 5s. per ton, and in a large number of cases the 
 duties on partly manufactured iron and on finished 
 goods were not altered, and there were even a 
 few reductions, though, on the other hand, many 
 were largely increased. Some of the increased 
 and new taxes were purely fiscal, and could not 
 by any possibility be regarded as protective. 
 Such, for example, was the paltry impost of 15s. 
 per cwt. on imported bound books, a tax which, 
 taking book with book, would work out, on 
 present imports, to about 2d. per volume. The 
 duty was avowedly proposed in the interest of the 
 printing trade — for both booksellers and book- 
 binders promptly opposed it — but such an argu- 
 ment was invalidated by the fact that the "goods" 
 here taxed could not by any possibility be made 
 in Germany, so that the tax could not in the 
 slightest degree relieve the German printer from 
 competition ; hence the duty resolved itself into a 
 special penalty imposed by the State upon the 
 
THE TARIFF OF 1902. 147 
 
 studied and reading classes — not the most wealthy 
 classes of German or any other society, by any 
 means. 
 
 The new tariff obviously marked a clear de- 
 parture from the policy pursued with so much 
 success by Count von Caprivi, That policy was to 
 hold the balance as fairly as possible between 
 agriculture and industry, while making special 
 allowance for the two important facts that (i), 
 driven by the force of circumstances, Germany is 
 destined to become more and more an industrial 
 country, and that (2) the vital condition of this 
 inevitable transition is cheap food for the working 
 classes. Count von Bulow also professed, in per- 
 fect good faith, that it was equally his own desire 
 to give to both great factors in the productive life 
 of the nation a fair chance — in his own words, to 
 "strike the balance between interests that are in 
 many instances opposed to each other" — but with 
 him agriculture had prior consideration. He 
 frankly confessed, when introducing the Tariff 
 Bill in the Reichstag on December 2nd, that his 
 object was "above all to endeavour to meet those 
 wishes which have been expressed by the agricul- 
 tural interest in favour of increased protection." 
 Taking the old duties as a whole, they averaged 
 in 1902 19 per cent, of the aggregate value of the 
 imports taxed. Count von Bulow estimated that 
 the new duties would add 17 per cent, to the 
 taxation of agricultural produce and 6 per cent, tc 
 that of industrial goods. 
 
 L 2 
 
148 PROTECTION IN GERMANY. 
 
 The Bill was variously received. The agrarians 
 welcomed it, though as an improvable measure, 
 and at once set their machinery to work with a 
 view to persuading the Government to raise the 
 minimum duties on corn still higher. The 
 manufacturing classes, on the other hand, were 
 by no means agreed in opposing the whole Bill. 
 The minimum duties for corn they liked little 
 enough ; even the Protectionist Central Associa- 
 tion of German Industrialists roundly condemned 
 them, and only re-considered its position v/hen 
 warned by the agrarians that without higher 
 corn duties there would be no industrial duties 
 at all. It was in accordance with the Interessen- 
 politik (" policy of interests ") followed by the 
 German industrialists, not less than by the 
 agrarians, that the Imperial Commercial Diet 
 only adopted by a very narrow majority (151 
 against 146 votes) a resolution on the subject 
 which, while asserting the necessity to national 
 industry and trade of commercial treaties of 
 long duration, and declaring against the fixing of 
 minimum rates in the customs tariff and against 
 any raising of the existing duties on foodstuffs 
 and raw materials, did not presume to advise the 
 Government concerning any of the duties, old 
 and new, on manufactured goods. As for disin- 
 terested consumers at large, loving neither the 
 duties on corn nor those on manufactured goods, 
 they cried a plague on both the great economic 
 interests which strove for their own ends. 
 
THE TARIFF OF 1902. 149 
 
 Meetings were held all over the country at which 
 strong protest was raised against the tariff, and 
 at Hamburg petitions against it were signed by 
 206,662 men and women, or over 27 per cent, of 
 the entire population. The view held by the aca- 
 demic Free Trade party ma}- best be expressed 
 in the words of Professor Walther Lotz, written 
 at the time : 
 
 " If we wish to remain capable and grovvingly 
 capable of exporting, and we have desired that 
 hitherto, it is necessary that we should have low 
 costs of production. But our new customs tariff 
 is based on a fundamental idea that higher prices are 
 the greatest blessing. Many believe that it is possible 
 to increase our duties, and nevertheless to maintain 
 our export by means of new commercial treaties. 
 Temporarily that might be possible, though by the 
 exhaustion of our national labour power, but per- 
 manently never, and least of all with dearer food. 
 And yet the new agricultural duties have this effect 
 in view. . . . According to the present grouping of 
 parties it is certain that high and increased corn duties 
 cannot becarriedout without the simultaneous increase 
 of those on theotherproductsof agriculture as well as of 
 forestry. Still more certain is it that increased corn 
 duties are impossible unless the wishes of the Protec- 
 tionist group of industrialists, and particularly those 
 combined in cartels, are realised. The Customs Tariff' 
 Bill bears the impress, in fact, of this reciprocal assur- 
 ance of Protection. Dearer corn must lead to the 
 endeavour for dearer meat, dearer feeding stuff's, dearer 
 eggs, dearer fruit and vegetables, and in any case as 
 dear iron, leather, glass, and building material as 
 possible with the consequence of dear dwellings." 
 
 Alike in Committee and in the full House the 
 Bill was warmly, even vehemently, debated. The 
 
150 PROTECTION IN GERMANY. 
 
 agrarians began by demanding corn duties of 
 £3 15s. per ton all round, and when the mercan- 
 tile members resisted they tried to get the indus- 
 trial duties reduced, so as to be quits with the 
 enemy. Finally they induced the Committee to 
 raise the Government's minimum rates as follows : 
 — Wheat and spelt from 55s. to 60s. per ton, 
 rye from 50s. to 55s. per ton, barley from 30s. 
 to 55s. per ton, and oats from 50s. to 55s. 
 per ton. An illustration of the different way 
 in which small and large farmers viewed the 
 question was lately attested by the Wiirtemberg 
 Minister, Dr. von Pischek. While the tariff was 
 under consideration the Government of Wiirtem- 
 berg invited the local agricultural associations of 
 that State interested in cattle breeding to state 
 the amount of Protection which they deemed 
 essential. Ten associations asked for a cattle 
 duty of 2s. 6d. per cwt., and one only made the 
 higher proposal of 4s. per cwt. Nevertheless, the 
 duty eventually introduced, owing to stronger 
 pressure exerted elsewhere, was gs. per cwt. 
 
 As of old, there were trade and industrial rivalries 
 without end to be conciliated. Thus when the 
 interests of the spinners and weavers came to be 
 weighed, it was found that the}' were very far 
 from being identical. The cotton weavers wanted 
 high duties on yarns, the spinners wanted low 
 ones. " We Conservatives," said the spokesman 
 of the latter with admirable candour, " certainlv 
 desire higher duties on grain ; but as the com 
 
THE TARIFF OF 1902, 151 
 
 duties raise the price of the necessaries of life for 
 the working classes we cannot proceed to diminish 
 their earnings by imposing high duties on yarn, a 
 course which would at the same time raise the 
 price of the material used for clothing." So the 
 duties were reduced much below the Government 
 rates. On the other hand, the paper duties were 
 further increased by a bargain between the repre- 
 sentatives of the manufacturers and the agrarians, 
 in spite of the Government's protest that high 
 duties were needless for protective purposes and 
 would injure important collateral trades. More 
 than once inter-State jealousy and antagonism 
 came to light. Thus when the Prussian land- 
 owners demanded that barley, too, should be sub- 
 jected to as high duties as other grains, the 
 Bavarian Minister of Finance rose in solemn pro- 
 test against this subtle conspiracy against Munich 
 beer. Such duties, he said, would disastrously 
 injure the beer export trade, since foreign countries 
 would have the benefit of cheaper raw material, 
 and even if the price of beer went up a few 
 pfennige in Bavaria there would be a great 
 decrease in its consumption, which would be bad 
 for the brewers and worse for the Treasury. If, 
 however, the theory of the " protection of national 
 labour " was upheld in some cases, it was coolly 
 ignored in others. So it happened when the 
 Social Democrats proposed an amendment against 
 " dumping," to the effect that the Federal Council 
 should repeal duties on goods imported from 
 
152 PROTECTION IN GERMANY. 
 
 foreign countries and admit them free whenever 
 goods of a like kind were sold by a German 
 syndicate to or in foreign countries at prices 
 below those ruling in the German customs terri- 
 tory. Though strong arguments were advanced 
 in support of the amendment both from the stand- 
 point of the labourer and of the consumer, it was 
 summarily rejected as an impertinence. 
 
 So the discussion and the revision of the Bill 
 dragged on month after month until the end of 
 1902 was in sight, and the mercantile classes 
 especially had cause for dissatisfaction at the way 
 in which it was forced through its later stages 
 without the slightest consideration for their wishes, 
 convenience, or interests. The proceedings in 
 Committee were a muddle from beginning to end. 
 When the new tariff was put forward, the Imperial 
 Chancellor declared that it had been made as pro- 
 tective as possible, and that even as the duties 
 then stood it would barely be able to conclude new 
 commercial treaties. The Government did their 
 best to keep the Committee in hand, but neither 
 moderation nor discretion has ever characterised 
 the agrarians, and alteration after alteration was 
 introduced of a kind not only contrary to the 
 lines laid down by Count von Biilow as unalter- 
 able, but absolutely unworkable in practice. In 
 the meantime, the industry and commerce of the 
 country were well-nigh paralysed, on the one hand 
 by the uncertainty of the outlook, and on the 
 other hand by apprehension of the retaliatory 
 
THE TARIFF OF 1902. 153 
 
 measures threatened by other countries. The 
 attitude of the mercantile class was faithfully 
 reflected by a memorial addressed to the Imperial 
 Chancellor in November by the Commercial 
 Treaties Association. Justifying the demand that 
 the existing treaties should be prolonged for a 
 series of years, and the country be spared the 
 imminent danger of tariff wars, the signatories to 
 this document said : — 
 
 " For two and a half years the whole economic life 
 of Germany has been in a condition which bears the 
 character of a crisis. Although this crisis did not 
 originate solely in the uncertainty with regard to 
 commercial policy, . . . that uncertainty has, never- 
 theless, beyond the possibility of a doubt, greatly 
 contributed to intensify and prolong the crisis. A 
 satisfactory state of things will not be restored until 
 the element of stability and security has been intro- 
 duced into our commercial relations with foreign 
 countries. For, notwithstanding the considerable 
 export trade which is still conducted under the pro- 
 tection of the existing treaties of commerce, German 
 industry in its most productive branches is suffering 
 from want of employment in a high degree, from 
 widespread want of work for those whom it employs, 
 and from a reduction of wages. The spirit of enter- 
 prise is practically extinct, new plant is hardly any- 
 where being acquired, and manufacturing premises 
 are hardly anywhere being extended. Moreover, the 
 efforts of employers at least to keep their works going 
 have resulted, especially in the case of syndicated 
 industries, in the exportation of large portions of their 
 productions at unprecedentedly low prices — a pro- 
 cedure which, if it were to last much longer, must 
 inflict the gravest damage upon the German economic 
 body, and entail consequences which would exercise 
 a prejudicial influence for decades. The present 
 
134 PROTECTION IN GERMANY. 
 
 melancholy situation has, therefore, a significance 
 which is not merely transitory, but which is of 
 decisive importance for the whole future of Germany 
 as a world-Power." 
 
 When at last the Bill emerged from Committee, 
 no time remained for reconsideration in a full 
 House, if it was to be got through before the end 
 of the session, and, to make matters worse, the 
 temper of the popular parties had now been 
 thoroughly aroused by the selfish policy pursued 
 by the interests upon whose support the Govern- 
 ment were dependent for a majority. Hence 
 came about the irritating mimic coup d'etat of 
 December 13th, when, in accordance with prior 
 agreement, a majority composed ad hoc and con- 
 sisting of the Clerical, Conservative, and National 
 Liberal fractions passed the Bill en bloc, as revised 
 by Committee, directly the schedule of agricultural 
 duties had been disposed of. The effect was to 
 prevent discussion of any one of the seven hundred 
 odd duties affecting industry and manufacture, a 
 proceeding as objectionable from the standpoint 
 of constitutional principle as it was inimical to the 
 economic interests of the country. Yet the agrarians 
 did not altogether get their own way. If Count 
 von Billow made one statement oftener and more 
 emphatically than another in the scores of speeches 
 which he devoted to the subject, it was that on no 
 account could or would the Government assent to 
 any increase of the minimum agricultural duties 
 laid down in the original draft of the tariff. 
 Moreover, he denied that any statesman within 
 
THE TARIFF OF 1902. 155 
 
 the Reichstag or without had capacity enough 
 to conclude commercial treaties on the basis of 
 duties further increased. The old corn duties as 
 adjusted for treaty purposes were : — Rye 35s., 
 wheat 35s., barley 20s., and oats 28s. per ton. The 
 Government proposed to fix these duties for the 
 future at some figure between minimum and 
 maximum rates of 50s. and 60s. in the case of rye 
 and oats, 55s. and 655. in the case of wheat, and 
 30S. and 40S. in the case of barley, while intro- 
 ducing a duty of 60s. upon hops. In Committee, 
 however, as we have seen, the agrarians succeeded 
 in getting the minimum rate for rye and oats 
 increased from 50s. to 55s., and that for wheat 
 from 55s. to 60s. On second reading, these 
 alterations were sustained in the Reichstag, but 
 by the terms of the compromise arranged between 
 the Government and the Conservative-Clerical 
 Cartel over the heads of the extreme Protec- 
 tionists the minimum duties originally proposed 
 were agreed to, with the exception that the 
 minimum duty upon barley used for brewing 
 purposes \\'as raised from 30s. to 40s. per ton, 
 while in the case of barley used for forage, and 
 also of cattle and meat, the principle of minimum 
 duties was abandoned. It may be convenient to 
 give here the corn duties which have been in 
 operation at different times (see Table, p. 156). 
 
 As now legalised the tariff pleases no one. The 
 agrarians still maintain that it fails to give them 
 all the protection they need. The professional 
 
154 PROTECTION IN GERMANY. 
 
 melancholy situation has, therefore, a significance 
 which is not merely transitory, but which is of 
 decisive importance for the whole future of Germany 
 as a world-Power." 
 
 When at last the Bill emerged from Committee, 
 no time remained for reconsideration in a full 
 House, if it was to be got through before the end 
 of the session, and, to make matters worse, the 
 temper of the popular parties had now been 
 thoroughly aroused by the selfish policy pursued 
 by the interests upon whose support the Govern- 
 ment were dependent for a majority. Hence 
 came about the irritating mimic coup d'etat of 
 December 13th, when, in accordance with prior 
 agreement, a majority composed ad hoc and con- 
 sisting of the Clerical, Conservative, and National 
 Liberal fractions passed the Bill en bloc, as revised 
 by Committee, directly the schedule of agricultural 
 duties had been disposed of. The effect was to 
 prevent discussion of any one of the seven hundred 
 odd duties affecting industry and manufacture, a 
 proceeding as objectionable from the standpoint 
 of constitutional principle as it was inimical to the 
 economic interests of the country. Yet the agrarians 
 did not altogether get their own way. If Count 
 von Billow made one statement oftener and more 
 emphatically than another in the scores of speeches 
 which he devoted to the subject, it was that on no 
 account could or would the Government assent to 
 any increase of the minimum agricultural duties 
 laid down in the original draft of the tariff. 
 Moreover, he denied that any statesman within 
 
 I 
 
THE TAFUFF OF 1902. 155 
 
 the Reichstag or without had capacity enough 
 to conclude commercial treaties on the basis of 
 duties further increased. The old corn duties as 
 adjusted for treaty purposes were : — Rye 35s., 
 wheat 35s., barley 20s., and oats 28s. per ton. The 
 Government proposed to fix these duties for the 
 future at some figure between minimum and 
 maximum rates of 505. and 60s. in the case of rye 
 and oats, 55s. and 65s. in the case of wheat, and 
 30S. and 40S. in the case of barley, while intro- 
 ducing a duty of 60s. upon hops. In Committee, 
 however, as we have seen, the agrarians succeeded 
 in getting the minimum rate for rye and oats 
 increased from 50s. to 55s., and that for wheat 
 from 55s. to 60s. On second reading, these 
 alterations were sustained in the Reichstag, but 
 by the terms of the compromise arranged between 
 the Government and the Conservative-Clerical 
 Cartel over the heads of the extreme Protec- 
 tionists the minimum duties originally proposed 
 were agreed to, with the exception that the 
 minimum duty upon barley used for brewing 
 purposes was raised from 30s. to 40s. per ton, 
 while in the case of barley used for forage, and 
 also of cattle and meat, the principle of minimum 
 duties was abandoned. It may be convenient to 
 give here the corn duties which have been in 
 operation at different times (see Table, p. 156). 
 
 As now legalised the tariff pleases no one. The 
 agrarians still maintain that it fails to give them 
 all the protection they need. The professional 
 
156 
 
 PROTECTION IN GERMANY. 
 
 and working classes have nothing to gain, but 
 everything to lose, by it, since as consumers their 
 interest is obviously a free and open market. It 
 was as a sop to the working classes, indeed, that 
 the Government nominally accepted a provision 
 introduced b}' the Clericals to the effect that any 
 increase in the revenue from the duties on food and 
 the necessaries of life should be passed to a fund 
 which should be used at some future time for the 
 
 
 
 Duties per Metric Ton. 
 
 
 
 
 
 As reduced 
 
 
 
 
 1879. 
 
 1885. 
 
 18S7. 
 
 for treaty 
 
 purposes. 
 
 1892. 
 
 
 Tariff of 
 
 1902. 
 
 
 £. s. d. 
 
 £. s. d. 
 
 £. s. d 
 
 £. s. d. 
 
 £. 
 
 s. d. £ s. d. 
 
 Wheat . 
 
 
 10 
 
 I 10 
 
 2 10 
 
 I 15 Q 
 
 2 
 
 15 to 3 5 
 
 Rye 
 
 
 10 
 
 I 10 
 
 2 10 
 
 I 15 
 
 2 
 
 10 to 3 
 
 Oats . 
 
 
 10 
 
 15 
 
 2 
 
 I 8 
 
 2 
 
 10 to 3 
 
 Barley . 
 
 
 050 
 
 15 
 
 I ;-• 
 
 100 
 
 I 
 
 10 to 4 
 
 Flour . 
 
 
 I 10 
 
 3 15 
 
 550 
 
 3 15 
 
 9 
 
 7 6 
 
 Rape . 
 
 
 030 
 
 100 
 
 100 
 
 100 
 
 2 
 
 10 
 
 jNiaize . 
 
 
 050 
 
 10 
 
 100 
 
 16 
 
 ' 
 
 10 
 
 support of widows and orphans. The proposal was 
 generally recognised as a mere ruse, and though 
 the Imperial Chancellor professed sympathy with 
 it he is hardly likely to act upon it, since the 
 Empire will for a long time need all the revenue it 
 can raise. On the other hand, the commercial 
 classes, though they stand to benefit by the 
 increase of many of the industrial duties, fear 
 that the retaliatory policy of other States will 
 more than neutralise that advantage. Their 
 attitude was shown by a protest published by 
 
THE TARIFF OF 1902. 157 
 
 the Commercial Treaties Association directly 
 the Bill had been forced through Parliament, 
 stating : — 
 
 " The parties composing the majority in the Reichs- 
 tag have unfortunately succeeded in securing the 
 adoption of the customs tariff, which has been altered 
 for the worse by the amendments of the Committee. 
 The Commercial Treaties Association consider it to 
 be all the more incumbent on them to persevere in 
 the task of endeavouring, by spreading information 
 among the people, to ensure that in the future German 
 commercial policy shall, in view of the greedy appetite 
 of the agrarians, "be guided into moderate courses, and 
 that, as a first step, the result of the elections may 
 furnish a prospect of the reduction of the exorbitant 
 duties of the tariff, which are greatly to the prejudice 
 of the internal economic condition of Germany. The 
 Commercial Treaties Association will now, as before, 
 constantly endeavour by their active co-operation to 
 promote the conclusion of advantageous commercial 
 treaties for long periods of time in the interest of the 
 overwhelming majority of the German people." 
 
 Considering the composition and influence of 
 this association, so significant a declaration is a 
 sufficient answer to the common assertion that 
 the mercantile classes of Germany are ardent advo- 
 cates of Protection. The fact is that there, as in 
 other countries, the industrial and manufacturing 
 interest is divided on the subject, and is as much 
 influenced by political and party as by economic 
 considerations. 
 
 It is impossible to withhold from Count von 
 Billow a certain mitigated sympathy. His posi- 
 tion is a difficult and a disagreeable one. With 
 
i6o PROTECTION IN GERMANY. 
 
 Association has nearly 20,000 members, who as 
 industrialists and merchants employ 1,500,000 
 people, though they claim to represent the eco- 
 nomic interests of three times that number, with- 
 out taking into account the consuming public. 
 The Association is a practical protest against the 
 short-sighted folly and the unconscionable egoism 
 of the agrarian party, which, rather than sacrifice 
 any one of its extreme demands, would see the 
 country plunged into a war of tariffs from which 
 she could not by any possibility emerge, whatever 
 the issue, without suffering irreparable injury. 
 The Conservative leader in the Reichstag con- 
 temptuously declared, indeed, that he "had not 
 the slightest fear'" of such an encounter, but fear 
 has never been a characteristic of his party so long 
 as the interests at stake were not its own. 
 
PROTECTION AND TRADE. i6i 
 
 CHAPTER X. 
 
 PROTECTION AND TRADE. 
 
 It is necessary now to inquire how Protection 
 has worked out in practice, what have been its 
 effects upon the several interests of industry, 
 agriculture, and labour, what are the gains and 
 what are the losses. Obviously there can be 
 neither finality nor absolute exactitude in an 
 inquiry of this kind. Much will depend upon the 
 point of view, upon the conception of public 
 policy which guides us, and upon the idea we 
 entertain as to what constitutes success and 
 failure. Prince Bismarck said in 1878 : " In the 
 contemplated revision of the customs tariff our 
 own interest must alone guide us." One may, 
 without being either pedantic or hypercritical, 
 object that such an elusive proposition entirely 
 begs the question at issue. For it makes two great 
 assumptions, viz., that protective laws are an 
 economic good and that such laws can be applied 
 so impartially as to promote the common welfare. 
 That special interests can be and are benefited by 
 Protection is a fact of daily observation ; that Pro- 
 tection benefits a political society as a whole is a 
 supposition not to be accepted without proof. 
 It is natural to ask first, has Protection, then, 
 P.G. M 
 
i62 PROTECTION IN GERMANY. 
 
 extended trade ? Before an answer is possible 
 the question must be clearly defined, and directly 
 it is examined its limits will be found to be much 
 narrower than they at first appear. It is clear 
 that neither German}^ nor any other country can 
 extend her exports by imposing duties on incom- 
 ing goods. In so far as the policy of Protection 
 influences foreign trade at all it must be prejudi- 
 cially, by inciting other nations to reprisals, such 
 as have in fact been resorted to by Germany's 
 neighbours, Russia and Austria, even to the extent 
 at times of temporarily shutting out German goods 
 altogether. There is a despairing note about most 
 of the Chamber of Commerce reports in all the 
 years of tariff revision that is eloquent in its testi- 
 mony to the disturbance, trepidation, and anxiety 
 caused by this critical operation, for exporters know 
 to their cost that upon the skill and success with 
 which the retaliatory measures of other States are 
 parried and overcome depend their entire trade and 
 prosperity. Typical is a passage which appears in 
 the report for 1903 of the Barmen Chamber relating 
 to the revised tariff of the preceding year: — 
 
 " That our industries, and especially the textile 
 branch, could be satisfied with the form t^iken by the 
 new customs tariff will be maintained by no one who 
 appreciates the large extent to which they are 
 dependent upon the import of yarns and the export 
 of their manufactured goods. Only the future will 
 show whether the Government will be able to 
 conclude favourable commercial treaties on the basis 
 of the tariU voted, and we cannot unfortunately 
 entertain too great hopes on this score. The change 
 
PROTECTION AND TRADE. 163 
 
 intended in various portions of the tariff will inevitably 
 entail retaliatory measures on the part of other States, 
 and the loss will naturally fall on the export indus- 
 tries. The new Russian, Austrian, and Swiss tariffs 
 already published increase two-fold and three-fold 
 the duties on articles in which our industries are 
 principally interested, a prospect which is not very 
 encouraging. The future of our foreign trade is thus 
 a dark one. Whether an improvement in trade at 
 home will compensate our industries for declining 
 trade abroad is very problematical, in view of the 
 fact that three-quarters of the entire production of 
 our district are sold to foreign countries." 
 
 Reporting for the same year, the British Consul- 
 General in Frankfurt said : — 
 
 " The consumers are threatened by a considerable 
 increase of the duties on food ; the export industry, 
 which has grown up year by year, fears that its inter- 
 ests are seriously threatened. The exporters argue 
 that, if a country so highly developed as Germanv 
 raises its customs duties, this would be the signal 
 for similar steps on the part of those countries which 
 constitute its best customers. . . . Sober manufac- 
 turers and artisans in Germany are convinced that the 
 example set by that country must ultimately favour 
 protective tendencies in other countries. They watch 
 with much apprehension the industrial growth of the 
 United States, which is looked upon as the ' coming 
 danger.' The feeling in the United Kingdom, too, 
 is being watched with much concern, as the opinion 
 is gaining ground that the German customs duties, 
 which are being persistently increased, must in the 
 end bring about a change in the system now pre- 
 vailing there. This danger is, in many quarters in 
 Germany, regarded as the greater of the two, for the 
 United Kingdom takes fully one-fifth of all goods 
 exported from Germany, and Germany, again, is the 
 United Kingdom's best customer. While the Pro- 
 tectionist agrarians and the large manufacturing 
 
 M 2 
 
i64 PROTF.CTION IN GERMANY. 
 
 industries are encouraging the German Government 
 in its Protectionist policy, the smaller and middle- 
 class industries and the centres of export are showing 
 a marked uneasiness, due to the uncertainty of the 
 near commercial future." 
 
 In considering the question of gain and loss by 
 Protection, therefore, any progress made in foreign 
 trade cannot be placed to the credit side of the 
 account, since exports are demonstrably hindered 
 rather than encouraged by protective tariffs, save 
 in so far as dear sales at home facilitate cheap sales 
 abroad — a reservation to which we shall have to 
 return. Further, it is a notorious fact that many 
 of the largest of German industrialists have only 
 been enabled to maintain their position abroad by 
 decentralising their production. A recognised 
 authority upon the iron industry, Dr. Eugen 
 Moritz, shows in his work, " Eisenindustrie, 
 Zolltariff, und Aussenhandel," how, owing to the 
 severe protective measures adopted by other 
 countries in imitation of Germany, industry after 
 industry has been compelled to establish branches 
 abroad. He enumerates seven large iron works 
 which have in this way established as many 
 branches in foreign countries ; sixteen machine 
 works which have established twenty-six branches ; 
 seven electrical companies which have established 
 twenty branches ; seven textile companies vv^hich 
 have established ten branches ; nine chemical 
 works which have established sixteen branches ; 
 and six glass, cement, and other companies which 
 
PROTECTION AND TRADE. 165 
 
 have established nine branches. Tracing in par- 
 ticular the effect of foreign Protection upon one 
 large German firm, which has for many years been 
 engaged in the construction of iron and steel rails, 
 he points out how it was compelled to build 
 factories first in Austria-Hungary and then in 
 Russia, since German material could not be 
 imported into those countries owing to the heavy 
 duties. The result has been that this large firm 
 has had to use a constantly decreasing amount of 
 German material in the execution of its contracts 
 abroad. Up to i8go only from 5 to 10 per cent, 
 of the material it employed was purchased abroad. 
 In 1898 the proportion had grown to 38 per cent., 
 in 1899 to 45 per cent., in 1900 to 50 per cent., 
 and in 1901 to nearly 60 per cent, of the firm's entire 
 sales. Protection has, therefore, had the effect of 
 depriving German workpeople, and to a large extent 
 German capital, from producing this material. 
 
 Moreover, so far as Germany has extended her 
 commerce in English and other Free Trade 
 markets she is herself a witness in favour of Free 
 Trade and against Protection. Only by examina- 
 tion of her exports will it be seen how greatly she 
 has been helped by the Free Trade policy of other 
 countries. Taking five recent years (1897-1902) 
 for comparative purposes, and relying upon the 
 returns of the Imperial Statistical Bureau, we 
 find that the total increase of exports has been in 
 weight from 28,019,949 tons to 35,029,559 tons, 
 and in value from £189,312,050 to £240,641,650, 
 
i66 
 
 PROTECTION IN GERMANY. 
 
 an increase of 7,009,610 tons and :£'5i,329,6oo 
 respectively. Of this increase, however, there 
 have fallen to three European Free Trade markets, 
 the United Kingdom, Holland, and Denmark, no 
 less than 3,079,097 tons of value £"20,868,350. 
 
 In Weieht — Tons. 
 
 
 1807. 
 
 1002. 
 
 Increase. 
 
 United Kingdom 
 
 Holland 
 
 Denmark 
 
 1,482,213 
 5,180,652 
 3S5.967 : 
 
 1 
 
 2,498.816 
 
 7.079.231 
 549,882 
 
 1,016,603 
 
 1.898,579 
 
 163,915 
 
 Totals . . 
 
 United Kingdom 
 
 Holland 
 
 Denmark 
 
 7.048,832 
 
 In Value. 
 
 ^ i 
 35,083.750 1 
 
 13,193,100 
 5.369.350 
 
 10,127,929 
 
 48,276,450 
 
 19,681,500 
 
 6,556,600 
 
 3,079,097 
 
 13,192,700 
 6,488,400 
 1,187,250 
 
 Totals . . 
 
 ;^53,646.2oo 
 
 ^■74.514.550 
 
 ;f 20.868,350 
 
 Thus, of the gross quinquennial increase of her 
 export trade 44 per cent, in volume and 40*4 per 
 cent, in value was secured in three neighbouring 
 Free Trade markets. Had these markets been 
 restricted like her own, it is a fair assumption not 
 only that nearly half of the growth of her foreign 
 trade would have been lost to her, but that she 
 would, by losing ground in these three markets, 
 have neutralised most of the progress made in 
 others. For the rest, 60 per cent, of her increased 
 trade during the years reviewed has fallen to 
 countries in which she enjoys no tariff preference 
 
PROTECTION AND TRADE. 
 
 167 
 
 whatever (saving the diminutive and very iinre- 
 munerative trade with her own colonies) but con- 
 tends with other countries on equal fiscal terms. 
 That here also she owes much to accidental 
 circumstances — such as geographical position and 
 favourable conditions and costs of transport — will 
 appear when it is remembered that next to England 
 the best of her European markets join her very 
 frontiers — Austria, Russia, Holland, Denmark, 
 France, Switzerland — and that the German Govern- 
 ment encourage foreign trade by charging almost 
 nominal railway rates on exported goods. How 
 the trade with these frontier countries (Holland 
 and Denmark excluded) has increased may be 
 shown by a similar comparison : — 
 
 
 1897. 
 
 1902. 
 
 Increase or 
 Decrease. 
 
 Austria-Hungary. . 
 
 Russia 
 
 France 
 
 Switzerland 
 
 21,756,550 
 17,281,200 
 10,495,600 
 12,719,650 
 
 £ 
 
 26,652,950 
 17,184,150 
 12,658,650 
 14,266,500 
 
 + 4,896,400 
 
 87,050 
 + 2,163,050 
 -t- 1,546,850 
 
 Totals.. 
 
 ;^62,253,ooo 
 
 ;^7o,76i,25o 
 
 + /8, 508, 250 
 
 This increase again accounts for i6*6 per cent, 
 of the whole, making 57 per cent, for which the 
 conditions were specially favourable. 
 
 It is, however, indisputable that the great 
 increase of Germany's foreign trade has fallen to 
 the years of reduced duties brought about by the 
 Caprivi treaties of 1892 and 1894, and to the 
 
i68 PROTECTION IN GERMANY. 
 
 countries with which commercial relationships were 
 by these tariffs made more eas)\ Figures in demon- 
 stration of this have, however, been given already, 
 and it is unnecessary to press their moral further. 
 It may be noted also that, as with progressive 
 industrial countries generally, Germany's "passive 
 balance of trade " has steadily increased during all 
 the years of her greatest commercial expansion, and 
 the excess of imports over exports was last year 
 about ;^6o, 000,000. Before the treaties came into 
 force the excess was ;£'4i, 500, oooini88g,;£'43, 1 50, 000 
 in 1890, and ^£"53, 200,000 in 1891. During three 
 recent years it has been : — 1900, £63,900,000 ; 
 
 1901, £49,648,000 ; and 1902, £59,884,000. In 
 
 1902, Germany's exports averaged £4 13s. per 
 head of the entire population, her imports £5. 
 
 Allowance must also be made for the increase of 
 population. In 1871 Germany gained by a mere 
 stroke of the pen an addition to her population of 
 1,400,000, by the annexation of Alsace-Lorraine 
 to the Empire, and, as has already been pointed 
 out, that annexation gave her at once a new 
 market and a new factory of enormous extent. 
 The population of the new Empire in that year 
 was 41,000,000; it was in 1900 56,000,000, an 
 increment of 15,000,000 or 36 per cent. ; while the 
 population of the United Kingdom increased in 
 the meantime from under 32,000,000 to under 
 42,000,000, an increment of 10,000,000 or 31*3 per 
 cent. This growth of population alone accounts for 
 a considerable increase both of industry and trade. 
 
PROTECTION AND TRADE. 
 
 169 
 
 That Protection has had the effect of reserving 
 the home market for home producers to a larger 
 extent than would otherwise have been the case 
 must be conceded. A comparison of the years 
 1897-1902 shows that the imports of raw materials 
 have increased relatively to the aggregate imports, 
 while those of manufactures have decreased and 
 those of food stuffs have on the whole stood still. 
 The following are the actual figures : — 
 
 
 
 
 Imports in Weight— 
 
 -Tons. 
 
 
 
 
 
 Raw 
 
 
 
 
 ; 
 
 
 Year. 
 
 
 Materials 
 
 Per- 
 
 Manu- 
 
 Per- 
 
 1 
 
 Per- 
 
 Total. 
 
 for 
 
 centage 
 
 factured 
 
 centage 
 
 Food- 
 
 centage 
 
 
 Tons. 
 
 Industrial 
 
 of 
 
 Goods. 
 
 of 
 
 stuffs and 
 
 of 
 
 
 
 Purposes. 
 
 Total. 
 
 Tons. 
 
 Total. 
 
 Cattle. 
 
 Total. 
 
 
 
 Tons. 
 
 
 
 
 
 
 1897 
 
 40,162,317 
 
 30,711,592 
 
 76-5 
 
 1.925,424 
 
 4-8 
 
 7,524.297 
 
 187 
 
 1898 
 
 42,729,839 
 
 32,077,716 
 
 7S'i 
 
 2,060,212 
 
 4'8 
 
 8,590,816 
 
 20"! 
 
 1899 
 
 44,652,288 
 
 1 34,634,940 
 
 77-6 
 
 ^.163,958 
 
 4-t 
 
 7.852.358 
 
 17-6 
 
 1900 
 
 45,911.799 
 
 1 36,255,027 
 
 79 'o 
 
 2,209,202 
 
 '^'o 
 
 7.446,366 
 
 l6'2 
 
 1901 
 
 44.304>577 
 
 34,038,124 
 
 76-8 
 
 2,104.739 
 
 4-8 
 
 8,160,435 
 
 18-4 
 
 1902 
 
 43,335.652 
 
 32,891,506 
 
 75 "9 
 
 1 
 
 2,063,029 
 
 4-8 
 
 8.379,919 
 
 i9'3 
 
 
 
 
 Import 
 
 s in Valu 
 
 e — In i,ooc 
 
 ) Marks. 
 
 
 
 Year. 
 
 
 Raw 
 Materials 
 
 Per- 
 
 Manu- 
 
 Per- 
 
 Food- 
 
 Per- 
 
 
 Total. 
 
 for 
 
 centage 
 
 of 
 Total. 
 
 factiu'ed 
 
 centage 
 
 of 
 Total. 
 
 stuffs and 
 
 of 
 Total. 
 
 
 
 Industrial 
 
 Goods. 
 
 Cattle. 
 
 
 
 Purposes. 
 
 
 
 
 
 
 1897 
 
 4,864,644 
 
 2,100,137 
 
 43'2 
 
 965,855 
 
 ig-S 
 
 1,614,705 
 
 33'2 
 
 1898 
 
 5,439.676 
 
 2,246,481 
 
 4i"3 
 
 1,015,129 
 
 i8-7 
 
 1,819,036 
 
 33"4 
 
 1899 
 
 5.783.628 
 
 2,607,014 
 
 45'i 
 
 1.147,578 
 
 19-8 
 
 1,728,504 
 
 29-9 
 
 1900 
 
 6,042,992 
 
 2,803,097 
 
 46'4 
 
 1,199,645 
 
 19-8 
 
 1,762,872 
 
 29-2 
 
 1901 
 
 5,710,338 
 
 2,458,769 
 
 43'i 
 
 1,064,231 
 
 i8-6 
 
 1,898,235 
 
 33'2 
 
 1902 
 
 5,205,776 
 
 2-559.636 
 
 44-1 
 
 1,102,743 
 
 19 'o 
 
 1,968,621 
 
 33 '9 
 
 A peculiar product of the Protectionist system 
 in Germany, as in other countries, are the syndi- 
 cates that have been called into existence for the 
 
170 PROTECTION IN GERMANY. 
 
 purpose of using to the best advantage the 
 opportunities of profitable trading which are 
 offered by preferential laws. To these passing 
 reference must be made. The syndicate regulates 
 both the production and the sale of the allied 
 industrial concerns, which henceforth are required 
 to transact business entirely through its mediation, 
 and to conform to the regulations which are issued 
 in the common interest by its directive officials. 
 The syndicate thus controls at once production, 
 sale, and prices, and, thanks to its power to check 
 competition and under-selling, it is virtually able 
 to rule the home market and to secure to its 
 members remunerative conditions of trading. An 
 important branch of the syndicate's operations is 
 the promotion of exports by means of premiums, 
 which facilitate the capture of foreign markets 
 :and account for much of the " dumping " of which 
 English manufacturers complain. In Germany 
 no disguise is made of the fact that this cheap 
 selling to foreign countries is only made possible 
 by dearer selling at home. Not long ago a syndi- 
 cate in the iron trade admitted having during six 
 months made a profit of ^60,000 on home sales 
 and a loss of £43,000 on foreign sales. Never- 
 theless, it frequently happens that the syndicating 
 of one industry proves injurious to the interests 
 of another similarl}- organised, and especially is 
 this the case where, owing to monopoly, raw 
 material or unfinished goods are made dearer 
 to industries engaged in the final processes of 
 
PROTECTION AND TRADE. 171 
 
 manufacture. Not only so, but the syndicates are 
 never slow to take advantage of the conjunctures 
 of the market, whatever be the inconvenience and 
 loss inflicted upon dependent industries. Speaking 
 of the coal famine which seriously handicapped 
 the iron trades in i8gg, Dr. Eugen Moritz, in the 
 work already named, says that the coal syndi- 
 cates " abundantly exploited the situation in their 
 special interests in a manner that can little be com- 
 mended," and he adds: "That the cartels, syndi- 
 catesand trustsshould be placed under State control 
 must appear indispensable to everyone who is versed 
 with the circumstances and who desires the healthy 
 development of our German economic life." So far 
 has the syndicating of trades and industries gone 
 that these combinations now number some hun- 
 dreds, covering every branch of enterprise. 
 
 While there can be no doubt that the consumer 
 pays more for syndicated goods than for goods 
 purchased in free exchange, this form of industrial 
 combination is widely defended in the interest of 
 labour, which is said to be secured more regular 
 employment and higher remuneration than existed 
 formerly ; though, on the other hand, great hard- 
 ship is occasionally caused where, in the interest 
 of economical concentration, old-established con- 
 cerns are arbitrarily discontinued. An investiga- 
 tion instituted by the Imperial Government led to 
 a sort of official benediction upon the syndicate 
 and the cartel, and in two recent speeches the 
 Prussian Minister of Commerce has commended 
 
172 
 
 PROTECTION IN GERMANY. 
 
 the further organisation of industry on the same 
 lines as the surest way of meeting the " American 
 terror," though taking care to warn the syndicates 
 that the immoderate use of their monopoly power 
 would lead to public condemnation and possibly 
 to legislative interference. From the consumer's 
 standpoint the syndicates simply mean higher 
 prices without an}' corresponding advantage. 
 Referring to the coal trade, a German writer 
 stated recently : — 
 
 " It is an undoubted fact that since the existence of 
 the coal syndicate the profits of the collieries have 
 enormously increased — far more than the miners' wages. 
 According to the admissions of the director of the 
 syndicate, made before the Government Commission, 
 the average price obtained during the years 1894. to 
 igoi increased from 7-83 to iroi marks, or 41 per 
 cent., while the average yearly wages of the colliers 
 increased from 961 to 1224 marks, or 28 per cent." 
 
 The following dividends declared by some of 
 the most important colliery companies represent 
 a fairly satisfactory return upon capital for years 
 of declining trade : — 
 
PROTECTION AND TRADE. 173 
 
 Granting, however, that the workpeople em- 
 ployed in the syndicated industries have not in 
 general suffered, the fact remains that the higher 
 profits of capital and the higher wages of labour, 
 where obtained, have come out of the pockets of the 
 consumers. The British Consul-General in Frank- 
 furt has summarised the pro and contra of the 
 question in the following words : — 
 
 " The old adage," he says, " that competition is the 
 life of trade no longer applies. Syndicates practically 
 do away with competition, which led to technical 
 improvements and inventions, and, as syndicates take 
 in tow also weak concerns, natural selection among 
 the works of the same branch ceases. It has not yet 
 been proved that this is counterbalanced by the 
 efforts of the various members of the syndicates to 
 occupy a prominent position in trade. Syndicates, 
 moreover, endeavour to rule the market, and this 
 compels them to deal very summarily with any new 
 competition that may spring up. They also interrupt 
 all connexion between manufacturer and customer, 
 which is one of the causes of their strength ; for, all 
 individual connexion having been severed, the manu- 
 facturer, if he quitted the syndicate, would find him- 
 self compelled to begin all over again. It is agreed 
 that since the formation of syndicates the capital 
 invested in trade is less subject to risks arising from 
 crises ; prices remain more even and steady, for the 
 crumbling away of prices through under-bidding, 
 especially in times of declining trade, is no longer 
 feared, and the expenses of production are reduced. 
 Thus, the labour market profits, employment and 
 wages have become steadier ; if during bad times the 
 home prices are kept up artificially, wholesale dis- 
 missal of workmen need not be resorted to, and the 
 various trades will more easily acquire an old and 
 experienced stock of workmen." 
 
174 PROTECTION IN GERMANY. 
 
 To return : how far the retention of the home 
 market, by the exclusion of foreign competition, 
 has been an advantage from the standpoint of the 
 national economy is a separate question, the 
 answer to which must be determined by several 
 considerations. It is obvious that, in so far as by 
 artificial aids industries are started or kept alive 
 which could not without those aids be successfully 
 carried on at all, there can be no benefit to the 
 community. For the gain which is apparently 
 shown by such industries is neutralised by at least 
 equal loss. Private individuals may profit, but it 
 is at the expense of the totality, and in the mean- 
 time productive activities are unremuneratively 
 employed which might have been employed to 
 positive economic advantage. Moreover, to the 
 extent that the exclusion of the foreigner from the 
 home market has the effect of increasing prices, a 
 further direct sacrifice is imposed upon the com- 
 munity, and this again must be placed against any 
 legitimate claim of extended trade. From this 
 standpoint the so-called "protection of national 
 industry " is at best a one-sided measure, for 
 what the producer gains the consumer loses, and 
 even when labour is more hio:hlv remunerated the 
 working man merely receives with one hand in 
 order to pay back with the other. Further, the 
 injury thus inflicted upon the community as a whole 
 is accentuated where, as is so largely the case in 
 Germany, foreign trade is systematically stimu- 
 lated by the low prices which are made possible 
 
PROTECTION AND TRADE. 175 
 
 owing to the monopoly possessed in the home 
 market, the effect of which is that the home pur- 
 chaser is overcharged in order that the foreigner 
 may be undercharged. The iron industry with 
 its allies is the chief illustration of this system of 
 uneconomic trading, popularly known in this 
 country by the vague term " dumping." The pro- 
 duction of pig-iron in Germany has increased from 
 4,658,451 tons in i8go to 8,520,540 tons in 1901, 
 8,402,660 tons in 1902, and 10,085,634 tons in 1903. 
 Naturally this great production of iron of late 
 years has been a forced production, and it was 
 necessary to dispose of a large part of it by forced 
 sales abroad. The exports of the entire iron 
 industry in 1903 were 3,309,000 tons, with a 
 value of £"30,168,750, or £(^ gs. ^d. per ton, against 
 2,347,211 tons with a value of £"25,862,950 or 
 £"11 OS. 5^. per ton in 1902, and 1,548,557 tons 
 with a value of £"23,980,450 or £"15 los. per ton 
 in igoi, showing a striking decline in prices. 
 Taking pig-iron exports alone, the value per ton 
 was in 1902 £"2 9s. 6d., against £"2 15s. in 1901 
 and £"4 in 1900. A general fall in values accounts 
 for part of this disparity, but the "dumping" 
 system accounts for still more. The Prussian 
 Minister of Finance, Baron von Rheinbaben, said 
 in the Prussian Diet on January 19th, 1904, " The 
 extraordinarily large export of iron goods has 
 unquestionably helped our iron industry over 
 difficult times. Without this export the works 
 would not have been able to keep going, and 
 
176 PROTECTION IN GERMANY. 
 
 workpeople would unavoidably have been dis- 
 charged." That is true, and the words suffici- 
 ently explain the policy which the iron industry 
 has pursued — the policy of producing to the full 
 extent of its capacity, selling to the home 
 market as dearly as protective laws and trade 
 combinations will permit, and then disposing of 
 the balance of its production abroad at " cut 
 prices"' (Schlenderpreise) which either afford a 
 very slight margin of profit or no margin at all. 
 
 Such a system of trading violates sound eco- 
 nomic principles, and the fact that individual 
 manufacturers benefit by it is no answer to the 
 objection that it expressly contradicts the 
 "national" argument by which Protection is 
 most commonly justified. A perfectly impartial 
 Consul of the United States reported to his Govern- 
 ment from Hamburg a few years ago : 
 
 " Frugality and industry can hardly be expected to 
 accomplish any miracle greater than that of enabling 
 a thrifty workman to keep out of debt. The policy of 
 the countries of Central Europe seems to be to extend 
 and inflate their manufacturing industries indefinitely 
 and suicidally. Their ideal of national prosperity 
 and of happiness seems to be nothing more than the 
 attainment of the ability to export manufactures 
 and import food, and in support of this policy the 
 Governments take from the working-man an import 
 duty on his food in order to give the manufacturer an 
 export bounty." 
 
 The only compensation which falls to the con- 
 sumer lies in the fact that the export of material 
 sold under cost enables the foreign manufacturer 
 
PROTECTION AND TRADE. 177 
 
 to re-export finished goods on favourable condi- 
 tions. Hence complaints like that of the Siegen 
 Chamber of Commerce (1903) : — 
 
 " We cannot pass over in silence the loud com- 
 plaints of many manufacturers of finished goods that 
 cheap German exports of material make it possible' 
 for firms abroad to offer serious competition here." 
 
 The Cologne Gazette, in giving illustrations of 
 this recently, wrote: — 
 
 " In transactions with foreign countries there is 
 much underbidding in the German fine-plate trade, so 
 much so that German fine-plate rolling works are 
 unable to compete, in spite of the export premiums 
 which they enjoy, and their trade abroad has been 
 greatly reduced. To all appearance the reason for 
 this is that German half-manufactured material has 
 been sold abroad at such extraordinarily low prices 
 that foreign plate rolling works are able with the 
 help of cheap German material to underbid German 
 competitors on their own ground." 
 
 It is fair, however, to remember that many 
 persons, while opposed to Protection on economic 
 grounds, defend it on political and social grounds. 
 The prospect of Germany's definite transforma- 
 tion from an agricultural into an industrial State 
 is one which is contemplated by thoughtful people 
 of every political party with regret and misgiving. 
 It is not merely that such a transition must 
 inevitably be accompanied by hardship to the 
 existences which go under, but that the final 
 triumph of industry means the triumph of the 
 factory system and all the hundred-and-one evils 
 which inevitably follow in its train — the decay of 
 
 P.G. N 
 
178 PROTECTION IN GERMANY. 
 
 rural life, the densely populated town, the un- 
 healthy life, the physical and moral deterioration 
 which modern industrial conditions occasion and 
 foster. Even avowed Free Trade economists like 
 Professor Walther Lotz frankly recognise the 
 importance of this aspect of the question, and 
 admit the desirability of checking in every natural 
 way the concentration of population in large 
 towns. Nevertheless, the outlook is not by any 
 means so gloomy as pessimistic imaginations are 
 apt to picture it. According to the census of 
 occupations of 1895 the industrial population of 
 Germany was still found to be resident for the 
 most part in towns of medium and of small size, 
 and only to the extent of one-fifth in towns of 
 over 100,000 inhabitants. For example, of every 
 1,000 persons employed in industry and mining 
 194*1 were found in towns of 100,000 and up- 
 wards, 146 in towns with from 20,000 to 100,000 
 inhabitants, 196*8 in towns with between 5,000 
 and 20,000 inhabitants, 152*4 in towns of between 
 2,000 and 5,000 inhabitants, and 310*7 in com- 
 munes with less than 2,000 inhabitants. At that 
 time 7,188,758 persons were found to be directly 
 engaged in industry, and their dependents num- 
 bered 8,257,721, making a total industrial popu- 
 lation of 15,446,479. On the other hand, the 
 agricultural labourers numbered 5,500,000, with 
 3,000,000 dependents. 
 
 Happily also, deterioration has not yet made 
 the inroad upon the national strength and vitality 
 
PROTECTION AND TRADE. 179 
 
 which is sometimes alleged, and of degeneracy 
 there can be no talk. The report upon the 
 physical condition of the youth levied for military 
 service during 1902 shows that the urban deca- 
 dence so generally affirmed has little basis in fact. 
 Of every 100 persons born on the land liable 
 to service, 58*64 were found to be efficient when 
 taken from agriculture and forestry, and 58*40 
 when taken from other employments : a difference 
 of only 0*24 per cent. Of town-born men liable 
 to serve, 58*52 per cent, of those employed on the 
 land were found to be efficient, and 53*52 per cent. 
 of those who followed other employments, a 
 difference in favour of the countryman of only 
 5 per cent. 
 
 And yet, however reasonable this fear of industry 
 may be, and however legitimate the plea that the 
 agricultural population, as the healthiest element 
 in the nation, should be protected against decay, 
 even at great sacrifice if need be, it is essential 
 that the State in discharging an obligation of this 
 kind should at least take care that the benefit of 
 the protection given is universally and equally 
 shared and does not become the monopoly of any 
 one class. This, however, it has entirely failed 
 to do. As we shall see, the inevitable result of 
 high agrarian tariffs is to enrich the large land- 
 owners and the large cultivators ; to the small 
 peasantry in general and to the agricultural 
 labourer Protection brings little or no gain, and 
 often positive loss. 
 
 N 2 
 
i8o PROTECTION IN GERMANY. 
 
 The attempt has been made to draw conclu- 
 sions favourable to Protection from the returns of 
 emigration. It was, of course, one of Prince 
 Bismarck's favourite theories that emigration was 
 the true index of the country's prosperity, yet even 
 if we accepted this theory as valid for Germany, 
 it would be difficult to base upon it any justifica- 
 tion of the policy introduced in 1879. during the 
 industrial expansion of 1872 no fewer than 125,650 
 persons emigrated from German ports, and in 
 1873, when times were still perilously prosperous, 
 103,638. Then the number fell to 45,112 in 1874, 
 to 30,773 in 1875, to 28,368 in 1876, and to 21,964 
 in 1877. Industrial and commercial stagnation 
 had now well set in, yet even in 1878, when the 
 last successful blow on behalf of Protection was 
 struck, the number of emigrants was only 24,217, 
 while in 1879 it was 33,227. The following year 
 the new tariff came into full operation, and the 
 emigration rose to 106,190, and in the next year 
 it was 210,574. Taking quinquennial periods, the 
 number of emigrants during the five years follow- 
 ing the French war (1871-1875) was 381,085, and 
 during the five years which covered the transition 
 to Protection (1876-1880) 214,068; but during the 
 following five years (1881-1885) it was 817,763.^ 
 During late years there has been a great decline 
 in this withdrawal of population. In 1887 it was 
 still 99,712, in 1888 it was 98,515, in 1889 it was 
 90,259, in 1890 it was 91,925, in 1891 it was 
 ^ Karl Strauss in Petermanns Mittheilungen, 1886. 
 
PROTECTION AND TRADE. i8i 
 
 115,392, and in 1892 112,208. The following 
 years saw the operation of the Caprivi treaties, 
 and the emigration fell to 84,458 in 1893, to 
 39,178 in 1894, to 35.557 in 1895, to 32,114 in 
 1896, to 23,220 in 1897, and to 20,837 ^^ 1898, in 
 which year the harvest was specially good. Since 
 then the number has risen to 32,000 (T902). It 
 should be added that since 1897 emigration has 
 been to some extent regulated by a law requiring 
 emigration agents to be registered, and restricting 
 their operations to such ports and even countries 
 of destination as the Imperial Chancellor may 
 from time to time determine. No wise man will 
 too daringly form definite conclusions either way 
 upon figures like the above without taking into 
 consideration other factors which have nothing 
 whatever to do with fiscal policy. 
 
 A fair verdict upon Protection from the purely 
 economic standpoint would be that while it has 
 undoubtedly preserved the home market for the ^ 
 home producers to a far larger extent than for- 
 merly, it has done this at the cost of the con- 
 sumers. The manufacturing classes have greatly 
 benefited ; but their gain has been the loss of the 
 rest of society. But an economy which does not 
 promote the interests of society as a whole cannot 
 by any right use of the term be called a national 
 economy ; it is a class economy pure and simple. 
 And this is what the policy of Protection has 
 gradually become in Germany. Commended 
 originally by its author on the score of its 
 
i82 PROT?:CTION IN GERMANY. 
 
 reasonableness and moderation, and by him lauded 
 as superior to the earlier policies of prohibition 
 and exclusion, because it sought to combine pro- 
 tection for industry and agriculture with a scru- 
 pulous regard for the interests of the consumers, 
 it has step by step grown into a huge political 
 system for guaranteeing the two great branches of 
 production security for their capital and a remu- 
 nerative return for their investments. The late 
 Dr. Schaffle pointedly characterised the demands 
 of the modern Protectionist in Germany in the 
 following words, and though they were meant to 
 refer particularly to the agrarian they apply to the 
 industrialist as well : — 
 
 " The Protectionists of our time no longer ask, as 
 did the Protectionists of earlier times, for protection 
 for the purpose of cultivating new or young branches 
 of production or against crises, but without disguise 
 demand a State guarantee, by means of customs 
 duties, of a definite interest on capital and rent of 
 land. Not temporary support of agriculture in its 
 endeavour to accommodate itself to the universal 
 obligation to pass over to a more intensive system of 
 farming, and to the new international competition, 
 but the maintenance of the rent of the land which 
 was attained up to 1875 is the real gist of the matter. 
 It is as if the investor asked for protection so that the 
 rate of interest might not fall, or the capital sunk in 
 industry and trade required protection so that old 
 undertakings might be continued without loss." 
 
 The word is like poison on the tongue of the 
 average Protectionist, whether agrarian or in- 
 dustrialist, yet in effect his demand implicitly 
 concedes the Communistic principle. For if the 
 
PROTECTION AND TRADE. 183 
 
 landowner is to be secured his rent, and the 
 capitahst his interest, why not the merchant his 
 profits, the workman his wages, the professional 
 man his fees, and everybody else his special form 
 of remuneration ? But a system of universal 
 bounties, under which everybody is equally sub- 
 sidised at the common expense — which means in 
 the last resort his own — would be nothing less 
 than Communism sans phrase. That was why 
 Count von Caprivi with statesman-like foresight 
 ranked agrarianism with Social Democracy as one 
 of the revolutionary elements in society. 
 
 It remains to be added that while the advocates 
 of industrial duties continue powerful enough to 
 influence legislation, the manufacturing and mer- 
 chant classes are no more Protectionist in a body 
 than are the same classes in England. Not only 
 so, but many of the most sagacious spokesmen of 
 industry contend that a return to Free Trade 
 would in time equip Germany far more efficiently 
 than in the past to compete for trade on a large 
 and imposing scale in the markets of the world. 
 Referring to the progress which has already 
 been made in this direction, Dr. Eugen Moritz 
 writes : — 
 
 "The reasons for this striking development are first 
 of all to be sought in the economic consolidation of the 
 German Empire and its concentration upon remunera- 
 tive industry and foreign trade. The inventions in 
 regard to the application of steam and electricity, the 
 discoveries in chemistry, the revolution in machine 
 and railway construction, formed the starting point 
 
i84 PROTECTION IN GERMANY. 
 
 for the creation of industry on a large scale, which 
 industr}', fostered by Germany's peace policy, has 
 grown to its present prosperity."^ 
 
 And speaking of the iron industry in particular, 
 he contends that its expansion would have taken 
 place without any protective duties at all, while his 
 final conclusion is that the future success of 
 Germany's industry and export will best be 
 furthered by the gradual adoption of a Free Trade 
 policy. Views like these have never been isolated, 
 but they are more common to-day than ever before. 
 So long as agrarianism was moderate in its demands 
 it was possible for the industrialists to work with it 
 to mutual advantage. Now, however, that the 
 agrarians insist more and more on regarding 
 Protection solely from their own standpoint, and 
 indeed demand severer tariffs for the express pur- 
 pose of stemming the progress of industry, it is not 
 difficult to foresee the time when the breach of the 
 old compact might become a vital necessity for the 
 manufacturing interest, and with that breach a 
 new era of freer international trade would at once 
 begin. 
 
 ' " Eisenindustrie, Zolltariff, und Aussenhandel," Berlin, 
 1903. 
 
CONDITION OF THE WORKING MAN. 185 
 
 X 
 
 CHAPTER XI. 
 
 THE CONDITION OF THE WORKING 
 
 MAN. 
 
 In commending Protection to his countrymen 
 in 1879 Prince Bismarck laid special stress upon 
 the need for the "protection of national labour." 
 Let the foreigner only be prevented from com- 
 peting on free and equal terms in the home 
 market, and as a result of the stimulus which 
 would be given to industry the working man 
 would be assured far more favourable conditions 
 both of labour and of life. A pertinent comment 
 upon this plea, which still continues to occupy a 
 leading place in the case for Protection, was passed 
 by a labour deput}^ in the Reichstag this year. 
 " The working man," he said, " receives no benefit 
 from the duties, and the middle (consuming) class 
 is seriously injured by them. If it were true that 
 Free Trade reduces wages, then wages should be 
 lowest in England and highest in Russia, but the 
 fact is exactly the reverse. Wages in England 
 are far higher than in Germany ; in Russia they 
 are miserable." Whether they are right or 
 wrong, the conclusions here expressed are enter- 
 tained by the entire labouring population, whose 
 
[86 
 
 PROTECTION IN GERMANY. 
 
 uncompromising hostility to Protection is rooted in 
 a profound conviction ofitsharmfulness and harsh- 
 ness as well as of its inequality. How far this 
 conviction is justifiable may be more fairly judged 
 when the facts of labour's condition in Germany- 
 are before us. 
 
 There is no denying that wages have increased 
 during recent years, yet the increase has in general 
 taken place on rates which have been unknown 
 in England for half a century. Even so, the 
 wages paid in the two countries to-day yield some 
 startling contrasts. Thus, returns published by 
 the Metal Workers' Union show that of 8,951 
 journeymen locksmiths employed in Berlin in 
 I903> 5>040 earned 3s. 6d. a day and upwards, 
 3,163 earned between 2s. 8^d. and 3s. 5*^., and 
 758 earned between 2s. 2^d. and 2s. yd. a day. 
 An agreement concluded between the master 
 locksmiths and their employees guaranteed to men 
 out of their time a minimum of 4^. an hour from 
 1904 forward. In England the average rate is 
 4s. 6d. a day. 
 
 According to official returns the average yearly 
 wages paid in the collieries of Prussia in 1901 and 
 1902 were — 
 
 District. 
 
 Upper Silesia 
 Lower Silesia 
 Dortmund ... 
 Saarbriicken 
 Aix-la-Chapelle 
 
 I90I. 
 
 
 1902. 
 
 
 £ s- 
 
 d. 
 
 £ s. 
 
 d. 
 
 43 12 
 
 
 
 .. 41 
 
 
 
 43 II 
 
 
 
 ■• 39 19 
 
 
 
 ... 61 4 
 
 
 
 .. 56 II 
 
 
 
 ... ■ ... 52 2 
 
 
 
 •• 52 13 
 
 
 
 58 2 
 
 
 
 •• 55 19 
 
 
 
CONDITION OF THE WORKING MAN. 187 
 The wages in the iron ore mines were : — 
 
 District. 
 
 
 
 190 r, 
 
 
 1902. 
 
 
 
 
 
 i ^. 
 
 d. 
 
 £ s. 
 
 d. 
 
 Mansfeld 
 
 
 > ■ • 
 
 50 I 
 
 ., 
 
 - 43 5 
 
 
 
 Upper Harz 
 
 
 
 33 18 
 
 ., 
 
 • 34 3 
 
 
 
 Siegen-Nassau 
 
 
 . . . 
 
 45 4 
 
 ., 
 
 ,. 39 6 
 
 
 
 Other districts right 
 
 of the 
 
 
 
 
 
 Rhine 
 
 
 • • • 
 
 40 13 
 
 ., 
 
 ■• 39 3 
 
 
 
 Other districts left 
 
 of 
 
 the 
 
 
 
 
 
 Rhine 
 
 
 ... 
 
 ^6 2 
 
 . 
 
 .. ^4 
 
 
 
 It is often interesting to see ourselves as others 
 
 see us, and this is a picture of British labour 
 
 drawn by two German State mining officials who 
 
 had been sent here to spy out the land : — 
 
 " Wages iu the mining industry of Great ikitain 
 are, as a whole, higher than in Prussia ; the working 
 hours, however, in the four or five regular working 
 days per week are longer in England than in Prussia. 
 . . . The English miner, apart from Northumberland 
 and Durham, works longer day shifts, Saturdays 
 excepted, than the German miner. Throughout the 
 whole year, however, he works fewer shifts than the 
 German miner, and he employs more frequently than 
 the latter a whole day or half a day for recreation, 
 amusement, and attendance at meetings. His higher 
 wages allow him to incur the necessary expenses. 
 The English miner employs his higher wages in better 
 eating and drinking, that is to say, in procuring 
 better and more nourishing food. Hence the greater 
 working capacity of the Englishman." 
 
 It is a German coal miner also who speaks in a 
 
 revealing little book written not long ago with the 
 
 title " How the English Workman Lives," ^ and 
 
 the following is his impression of German and 
 
 English conditions of labour : — 
 
 ' By Ernst Diickershoff (published in translation by 
 P. S. King & Son). 
 
i88 PROTECTION IN GERMANY. 
 
 " In my opinion, the workman makes and maintains 
 a home more easily in England than in Germany. 
 It might be thought that a German workman ought 
 to be able, with diligence, to save a little. But, on 
 the other hand, where living is cheap, wages are low. 
 If the workman goes nearer the town, where wages 
 are higher, he fmds rent and provisions are higher, 
 too ; and if he wants to rent a piece of ground, the 
 owner cannot put too high a price upon it. I have 
 tried in every way to effect some saving, but to no 
 purpose. My monthly average in Germany was 
 eighty marks {£^ 8s. ^d.). Here I received during 
 1895, according to the colliery books, ;^77 iis. yd. 
 It must be admitted, however, that I was favoured, 
 because I had to fetch my wife and four children out 
 of Germany. I know well that I can make some- 
 thing out of two years' work here, for saving is easy 
 to a German where it is hard to an Englishman, 
 because the latter makes more demand upon life. 
 The chief advantage of all is the cheapness of flour. 
 If everything else is wanting, at least one can always 
 get bread. I have talked over the subject with many 
 Germans round about, and have often received the 
 answer, ' Germany is all very well if one has English 
 money to spend in it.' " 
 
 Again, the average 37earl3'' wages of the musical 
 instrument makers — representing in Germany a 
 very important industry — were in 1888 -^35 15s. ; 
 in 1899 they had risen to £36 gs. ; in 1900 they 
 were £33 i8s. ; and in 1901 £^6 8s. ; an increase 
 of 13s. a year in eleven years. 
 
 So, too, the wages of masons run from 5^. to 
 yd. per hour, and it is not without significance 
 that the majority of the strikes which take place 
 in Germany fall to the building trades. Thus in 
 1903 the masons of Konigsberg struck work to 
 
CONDITION OF THE WORKING MAN. 189 
 
 secure an advance of wages from the ruling rates 
 of from ^^d. to ^f^d. an hour. After thirteen 
 weeks' idleness they were successful in securing 
 an immediate advance to 5f^., with a promise of 
 ^d. more in 1904, but the victory lost the funds of 
 their trade union some hundreds of pounds. 
 
 A calculation made by the trade unions of the 
 Saxon textile industry in 1903 showed that the 
 average wages of employees in that industry, in- 
 cluding overseers, only amounted to £^2 15s. per 
 year. A contributor^ to Schmoller's Jahrbuch in 
 1903 gave the following comparison of standard 
 wages in Germany and England, based on inquiry 
 in both countries ; I have added, where possible, 
 the corresponding figures published in the Board 
 of Trade's fiscal Blue Book : — 
 
 
 /^„ 
 
 
 
 United 
 
 Board of Trade 
 
 
 
 Oermany. 
 
 Kingd 
 
 om 
 
 
 Bl 
 
 ue Bool 
 
 • 
 
 
 
 £ 
 
 s. 
 
 d. 
 
 £ 
 
 s. 
 
 d. 
 
 £ 
 
 *v. 
 
 <i. £ 
 
 s. 
 
 tf. 
 
 Coal miners 
 
 I 
 
 1 
 
 
 
 
 13 
 
 II 
 
 I 
 
 12 
 
 to I 
 
 19 
 
 
 
 Iron workers ■< 
 
 
 
 18 
 
 3 
 
 
 4 
 
 6 
 
 1 
 
 
 
 
 
 
 to 
 
 
 
 to 
 
 
 f 
 
 
 
 
 
 I 
 
 2 
 
 I 
 
 2 
 
 
 10 
 
 
 
 ) 
 
 
 
 
 
 Turners 
 
 
 6 
 
 
 
 
 13 
 
 
 
 I 
 
 15 
 
 to I 
 
 18 
 
 
 
 Machine makers and litters 
 
 
 4 
 
 6 
 
 
 13 
 
 
 
 I 
 
 15 
 
 to I 
 
 18 
 
 
 
 Smiths 
 
 
 7 
 
 5 
 
 
 13 
 
 
 
 I 
 
 16 
 
 to I 
 
 18 
 
 
 
 Pattern makers 
 
 
 4 
 
 9 
 
 
 18 
 
 
 
 I 
 
 17 
 
 to 2 
 
 
 
 
 
 Shipwrights 
 
 
 5 
 
 10 
 
 
 14 
 
 
 
 
 
 
 
 
 Coppersmiths 
 
 
 J 
 
 5 
 
 
 6 
 
 
 
 I 
 
 16' 
 
 
 
 
 
 Masons 
 
 I 
 
 I 
 
 7 
 
 
 13 
 
 9 
 
 I 
 
 19 
 
 2 to 2 
 
 3 
 
 9 
 
 Carpenters and joiners 
 
 
 2 
 
 4 
 
 
 12 
 
 9 
 
 I 
 
 iS 
 
 3 to 2 
 
 3 
 
 9 
 
 Wood turners 
 
 
 
 18 
 
 5 
 
 
 10 
 
 
 
 
 
 
 
 
 Pottery workers 
 
 
 2 
 
 7 
 
 
 7 
 
 
 
 
 
 
 
 
 Woollen weavers and spinners . . 
 
 
 
 
 7 
 
 
 
 
 o(?) 
 
 
 
 
 
 
 Cotton spinners 
 
 
 
 
 
 
 
 1=, 
 
 6 
 
 
 
 
 
 
 Cotton weavers 
 
 
 
 12 
 
 6 
 
 
 i3 
 
 
 
 
 
 
 
 
 Shoemakers 
 
 
 
 18 
 
 1 
 
 
 15 
 
 
 
 
 
 
 
 
 Compositors 
 
 I 
 
 8 
 
 S 
 
 
 15 
 
 
 
 I 
 
 12 
 
 3 io I 
 
 i3 
 
 
 
 Seamen 
 
 
 
 12 
 
 9 
 
 
 
 15 
 
 5 
 
 
 
 15 
 
 to I 
 
 2 
 
 6 
 
 1 W. Hasbach, " Zur Charakteristik der englischen 
 Industrie." 
 
igo PROTECTION IN GERMANY. 
 
 The statistics published by the Board of Trade 
 give the weekly wages of skilled workmen generally 
 in German towns as from 22s. 6d. to 24s,, against 
 36s. to 42s. in England. 
 
 To take more general computations, according 
 to statistics of the Imperial Insurance Office, the 
 average yearly earnings of the working classes are 
 £^6 15s., or 14s. id. per week, 65 per cent, of the 
 total wage-earners receiving less than £40, and 
 85*5 per cent, less than ;^50 a year. Further, 
 the number of persons assessed to income tax 
 in Prussia in 1903 was 3,897,782, and the total 
 assessment was £9,317,700, but while there was 
 an increase in the assessments as compared with 
 the previous year of 135,735, there was a reduc- 
 tion in the tax of £123,900. Of a population of 
 35,000,000, over 20^ millions were free from income 
 tax owing to the family income not exceeding £45. 
 Of the population exempted, 7^ millions fell to the 
 towns, and 13 millions to the country. Of the 
 14I million persons whose collective incomes were 
 assessed, 88"i5 per cent, fell to the schedule 
 between £45 and £150. Only two-fifths of the 
 households of the country had an income exceed- 
 ing £45. So, too, in Saxony 1,785,471 persons 
 were assessed to income tax in 1902, but of these 
 188,770 were found to come within the exemption 
 income, viz., £20. Of the rest 984,308 had an 
 income of between £40 and £80, and only 235,970 
 persons in the whole country exceeded the last- 
 named amount. And speaking of Saxony, the 
 
CONDITION OF THE WORKING MAN. igi 
 
 returns of the Dresden Sickness Insurance Fund 
 show that in April, 1903, only 41 -3 per cent, of 
 the 51,945 male members received weekly wages 
 exceeding 22s. 6d. ; 32*4 per cent, received from 
 i6s. 6^. to 22s. 6d. ; and 26"3 per cent, received less 
 than i6s. 6d. The 27,237 female members had 
 the following earnings : Over 22s. 6d., i"8 per 
 cent.; from 19s. 6d. to 22s. 6d., i'6 percent.; from 
 i6s. 6d. to 19s. 6d., 4*9 per cent. ; from 13s. 6d. to 
 i6s. 6d., 10*3 per cent. ; from los. 6d. to 13s. 6d., 
 33*5 per cent. ; from ys. 6d. to los. 6d., 32*4 per 
 cent. ; from 4s. 6d. to ys. 6d., 11 '4 per cent. ; 
 under 4s. 6d., 4*1 per cent. Nevertheless, the 
 frugal Saxons are pre-eminently a saving people. 
 The deposits in the savings bank of Saxon 
 averaged per head of the population for the whole 
 of the monarchy: — 1877, 1027 marks; 1882, 
 ii8*5 marks; 1887, i54'4 marks; 1892, i75'5 
 marks ; 1897, 2207 marks ; and the number of 
 depositors varied as follows at the same periods : 
 1877, I for every 3-60 of the population ; 1882, 
 I for every 2*96 of the population ; 1887, i for 
 every 2*27 of the population ; 1892, i for every 
 2*1 of the population; and 1897, i for every r8 of 
 the population. 
 
 But the true significance of the prevailing rates 
 of wages is not their lowness but the fact that 
 they are supposed to represent that " protection of 
 national labour " which it is the purpose and object 
 of customs duties to assert. It must also be 
 remembered that these wages remunerate far 
 
192 PROTECTION IN GERMANY. 
 
 longer hours of labour than are usual in Eng- 
 land. The average is ii or ii| hours per day, 
 or 64 to 68 per week, for work continues on 
 Saturday until five or six o'clock ; and the 
 conditions of employment otherwise still leave 
 much to be improved, especially in regard to 
 the place taken by women and children in the 
 factory. 
 
 Granting, however, that wages are higher than 
 formerly, yet so also is the cost of all the com- 
 modities of daily use, so that the working classes 
 have at best gained the questionable exchange of 
 living on a higher scale, not of life but of prices. 
 According to the Statistical Bureau the old corn 
 duties represented a tribute of 30s. per family 
 all the country through, so that a working man 
 had to give at least ten days' work at 3s. a 
 day in this single tax. This estimate is con- 
 firmed by the results of independent investigations. 
 Estimating the incidence of the corn duties upon 
 working men's incomes on the basis of seventy- 
 five actual household budgets, P. Mombert found 
 that when the duties stood at 35s. per ton they 
 represented a tax of 3*64 per cent, of the average 
 income in this article alone, while the duties under 
 the new tariff of 55s. per ton will amount to a 
 tribute of 5*57 per cent, or is. i^^. in every pound 
 of earnings. To this come, however, other charges 
 which are collectively even more serious — a duty 
 of 2d. and 2hd. per lb. on meat, a duty on butter 
 and margarine equal to i^d. in the shilling spent, 
 
CONDITION OF THE WORKING MAN. 193 
 
 i^d. in the shilling on cheese, 4^^. on baked goods, 
 z^d. on rice, gld. on petroleum, zd. on cooking 
 oil, i^d. on salted herrings, not to speak of still 
 higher duties on less indispensable articles like 
 coffee and tea. It has been estimated by the 
 Board of Trade that while 100 shillings, spent 
 on the ordinary commodities of working-class 
 consumption, would buy in England during the 
 years 1897 to igoi as much as 140 shillings 
 bought in 1877 to 1881, they would only buy in 
 Germany as much as 112 shillings bought afore- 
 time. There may be heat — but is there not also 
 light ? — in the words of a German writer who 
 recently voiced the protest of the working classes 
 upon this subject : — 
 
 " On penalty of death, nature compels us to eat, 
 and so on penalty of death we are compelled to pay 
 the bread and meat taxes. The man who fails to 
 
 Eay his direct taxes may have his goods distrained, 
 at he cannot be punished. But the man who is 
 unwilling to pay the taxes on bread and meat must 
 die of hunger. It is a truly diabolical system. For 
 by the increasing burdens on the food of the people 
 civilisation in general is deteriorated, the masses are 
 placed in the unworthy position that they can only 
 satisfy their most urgent needs, wliile the resources of 
 culture which they create are monopolised by those 
 who have no right to them save the fact of possession. 
 The system of indirect taxation is in direct antagonism 
 to civilisation."^ 
 
 Nothing could better illustrate the practical 
 
 ^ " Die Lebensmittekblle und die indirecten Steuer," 
 1903. 
 
 P.G. O 
 
194 PROTECTION IN GERMANY. 
 
 working of the protective laws and regulations 
 in their relation to the food of the people than 
 the following incident, reported from Berlin 
 by a London newspaper on September I2th, 
 1902 : 
 
 " No fewer than seventeen meetings were held 
 simultaneously in Berlin yesterday, to protest against 
 the high prices of meat. All the meetings were 
 crowded, and in most instances the police had to 
 close the doors to prevent dangerous crushing. Each 
 hall was surrounded by crowds of people who were 
 unable to obtain admittance. The prices have gone so 
 high that for the workman's family meat has become 
 almost impossible, and in the poorer districts in the 
 provinces the consumption of meat has become nil, 
 and in consequence sickness is said to be rife in many 
 places. The cause of the high prices is considered 
 to be the strict frontier regulations as regards the 
 import of foreign meat and the Inspection of Meat 
 Law of June, 1900. Under the pretext of preventing 
 the importation of diseased cattle and meat, the 
 agrarian cattle breeders' petition for the almost total 
 closing of the frontiers to foreign meat by making 
 the conditions stricter was granted. By the new 
 Inspection of Meat Act the importation of fresh and 
 pickled pork is prohibited, and as the supply of 
 German-bred cattle is insufficient, the result is 
 scarcity, coupled with high prices." 
 
 The consequences of low wages and dear food 
 are, as might be expected, an inferior standard of 
 life, insufficient nutrition, and impaired vitality. 
 A German authority has estimated the following 
 to have been the consumption of various articles 
 of food in his country and in England in 
 1896-7 : 
 
CONDITION OF THE WORKING MAN. 195 
 
 
 Estimated consumption in kilogrammes 
 
 
 
 (of 2 V lb.). 
 
 
 
 
 In Germany. In England. 
 
 Corn 
 
 
 139 
 
 157 
 
 Potatoes .. 
 
 
 439 
 
 146 
 
 Rice 
 
 
 2-35 
 
 2-9 
 
 Sugar 
 
 
 12-3 
 
 38-5 
 
 Fruit 
 
 
 2 
 
 6-5 
 
 Cocoa 
 
 
 •27 
 
 •28 
 
 Coffee 
 
 
 2'53 
 
 ■39 
 
 Tea 
 
 
 '5 
 
 2-6i 
 
 Meat 
 
 
 41 
 
 59 
 
 The statistician, Dr. F. Hirschfeld, has shown 
 that amongst German famihes with an income of 
 under £y^ yearly the daily consumption of bread 
 — rye-bread exclusively — and potatoes varies from 
 500 to 750 grammes. Amongst families with an 
 income of from ^^300 to ;^5oo, however, the con- 
 sumption of bread (here wheaten bread for the 
 most part) and potatoes is only from 150 to 200 
 grammes, for a more substantial diet, in which 
 meat takes a prominent place, is here customary. 
 According to the Fiscal Blue Book of 1903, an 
 examination of 282 English urban working-men's 
 household budgets showed an average consump- 
 tion per family of i lb. 5 oz. of meat per day. 
 An investigation made in Nuremberg gave \ lb. 
 per family, and an investigation at Konigsberg 
 gave nearly | lb. The German Imperial Health 
 Bureau lays down the principle that an adult 
 requires for his physical efficiency a minimum 
 consumption of 150 grammes of flesh food daily, 
 or about i kilogramme, or under 2 lb. 2 oz., 
 
 o 2 
 
196 PROTECTION IN GERMANY. 
 
 weekly. Yet the average consumption for 
 German}/, taking the rich with the poor, is 
 placed at i lb. 3 oz. In a recent Press prosecu- 
 tion at Saarbriicken pastors residing in that 
 mining district testified that " they knew colliers' 
 homes in which no meat came on the table the 
 whole week through ; bread, coffee, and potatoes 
 formed the colliers' principal food." How the 
 pressure upon wages deteriorates the food supply 
 may be illustrated from an address given before 
 the Association for the Advancement of the 
 Interests of the Chemical Industry in Berlin in 
 September, 1903, by the general secretary of that 
 organisation, who, in comparing the condition 
 of the working classes in 1902 and 1901, 
 said : — 
 
 " The standard of life of the workers has consider- 
 ably worsened. The place of nutritious bread has to 
 a large extent been taken by cheap potatoes : the 
 consumption of meat, which has become dearer, has 
 greatly decreased ; and that of the most indispensable 
 luxuries, as sugar, coffee, beer, tobacco, &c., has also 
 diminished. The consumption of rye fell between 
 1901 and 1902 from 147 to 137 kilo, per head of the 
 population, that of wheat from 91 to 85 kilo., that 
 of sugar from i2"3 to 11 "6 kilo., that of coffee from 
 3'oi to 2"95 kilo., while simultaneously the consump- 
 tion of potatoes increased from 604 to 732 kilo., and 
 that of herrings from 3"59 to 4'o6 kilo. So, too, the 
 consumption of meat decreased. During the first 
 half of 1902 there were slaughtered at abattoirs 
 197,000 fewer pigs than in 1901, while in eleven 
 towns the consumption of horse flesh increased from 
 35 to 200 per cent." 
 
CONDITION OF THE WORKING MAN. 197 
 
 In confirmation of the above the German 
 Labour Market Correspondence for December, 
 1901, reported that the average price of provi- 
 sions had increased yh per cent, at Leipzig, and 
 at Chemnitz and other Saxon towns 12^ per 
 cent. So, too, Dr. G. Creuzbacher, in his inquiry 
 into the food consumption of the town of Munich, 
 shows that the consumption of meat has decreased 
 even in that well-to-do city during recent years. 
 While the population of Munich increased between 
 1881 and igoo 10975 P^^ cent., the consumption 
 of meat only increased 8i"33 per cent., the decrease 
 per head being from g4"8 to 8i'8 kilogrammes. 
 The official market returns give the following 
 comparison for the years 1896 to igoi : — 
 
 
 Dead Meat sold 
 
 
 Per head of the 
 
 
 in double cwts. 
 
 
 population. 
 
 Year. 
 
 (100 kilo.). 
 
 Population. 
 
 In kilo. 
 
 1896 . 
 
 . 328,268 ... 
 
 415,000 
 
 ... 79-1 
 
 1897 . 
 
 • 338.224 ... 
 
 430,000 
 
 .. 78-6 
 
 1898 . 
 
 . 342,468 ... 
 
 446,000 
 
 .. 76-8 
 
 1899 . 
 
 . 360,597 ••• 
 
 466,000 
 
 •• 77-3 
 
 1900 
 
 . 381,625 ... 
 
 490,000 
 
 .. 77-9 
 
 1901 
 
 • 375.285 ... 
 
 503.900 
 
 .. 75-2 
 
 In English weight there was a reduction in the 
 consumption of meat during this period of from 
 166 to 158 lb. per head of all classes, the latter still 
 a large average as German meat consumption goes. 
 Meanwhile, the consumption of horse flesh has 
 increased — a sinister fact whose significance can- 
 not be misunderstood. In 1896 the number of 
 
200 PROTECTION IN GERMANY. 
 
 following comparison between his own country and 
 England : — 
 
 "England is certain of a peaceful solution of its 
 social perplexities and antagonisms. No Englishman 
 doubts this, whether he be Conservative or Liberal, 
 workman or employer. Nowhere does there exist in 
 England that tendency to social pessimism which is 
 so common amongst ourselves ; nowhere in the lower 
 classes of society exists the belief that salvation can 
 only be found in the subversion and the destruction 
 of the existing order ; nowhere in the upper classes the 
 idea that the chief thing is to do all that is necessary 
 beforehand in order that ' the sword may be drawn 
 with a good conscience.' . . . Nowhere does the 
 economic investigator meet on the part of the English 
 workman that deeply-rooted mistrust which causes 
 the German workman to regard every man with a 
 better coat than himself as an enemy and most 
 probably as a secret policeman. The English people 
 form one nation. That is what I understand by 
 social peace — not a condition that leaves no room 
 for improvement, for such a state of things will never 
 exist in this world." 
 
 It may be that his own dark outlook has disposed 
 the writer, in judging England's social condition, 
 to an optimism which facts do not fully justify. 
 Hence the mood of hopeful humility rather than of 
 complacent satisfaction befits the Englishman who 
 reads observations like the foregoing. Yet that the 
 writer correctly characterises the thought and atti- 
 tude of the working classes of his own country no 
 one will doubt who has studied at close quarters 
 the momentous political movement which con- 
 vulses Germany at the present day. The fervent 
 hope of such a one must be that no considerations 
 
CONDITION OF THE WORKING MAN. 201 
 
 of political expediency, and even no ambitions for 
 commercial expansion, which might or might not 
 be reahsed, will be allowed to menace in England 
 that greatest of all national goods, a peaceful and 
 contented populace. 
 
200 PROTECTION IN GERMANY. 
 
 following comparison between his own country and 
 England : — 
 
 " England is certain of a peaceful solution of its 
 social perplexities and antagonisms. No Englishman 
 doubts this, whether he be Conservative or Liberal, 
 workman or employer. Nowhere does there exist in 
 England that tendency to social pessimism which is 
 so common amongst ourselves ; nowhere in the lower 
 classes of society exists the belief that salvation can 
 only be found in the subversion and the destruction 
 of the existing order ; nowhere in the upper classes the 
 idea that the chief thing is to do all that is necessary 
 beforehand in order that ' the sword may be drawn 
 with a good conscience.' . . . Nowhere does the 
 economic investigator meet on the part of the English 
 workman that deeply-rooted mistrust which causes 
 the German workman to regard every man with a 
 better coat than himself as an enemy and most 
 probably as a secret policeman. The English people 
 form one nation. That is what I understand by 
 social peace — not a condition that leaves no room 
 for improvement, for such a state of things will never 
 exist in this world." 
 
 It may be that his own dark outlook has disposed 
 the writer, in judging England's social condition, 
 to an optimism which facts do not fully justify. 
 Hence the mood of hopeful humility rather than of 
 complacent satisfaction befits the Englishman who 
 reads observations like the foregoing. Yet that the 
 writer correctly characterises the thought and atti- 
 tude of the working classes of his own country no 
 one will doubt who has studied at close quarters 
 the momentous political movement which con- 
 vulses Germany at the present day. The fervent 
 hope of such a one must be that no considerations 
 
CONDITION OF THE WORKING MAN. 201 
 
 of political expediency, and even no ambitions for 
 commercial expansion, which might or might not 
 be realised, will be allowed to menace in England 
 that greatest of all national goods, a peaceful and 
 contented populace. 
 
202 PROTECTION IN GERMANY. 
 
 CHAPTER XII. 
 
 AGRICULTURE UNDER PROTECTION. 
 
 "The corn and cattle-producing industry," said 
 Prince Bismarck in the 'seventies, " has been 
 treated Hke a step-child." It soon became evident, 
 however, that once the State owned blood relation- 
 ship, there would be no lack of readiness on the part 
 of the neglected offspring to accept and to claim 
 full recognition of parental obligation. Admit it 
 to be the duty of the State to protect agriculture 
 or any other industry from the effects of foreign 
 competition, and there is logically no limit to the 
 lengths to which that protection should go. If 
 the degree of injury or defencelessness be the test 
 of claim to legislative help to-day, to refuse to 
 apply that same test to-morrow, and alter the law 
 accordingly, is an untenable inconsequence. And 
 even if it be discovered in time that resort to 
 artificial measures of relief has had the effect of 
 producing a false sense of security, and of pre- 
 venting the protected industry from adjusting 
 itself to the adverse conditions by adaptation, by 
 improved methods, by new direction of effort and 
 enterprise, who shall blame it ? It has been put 
 on a wrong course; the spirit of self-help has 
 been sapped ; expectations have been created 
 
AGRICULTURE UNDER PROTECTION. 203 
 
 which cannot be summarily denied as illegitimate; 
 in short, the State having once assumed responsi- 
 bility, it can hardly do otherwise than continue to 
 shoulder its own burden, increasingly heavy though 
 the weight may from year to year become. 
 
 Looking back, and reflecting upon the gradual 
 growth of protective legislation in the interest of 
 agriculture, and the immense sacrifice which it has 
 imposed upon the community as a whole, it may 
 be a debatable question whether the State would 
 not have done better, before the first irretrievable 
 step was taken, had it made this industry either 
 a single free gift or a periodical grant ample 
 enough to enable it not merely to tide over the 
 difficulties of the moment but so to transform and 
 ameliorate the conditions of tenure, credit, and 
 culture that for the future the competition of the 
 foreigner might have been overcome by a com- 
 bination of greater efficiency, energy, and pro- 
 ductivity. The capital sum would have been 
 large, no doubt, but it would have been far less 
 than the accumulated yearly sacrifices of a quarter 
 of a century, and agriculture might to-day have 
 been prospering without Protection where it is 
 languishing with it and in spite of it. A hundred 
 million pounds is an amount which, even in these 
 expansive days, is still beyond the dreams of an 
 average avarice, and it would have accomplished 
 wonders in extinguishing inherited incumbrances 
 of debt, in multiplying the peasant proprietary, 
 in facilitating the division of great unwieldy estates 
 
204 PROTECTION IN GERMANY. 
 
 which their titular proprietors are unable to own, 
 much less to work, profitably, and in bringing the 
 entire pastoral industry abreast with the technical, 
 mechanical, and scientific requirements of the 
 time. And yet a bounty so liberal as this would 
 only have meant an annual interest charge of 
 three millions a year, spread over the entire 
 population, whereas the corn duties have long 
 entailed an indirect tax estimated at from thirty 
 to forty millions a year, confined to the con- 
 sumers, and at the end of all the corn-grower 
 declares that his position is more desperate than 
 before. 
 
 When this objection is taken the corn-grower 
 is always ready with his answer. " But for Pro- 
 tection," he says, " we should have been worse off 
 than we are." No assertion might appear more 
 reasonable ; in reality none is more disputable. 
 For just as the inevitable effect of protective duties 
 is to encourage the foreign grower to aim after 
 cheaper production, their effect upon the home 
 grower is to discourage him from exerting himself, 
 and this is what has occurred in Germany. In 
 proportion as Germany's competitors have suc- 
 ceeded in overcoming the tariff obstacles placed 
 in their way, her own agriculturists have allowed 
 themselves to be lulled into a condition of apathy 
 and false security. 
 
 " No one can guarantee," writes Dr. A. Schulz, 
 " that the artificial increase of profits will stimulate 
 agriculturists to extended production, to the purchase 
 
AGRICULTURE UNDER PROTECTION. 205 
 
 of more labour, and to more intensive culture. On 
 the contrary, experience teaches that protective duties 
 of this kind tend greatly to perpetuate technical 
 anachronisms and outlived economic methods, while 
 the free play of international competition has proved 
 the most effective incentive to the greatest possible 
 development of agricultural productivity." 
 
 It is also notorious that the corn-growing 
 industry in Germany is handicapped by heavy 
 mortgages, which in turn cause a lack of working 
 capital, and often make enterprise impossible 
 even where there is the best disposition to employ 
 it. So long ago as 1883 it was estimated that 
 the mortgages upon the agricultural estates of 
 Prussia amounted to some ^500,000,000, or five- 
 twelfths of a sale value of £"1,200,000,000. Accu- 
 rate data are not, however, available, and the only 
 official light thrown upon the subject consists in 
 the fact that during the ten years 1886 to 1896 
 new mortgages to the extent of £324,500,000 
 were registered, and mortgages to the value of 
 £233,500,000 were cancelled, giving a debit differ- 
 ence of £91,000,000, though these figures take no 
 account of earlier debts. The late Dr. Miquel, 
 while still Minister of Finance, endeavoured to 
 come to a more exact estimate of the indebtedness 
 of the landowning class, by means of the assess- 
 ments under his new income tax, and though the 
 material was imperfect, he concluded that the 
 interest on debts varied from 14 per cent, (in 
 the Aix-la-Chapelle district) to 60 per cent, (in the 
 Bromberg district) of the total agricultural rent, 
 
2o6 PROTECTION IN GERMANY. 
 
 and taking the whole monarchy, to an average of 
 33 per cent. As the rent of land in North and 
 East Prussia increased lOO per cent, during the 
 past century, Dr. Schaffle contends that if the 
 condition of the great estates had been sound 
 the fall in prices would not have been disastrous. 
 There had been worse falls of prices before — 
 as when the price of wheat fell from ^^ii 14s. and 
 £14 10s. in i8i6-i8ig to £4 gs. in 1820-1822 
 and £4 3s. in 1825 — yet agriculture had not only 
 survived but had regained prosperity. In i8gi, 
 indeed, the price of wheat, at ;^I2, was temporarily 
 higher than since 1871. 
 
 Dr. Schaffle enumerates, among the defects of 
 the land system which are responsible for the 
 present decadence of agriculture, the overpayment 
 of estates on hereditary transfers or open pur- 
 chase, entailing perpetual financial embarrass- 
 ment, and the lack of intensive cultivation, due to 
 deficient capital and often lack of knowledge, 
 seriousness, and concentration on the part of the 
 large landowner himself, who seldom follows agri- 
 culture as a practical calling, and lives rather the 
 life of a leisurely nobleman or of a politician. A 
 further disadvantage which handicaps the large 
 estate, especially in the North of Germany, is the 
 character of the agricultural labourer, in whose 
 education and enlightenment his employer too 
 often takes no interest whatever. Baron von 
 Hammerstein, ex-Minister of Agriculture, touched 
 a sore place in the agrarian body politic when 
 
AGRICULTURE UNDER PROTECTION. 207 
 
 on January 29th, 1895, he said in the Prussian 
 Diet :— 
 
 " The German middle classes have gone through 
 many crises, and I believe they will tide over the 
 existing one also. The great landed proprietors will 
 find that they can do likewise if they draw the right 
 moral from their present distress and devote all their 
 intelligence to the management of their own pro- 
 perty. This crisis, like all others, demands its victims, 
 whether their fate is merited or not, and it is the 
 duty of the State to reduce their number as far as 
 possible. I would warn you once more against 
 pessimism, and would beg you to display in the time 
 of need energy, industry, and economy." 
 
 A memorial which was circulated by the Ministry 
 of Agriculture amongst the members of the Prussian 
 Diet in 1897 complained strongly of the opposi- 
 tion shown by the larger peasants, and still more 
 by the great landowners, to agricultural continua- 
 tion schools, and nowhere so much as in the 
 Eastern Provinces. A Prussian journal, pub- 
 lished in the interest of continuation schools, 
 said quite recently — 
 
 " It is lamentable that so very many of our farmers 
 pay more attention to the care of their horses and 
 cattle than to the training of their own sons or of 
 their servants. Such short-sightedness cannot bear 
 good fruit in a time when the farmer has to meet so 
 many increased demands, and when, if he would 
 succeed, his employees must be more efficient than 
 in olden times." 
 
 When we inquire into the effect of protec- 
 tive duties in encouraging home agriculture to 
 supply the needs of the nation in food, the result is 
 
2J0 
 
 PROTECTION IN GERMANY. 
 
 was 13,896,984 hectares, or 606,652 hectares more, 
 an average increase of 46,604 hectares. Thus : — 
 
 
 Hectares. 
 
 
 1888. 
 
 1896. 
 
 igoi. 
 
 Increase or 
 Decrease, 
 13 years. 
 
 Rye .. 
 
 Wheat 
 Barley 
 Oats . . 
 
 5,841,841 
 1,919,278 
 1,742,386 
 3.786,827 
 
 5,982,180 
 1,926,885 
 1,676,329 
 3.979.643 
 
 5-954.973 
 2,049,160 
 1,670,033 
 4,122,818 
 
 + 113.132 
 4- 129,882 
 
 - 72,353 
 + 335.991 
 
 Total . . 
 
 13,290.332 
 
 13.565.037 
 
 13,896,984 
 
 4- 606,652 
 
 The result of the consequent shortage of pro- 
 duction has been largely increased imports, and it 
 is difficult to see how, short of absolute prohibi- 
 tion, producing an intolerable condition of scarcity, 
 these imports could have been checked. 
 
 Germany to-day must still buy abroad the corn 
 needed by one in every nine of her people, and 
 that fact is sufficient to prove that the duties 
 cannot be without influence upon prices.^ Where 
 there is a margin between production and con- 
 sumption the " natural " play of competitive 
 influences will tend to produce a *' natural " price. 
 Where a country cannot feed itself, and there is 
 
 ^ Count von Capri vi said in the Reichstag on June ist, 
 1 891 : "We are dependent on corn imports ; Prussia ceased 
 years ago to be a corn-exporting country. We are com- 
 pelled to import corn, and the more the population increases 
 the more will that obligation increase. In general, we pay 
 for corn the universal market price plus the duty." 
 
AGRICULTURE UNDER PROTECTION. 211 
 
 and must be a regular deficit, the price of the 
 imported grain with the duty added will determine 
 the universal market price of the entire home con- 
 sumption. An exact equivalence between the 
 price of home produce and that of the duty-paying 
 imports cannot be expected, for there will always 
 be deviations according to local circumstances in 
 a large country offering greatly divergent condi- 
 tions of transport, density of population, and 
 standard of life ; but a fair approximation is cer- 
 tain, and is, in fact, found in Germany. It is a 
 notable fact that the agrarians long ago abandoned 
 Bismarck's favourite theory that protective duties 
 would not advance the price of corn. Here, at 
 any rate, they have learnt a lesson from experi- 
 ence. Thus Count Schwerin, one of the leaders 
 of the party, stated in a speech in the Reichstag 
 at the beginning of the present year that the 
 failure of the Government to negotiate new com- 
 mercial treaties on the basis of the increased tariff 
 before the end of 1903 had entailed upon the corn- 
 growers a clear loss of over £5,000,000. 
 
 " The German corn so far as it reaches the market 
 amounts on the average of recent years to over 
 7,000,000 tons. The difference in duty between the 
 existing treaty tariff and the minimal rates of the 
 new tariff will run to £1 per ton. Even allow- 
 ing that of this £1 a portion will be borne by 
 the foreigner and that the new tariff will only 
 increase prices 15s. instead of £1 per ton, it is 
 evident that, since German agriculturists will be 
 compelled to sell their crops for 1904 under the old 
 tariff, they will suffer a loss on corn alone of over 
 
 P 2 
 
212 
 
 PROTECTION IN GERMANY. 
 
 105,000,000 marks. Equal, or at any rate similar, 
 losses will naturally be suffered on other produce of 
 the land, and especially on cattle and timber." 
 
 Even assuming with the agrarian leader that 
 the corn-growers received a bounty of only 
 3^5,250,000, by reason of the late increase of the 
 duties, it follows that upon the entire duties hence- 
 forth leviable they would on the same ratio benefit 
 to the extent of ;£'i5, 000,000 on the small com- 
 puted purchase of 7,000,000 tons of home-grown 
 grain, which is an amount far below the mark, 
 and which would still have to be supplemented by 
 the imported supplies. But the best index to the 
 cost of the corn duties is found by a comparison 
 of prices in Germany and in a Free Trade country. 
 According to Conrad the price of wheat in Berlin 
 and London at various periods was as follows : — 
 
 
 1879-83. 
 
 1884—85. 
 
 1886—90. 
 
 i8qi— 95. 
 
 1899. 
 
 London . . 
 Berlin 
 
 £ s. d. 
 10 
 10 5 
 
 £ s. d. 
 
 7 13 5 
 
 8 I 6 
 
 £ s. d. 
 728 
 
 8 14 3 
 
 £ s. d. 
 
 5 19 9 
 862 
 
 £ s. d. 
 608 
 
 7 15 3 
 
 Increase in 1 
 Berlin J 
 
 Amount of) 
 duty j 
 
 050 
 
 10 
 
 8 I 
 10 
 
 I II 7 
 I 10 
 
 2 6 5 
 f 2 10 o\ 
 
 -j reduced to > 
 I I 15 / 
 
 I 14 7 
 I 15 
 
 The approximation between the higher Berlin 
 price and the amount of the duty is too close to be 
 merely accidental. It will be seen that while 
 between the years 1879 and 1899 the price of wheat 
 fell in Berlin £2 los. per ton, it fell in London £^. 
 
AGRICULTURE UNDER PROTECTION. 213 
 
 Again, the price of wheat in England in the 
 
 wholesale market during the years 1890 to 1900 
 
 ranged from £"5 js. to 5^8 13s. per ton, 
 
 falling in the latter year to £6 ys., while in 
 
 Prussia the price ranged from £6 15s. to 
 
 ;^ii 2s., falling to £j 15s. ; in Bavaria from 
 
 £y 25. to £11 15s., falling to £8 3s. ; in Baden 
 
 from 5^7 9s. to ;fii us., falling to ;^8 iis. ; 
 
 and in Saxony from £6 12s. to ;^ii 3s., 
 
 falling to £8 6s. in 1899. Comparing the 
 
 figures for the later year, we get the result 
 
 — England, £6 ys. ; Prussia, £y 15s. ; Bavaria, 
 
 £835.; Baden, £8 lis.; Saxony, £8 6s.; giving 
 
 an average for the German States of ;^8 ^s. gd., 
 
 or £1 16s. gd. more than the English price, the 
 
 German duty being £1 15s. 
 
 Long before the tariff had by repeated revisions 
 
 been brought to its present height the agrarian party 
 
 declared in a formal manifesto to the nation : — 
 
 "Agriculture does not wish to enrich itself at the 
 cost of others ; it only wishes to see the average 
 prices of the last fifteen years fairly maintained, since 
 lower prices would mean its destruction. . . . Expert 
 authorities on German agriculture declare it to be 
 beyond doubt that Germany can itself produce the 
 present excess of corn imports if only it be fostered 
 more than hitherto, more after the example of 
 Frederick the Great." 
 
 At the time these words were written the 
 
 duties on food-corn were fixed at los. per ton : they 
 
 now vary from £2 10s. to £2 15s., and if the 
 
 agrarian party had had their way they would have 
 
 been £^ 15s. all round. 
 
214 PROTECTION IN GERMANY. 
 
 It is more difficult to follow the effect of the 
 duties upon live stock, the imports of which 
 depend upon many factors independent of pro- 
 tective measures. Where there has been a falling 
 off here it has probably been due less to duties 
 than to sanitary restrictions. Yet the effect upon 
 prices, and hence upon the cost of meat, has been 
 none the less perceptible, while writers qualified 
 to speak from the breeder's standpoint are by no 
 means unanimous in regarding the exclusion of 
 foreign live stock as either judicious or economical. 
 The Hungarian writer Matlekovits^ says : — 
 
 " Whether it is good for the national economy of 
 Germany that the cheaper cattle of Austria-Hungary 
 should not only be excluded from the food market, 
 but should be rejected for labour and breeding pur- 
 poses, and that in this way the cost of meat should 
 be artificially increased, and the German working 
 classes should be prevented from consuming a larger 
 amount of flesh food, and the German farmer be 
 prevented from buying strong young cattle for draught, 
 breeding, and feeding purposes from neighbouring 
 countries, it should no longer be necessary to discuss 
 in a country whose famous writers, Roscher at the 
 head, have described the development of cattle 
 breeding in so masterly a manner. Agrarianism has 
 many errors to its account, but that it should have 
 inflicted injury upon itself by prohibiting the import 
 of cattle out of countries of less intensive agriculture, 
 and for the same purpose should have had resort to 
 sanitary restrictions, is one of the greatest of all, and 
 belongs to those mistakes that can inflict the greatest 
 disasters upon a country's entire economy." 
 
 > "DieZoUpolitikderOesterreich-ungarischen Monarchic 
 seit ib68" (1891). 
 
AGRICULTURE UNDER PROTECTION. 215 
 
 Time will alone show how wise the agrarians 
 have been in insisting upon measure after measure 
 of restriction and exclusion until the live stock of 
 the country is to-day less relatively to population : 
 than it was thirty years ago. The following was 
 the ratio to every hundred of the population in 
 different years : — 
 
 1873. 
 
 1883. 
 
 1893. 
 
 1897- 
 
 1900. 
 
 Cattle... 38-4 . 
 
 •• 34'5 • 
 
 •. 34-5 • 
 
 •• 35"4 •• 
 
 •• 337 
 
 Sheep... 6o"6 ,. 
 
 ,. 42-2 ., 
 
 .. 27-8 ., 
 
 .. 27-8 ., 
 
 ,. 17-2 
 
 Pigs ... 17-4 .. 
 
 ,. 20'I ., 
 
 .. 20-I ., 
 
 .. 27-3 ., 
 
 ,. 29-6 
 
 The extent to which the price of meat has in- 
 creased and the effect of that increase upon the 
 diet of the working classes have already been 
 considered. 
 
 Furthermore, it is a mistake to suppose that 
 the corn duties favour agriculture equally or even 
 generally. In the opinion of many, far from 
 benefiting the small peasantry the system of Pro- 
 tection has exposed them in a still greater degree 
 than before to the competition of the larger landed 
 proprietors. The leaders of the agrarian move- 
 ment profess to advocate the cause of agriculture 
 as a whole, and endeavour to convince the small 
 farmers that their interests are in every respect 
 identical with those of the great landowner. That 
 pretence was long ago exploded, and is indeed 
 inconsistent with the attitude of a large part of 
 the so-called Kleinbauern (small peasantry) who 
 neither sought further Protection nor desired 
 it, believing that it could only tend to their 
 
2i6 PROTECTION IN GERMANY. 
 
 impoverishment. Higher corn duties, in fact, are 
 only beneficial to the great producers — to the 
 owners of large estates supporting little popula- 
 tion. The peasantry of the smaller communes 
 produce corn in the main for consumption, and 
 but little, if at all, for sale, and are often, indeed, 
 unable to supply the whole of their needs in grain, 
 so that they have to purchase the deficiency in 
 the market. Most of these small farmers largely 
 continue to follow the old plan of having their 
 corn threshed for them in the neighbouring mills. 
 To the extent that they use their own grain, it is 
 a matter of little importance to them whether the 
 duties are high or low. Directly, however, they 
 become buyers they begin to feel the pinch like 
 the urban consumer, and they are shrewd enough 
 to recognise that for their wealthy neighbours the 
 game of Protection is one of " Heads we win, 
 tails you lose." Not only so, but under the tariff 
 these small farmers have to pay more heavily for 
 their implements and imported manures. How 
 large is this class of cultivators may be judged 
 from the occupation census of 1895. In that year 
 the number of persons following agriculture for 
 their subsistence was 17,815,187, of whom inde- 
 pendent farmers with the members of their families 
 numbered 11,300,108 (about 2,000,000 being de- 
 pendents — children or other relatives employed 
 for wages), while the remaining 6,500,000 were in 
 the main labourers. In round numbers 25,000 
 large owners divide one-quarter of the land between 
 
AGRICULTURE UNDER PROTECTION. 217 
 
 them ; then come 281,000 large peasant pro- 
 prietors, owning together one-third; making 
 306,000 persons to 54 per cent, of the soil. Here 
 the corn-grower's interest in protective duties is 
 obvious enough. But then follow in order of 
 territorial importance no fewer than 5,250,000 
 smaller cultivators — proprietors and leasehold 
 tenants — of whom about 1,000,000 hold between 
 5 to 20 hectares (7I to 50 acres), 1,016,238 from 
 2 to 5 hectares (5 to yi acres), representing an 
 aggregate area of 4,142,000 hectares ; and 3,236,000 
 with 2 hectares and under, with an aggregate area 
 of 2,416,000 hectares. Two successive Chancellors 
 of the Empire, Count von Caprivi and Prince 
 Hohenlohe, agreed in accepting the estimate that 
 only corn-growing farms of at least five hectares 
 have any interest at all in the increase of the price 
 of corn, which means that only from one-fourth to 
 three-tenths of the entire agricultural industry is 
 affected one way or the other. The larger estates, 
 exceeding five hectares, comprise an area of 
 36,727,000 hectares, the small ones an area of 
 6,558,000 hectares. Prince Hohenlohe stated the 
 matter pointedly in a speech of March 29th, 1895, 
 in which he said : — 
 
 " Holdings under 12 hectares have no corn to sell, 
 but on the contrary are for the most part themselves 
 buyers. Holdings of 6 hectares and below, even with 
 good soil, are at best able to cover the corn needs 
 of the owners and their families. The number up 
 to 12 hectares comprise four million holdings, or 
 76 percent, of all the agricultural holdings. Reckoning 
 
2i8 PROTECTION IN GERMANY, 
 
 3^ persons per holding, they represent a population 
 of hfteen millions, who with relatively few excep- 
 tions suffer direct loss owing to the increase of the 
 price of food. . , . Thus there remains a population 
 of four millions for whom the Kanitz proposal [of fixed 
 corn prices guaranteed by the State] offers advantage." 
 
 At the highest computation, a million members 
 of the agrarian class, or less than a quarter of the 
 whole, monopolise the entire advantage of the 
 duties, and do this to the direct prejudice of 
 the majority of their fellow agriculturists and 
 to the injury of the entire consuming community. 
 As to population, this privileged class represents 
 at the outside between four and five million persons 
 — the estimate of Prince Hohenlohe, as we have 
 seen, was only four millions — out of a total popu- 
 lation of fifty-six millions. The agrarians can, 
 however, be cited in evidence against their own 
 contention that Protection is a universal interest of 
 agriculture. Not long ago the German Agricul- 
 tural Council, with the object of supporting the 
 demand for higher duties, instituted inquiries 
 relative to 1,524 holdings, and received the un- 
 expected information that only 26*4 per cent, of 
 the receipts from these farms, which had an aggre- 
 gate area of 518,000 acres, came from corn; 40*6 
 per cent, came from cattle, butter, and cheese, and 
 i6'3 per cent, from rape seed, sugar, beet, and 
 potatoes. The proportion which fell to corn in so 
 pastoral a State as Bavaria was as low as I5"5 per 
 cent. It is significant also that Dr. Rubow, who 
 recently investigated the agricultural economy of 
 
AGRICULTURE UNDER PROTECTION. 219 
 
 the rural commune of Schwessin, in Pomerania, 
 with a view to discovering the practical value of 
 the corn duties, found that only one farmer regu- 
 larly produced corn for sale, and even he could only 
 spare from two or three tons of rye a year, though 
 he had twenty-four hectares (60 acres) of arable 
 land. Only in time of financial need did any other 
 of the peasants sell either rye or oats, and then only 
 a few hundredweights. Taking the whole of the 
 205 farmers, he found that they did not sell ten tons 
 of grain a year, and that the total revenue from 
 this source was only ;£'6o, or 6s. a head. Not only 
 so, but every single peasant was compelled to buy 
 grain of some sort in order to supplement his own 
 produce. Hence the corn duties were a positive 
 injury to this rural commune, and there are 
 hundreds like it. Dr. Rubow found that the 
 aggregate produce of the commune amounted to 
 713 tons; while, on the other hand, the consump- 
 tion of corn for bread, for stock-feeding purposes, 
 and for seed was 925 tons, leaving 212 tons to be 
 purchased. The duties upon this purchased corn 
 represented a loss to the commune of £^34 10s., 
 and the new duties will increase this loss to £476, 
 or as much as would liquidate the whole of the 
 communal taxation. 
 
 Facts like these — and it is the small peasant's 
 tardy recognition of them which accounts for the 
 decadence of the agrarian movement in some dis- 
 tricts which were formerly strongholds of the 
 famous League — emphasise not only the unfairness 
 
220 PROTECTION IN GERMANY. 
 
 of the corn duties, even from the cultivator's stand- 
 point, but the hollowness of the cry of " Agricul- 
 ture in danger ! " which imposed upon the too ready 
 credulity of Count von Biilow, who throughout 
 the recent tariff controversy acted rather as the 
 advocate of the great proprietors than as the 
 spokesman of the common interest. It is not 
 German agriculture, but the system of large, ill- 
 managed estates which has been handed down 
 from feudal times, that is imperilled, and to the 
 latter every successive increase of the corn duties, 
 though it may afford relief for the moment, is 
 in truth both a warning and a menace. The 
 healthiest part, perhaps the only healthy part, 
 of the agricultural industry in Germany to-day 
 is the so-called Kleinbetrieb — that system of petite 
 culture of the value of which John Stuart Mill 
 was so sensible, and which accounts so largely 
 for the comparative wealth of rural France. 
 
 " In all German States [wrote a German economist 
 recently] the larger the system of agriculture the 
 more it is threatened by forced sales. The large 
 system of farming cannot compete with the small, 
 because corn-growing is not as remunerative as the 
 breeding of cattle and the production of meat. . . . 
 To-day the peasant, in spite of his less intelligence, 
 is economically superior to the large proprietor. 
 Hence in the East of Germany every division of a 
 large estate must be regarded as a sign of economic 
 progress." 
 
 Slowly but surely this lesson is being learned. 
 Official returns show that during the years 1882 to 
 1895 there was an increase of 26,318 in the number 
 
AGRICULTURE UNDER PROTECTION. 221 
 
 of farms in Prussia between I2| and 25 acres, an 
 increase of 17,152 in farms between 25 and 50 
 acres, and one of 1,445 in farms between 50 and 
 250 acres. On the other hand, there was a de- 
 crease of 852 holdings between 250 and 2,500 
 acres. Commenting upon these figures, an official 
 statistician remarks : 
 
 "The farmer's calling has not lost in attraction, 
 but on the contrary has greatly gained. The con- 
 tinual laments about the decay of agriculture have 
 not prevented a large section of the population from 
 turning to this occupation, a very strilcing fact the 
 explanation of which is most likely to be found in 
 the great development of cattle breeding." 
 
 It is significant also that comprehensive statistics 
 prepared by the Government of Brunswick, and 
 extending to the year 1897, show that the small 
 peasantry are as a whole much less encumbered 
 with debt than the large landowners. 
 
 Incidentally it may be noted that where a 
 decline of population has taken place in rural 
 Germany it has generally been in the districts in 
 which large estates predominate, and that in 
 districts where small proprietorships are in the 
 ascendant population has increased. Thus there 
 has been a larger decrease of population in the Prus- 
 sian provinces of Pomerania, Posen, East and West 
 Prussia, Brandenburg, and Silesia, than in other 
 parts of the monarchy, and there it will be found 
 that estates of 100 hectares and over form between 
 42 and 65 per cent, of the area devoted to agricul- 
 ture. On the other hand, it is noticeable that 
 
222 PROTECTION IN GERMANY. 
 
 Saxony, a country free from the disadvantages 
 under which the North and East of Prussia labour, 
 reports not only a largely increased area of land 
 under corn, but increased productivity, both in 
 yield and in value. Between 1891 and 1897 its 
 yield of wheat, rye, barley and oats was 772,690 
 tons ; in 1898 it was 856,644 tons, an increase of 
 83.954 tons. The value of the corn of all kinds 
 grown in Saxony in 1898, according to Leipzig 
 Produce Exchange prices, was ^^6,612, 869, against 
 an average for 1891-1897 of ^^5,721,309, an in- 
 crease again of ;^89i,56o. Finally, there was 
 a larger value per hectare of land cultivated of 
 ■£1 16s., viz., £1^ I2S. in 1898 against £11 i6s. for 
 the preceding seven years. 
 
 To recapitulate, that agriculture carried on 
 under the combined disadvantages of unscientific 
 methods, want of capital, an oppressed labouring 
 class, and incompatibility with the changed needs 
 of the times, could prosper is a flat impossibility, 
 and it is only by the fallacious policy of increasing 
 the protective duties from time to time, as the 
 pressure of circumstances has increased, that the 
 corn-growers of the North have been enabled so 
 far to stave off the necessity of looking the hard 
 facts of their position fairly in the face. There 
 are, no doubt, many districts which, owing to the 
 dryness of the soil and to climate, are unsuited to 
 grazing, and are necessarily restricted to arable 
 farming, but when all proper deductions have 
 been made on that account, the fact remains that 
 
AGRICULTURE UNDER PROTECTION. 223 
 
 unwillingness to change their ancient ways is a 
 great cause of agricultural stagnation and decline 
 in most parts of the country. And agriculture, 
 as the great landowners understand it, will con- 
 tinue to be " in danger " so long as they refuse to 
 take a lesson from the book of the small cultivators, 
 who in Germany, as in Denmark and Holland, have 
 held their own in spite of every disadvantage of 
 restricted capital and lack of mechanical appliances 
 of the most improved kind. 
 
224 PROTECTION IN GERMANY. 
 
 CHAPTER XIII. 
 THE AGRICULTURAL LABOURER. 
 
 •* Protection," wrote once Professor Adolf 
 Wagner, one of the few Protectionists of the 
 Chair in Germany, " will secure the home grain 
 market, and so increase the income of the entire 
 agricultural population." We have seen that it 
 has failed entirely to secure the home market for 
 the home grower, for the latter has either been 
 unable or unwilling to claim that which was 
 reserved for his exclusive use. The agricultural 
 labourer has also waited in vain for the promised 
 benefits. His condition in Germany is well worth 
 studying. Happily there is to-day nothing in 
 England that can be compared with the system 
 of semi-feudalism which still prevails in North 
 Germany east of the Elbe, a system under which 
 progressive agriculture is almost unknown, and 
 the labouring class is kept in a condition hardly 
 to be distinguished from the serfage of a hundred 
 years ago. In the discussion of the question of 
 Free Trade and Protection it is too often assumed 
 that the industrial labourer is the centre of the 
 problem, and the labourer on the land is ignored. 
 Yet unless the imposition of corn duties, with a 
 consequent higher price of produce, higher rents, 
 
THE AGRICULTURAL LABOURER. 225 
 
 and a higher value of land, not merely ameliorates 
 the condition of the agricultural labourer but entirely 
 raises his status in society and civilisation, Protec- 
 tion passes condemnation upon itself. Now it has 
 been proved over and over again that, despite the 
 decline of corn prices which took place during the 
 second half of last century, rents on the whole 
 increased to an enormous degree. While, however, 
 the price of grain has fallen and the wages of 
 labour have shown an upward tendency, many 
 other articles of consumption and use, as well as 
 rents and taxation, have advanced, so that the 
 labourer's actual position is in general but little 
 better. Not only so, but such progress as the 
 agricultural labourer has made has been due less 
 to the desire, or even the willingness, of the land- 
 owners to improve his position than to the com- 
 petition for his services which was set up by the 
 manufacturers in the 'seventies and onward. In 
 the middle of the nineteenth century wages in 
 North Germany rarely exceeded gd. a day, and it 
 was several years after the French war before they 
 advanced to is. In the words of a recent German 
 writer : — 
 
 "Agricultural wages have only increased in a time 
 of sinking corn prices, when the development of 
 industry led to such an increase of the workpeople 
 therein engaged that the agricultural employers, in 
 order to obtain labourers at all, were compelled to 
 pay higher wages as well." 
 
 The best that Professor von der Goltz, one of 
 the highest German authorities upon the land 
 
 P.G. Q 
 
226 PROTECTION IN GERMANY. 
 
 question, can say of the position of the rural 
 labourers is that 
 
 " They and their families have an assured, if 
 often a penurious subsistence, provided no unusual 
 or unpropitious circumstances occur, such as the 
 failure of the potatoes or of corn, whereby the earn- 
 ings for threshing are reduced to a minimum, long 
 sickness, or too numerous a family." 
 
 Unfortunately these "unpropitious circum- 
 stances" are of very frequent occurrence, and the 
 "too numerous family" is the rule rather than 
 the exception. 
 
 The rates of wages vary naturally in different 
 parts of the country, but in general it may be 
 taken for granted that the worst paid labour is 
 that which is employed on the large corn-growing 
 estates, and particularly those situated in districts 
 like North and North- East Prussia, far removed 
 from centres of industry. While on the Rhine 
 and in Alsace rates of from is. Sd. to is. lod. are 
 usual, in Pomerania, the Mecklenburgs, and the 
 more distant East, 6d. or gd. a day is as much 
 as an average labourer can count on. Taking 
 all the provinces of Prussia together, the wages 
 of out-workers vary from is. 6d. to 2s. per day in 
 summer, and from is. to is. ^d. per day in winter. 
 In 1892 the Association for Social Policy — which 
 began its career in 1872 by declaring that "the 
 rightful interests of the working class as against 
 the egoism of the propertied class should be 
 emphasised with moral pathos," and in 1879 
 
THE AGRICULTURAL LABOURER. 227 
 
 approved '* a moderate tariff reform in a financial- 
 political and protective sense" — carefully investi- 
 gated the wages of the agricultural labourers in 
 Prussia generally, and found that the following 
 rates per day ruled in the various provinces of the 
 monarchy : — 
 
 Summer. Winter. 
 
 Without 
 
 With 
 
 Without 
 
 With 
 
 Provinces. board. 
 
 board. 
 
 board. 
 
 board. 
 
 s. d. 
 
 s. 
 
 d. 
 
 s. d. 
 
 s. d. 
 
 East Prussia 2 
 
 
 2 
 
 ... I 3 
 
 .. 7l 
 
 West Prussia 2 3 
 
 
 6 
 
 ... I 3 
 
 •• 7f 
 
 Pomerania... 2 3 
 
 
 9 
 
 ... I 4I 
 
 .. iii 
 
 Posen ... I II 
 
 
 3 
 
 ... I 
 
 .. 8 
 
 Silesia ... i 6 
 
 
 
 
 ... I 2i 
 
 .. 7^ 
 
 Brandenburg i g 
 
 
 3 
 
 ... I 4l 
 
 ..10 
 
 But in Upper Silesia to-day there are hundreds 
 of farm labourers who only receive 6d. or yd. a 
 day. The average in the west of the Empire is 
 IS. ^d. or IS. 4^. in summer, with a deduction of 
 from 2d. or ^d. per day in winter. Women are 
 paid, at the most, half the wages of men, and 
 children only a quarter. 
 
 When we are told that in the more progressive 
 and prosperous districts the wages are now as 
 much as 50 per cent, higher than twenty years 
 ago, the first reflection suggested is that the con- 
 dition out of which the labourer has been raised 
 must have been one of simple desperation. For, 
 after all, how far has this 50 per cent, advance 
 brought him ? Quite recently a monograph was 
 pubhshed by Dr. W. Rubow upon the social and 
 agrarian conditions prevalent in the Pomeranian 
 
 Q 2 
 
228 PROTECTION IN GERMANY. 
 
 rural commune of Schwessin, with a view to demon- 
 strating the positive injury done to small peasant 
 proprietors and tenant farmers by the corn duties. 
 The writer says that the wages and standard 
 of life of the labouring class in that part of 
 Pomerania are far above the average of the pro- 
 vince, yet, even so, a permanent labourer only 
 earns is. a day the whole year round, with pay- 
 ments in kind which bring his entire pay to ^^27 
 or £30 ; while the day's wages of forest labourers 
 for exhausting work are is. without extras. On 
 the largest farms a hind receives £8 5s. in money 
 (formerly £5 to £6), several pounds of wool, and 
 material for clothing and shirts of a value of 15s., 
 food which at gd. a day comes to ^13 14s., and 
 a Christmas present of los., making a total of 
 3^23 4s. A maid earns £"20 4s., made up of £4 los. 
 in money, ^^i los. in goods (three aprons, two lb. 
 of wool, two dresses, twenty-four ells of linen, and 
 four pecks of linseed), ^13 13s. in food, and a 
 Christmas present of los. 
 
 But such rates are princely as compared with 
 the general run of North Germany. Upon many 
 estates of East Prussia at the present time the 
 entire income of a labourer and his family, inclu- 
 sive of all payments in kind, does not exceed ;^20, 
 and, indeed, the basis of earnings adopted by the 
 insurance authorities, upon which compensation 
 is awarded in case of accident, is in general 
 exactly this sum. A Berlin workman who, from 
 inability to find employment in his trade, hired 
 
THE AGRICULTURAL LABOURER. 229 
 
 himself for a year upon a Mecklenburg estate, 
 lately put on record his experiences, and a truly 
 lurid light they throw on the social conditions 
 prevalent in that backward part of the country. 
 Of the result of his year's labour he says : — 
 
 "When I left I received in money i6s. 4^. All the 
 rest of my earnings had been deducted for expenses 
 or for clothing, which I had long ago used up. I 
 could take nothing of this away save two old shirts 
 and two pairs of old stockings. Sixteen shillings and 
 fourpence was the whole of my wages for such long 
 and arduous toil ! I should have earned quite as 
 much in the workhouse, without being compelled to 
 such severe exertion, and I should have been less 
 despised than I was while working as a free man in 
 an honest occupation." 
 
 To take a case of municipal employment, the 
 labourers on the great irrigation farm belonging to 
 the city of Berlin receive wages varying from is. lod. 
 to 2s. a day in summer and from is. to is. 6d. in 
 winter for men, and is. in summer and lod. in 
 winter for women, beside housing and a piece of 
 land upon which to grow potatoes, the latter 
 having a value of between ^^6 and ;^8. In money 
 value the best paid labourers receive about 14s. a 
 week, the less well paid about 12s. And the hours 
 of labour thus remunerated number 12, 13, and 14 
 a day, according to the season; for a "normal" 
 working day is fixed, if not strictly observed, 
 viz., from 5.30 a.m. to 7.30 p.m. in summer (with 
 pauses for meals), and from 6.0 to 6.0 in winter. 
 Compare with the foregoing figures the statement 
 of agricultural wages just published by the Board 
 
230 PROTECTION IN GERMANY. 
 
 of Trade, according to which the average earnings 
 for England, taking the lowest into consideration, 
 are i8s. 6d. (the maximum being 22s.), while a 
 rural labourer can, as a rule, afford to spend 
 13s. 6^. a week upon the food of his family alone. 
 It is the general rule upon the larger estates 
 that the landlord provides dwellings for his men, 
 charging a small rent, which is counted as wages. 
 Part of the pay takes the form also of a piece of 
 land for potato growing, though the disadvantage 
 of this arrangement is that the labourer is so hard 
 worked that he has little time for work of his own, 
 and unless he has a wife and children who are 
 able to manage it for him the " allotment " runs a 
 chance of being neglected. In general this system 
 of payment in kind is carried to a very unfair 
 length. It is very common for the greater part of 
 a labourer's pay to take the form of corn and other 
 produce, and of course this is cheaper for the 
 landlord, since the Naiuralien which he gives in 
 lieu of money-wages are grown on his estate, and 
 in reckoning their value he takes a fair market 
 price ; but the labourer would much prefer to be 
 paid exclusively in money, so that he might know 
 exactly how much he receives, and make his own 
 arrangements for spending it. It follows, of course, 
 that in so far as agricultural labourers are paid in 
 kind, which for the most part means corn, they 
 neither gain nor lose by the increased price of this 
 commodity, save in so far as that price re-acts 
 upon the prices of other commodities. 
 
THE AGRICULTURAL LABOURER. 231 
 
 As to the housing of the rural labourer, only 
 one opinion is possible : it is for the most part 
 not merely inadequate and primitive, but unworthy 
 of human beings, while the poverty of the people 
 makes domestic comfort out of the question. Says 
 Professor von der Goltz : — 
 
 " Often one finds only the most needful domestic 
 utensils, and even they are defective, dirty, and 
 scattered in every corner of the rooms. The bed- 
 clothes, upon whose orderliness so much weight is, 
 as a rule, laid, consist of a few tattered rags. The 
 window-panes are seldom all whole, the holes being 
 covered with paper or filled with rags. The children, 
 half naked and dirty, go about unoccupied or lie in 
 bed till noon without being ill. The wife, untroubled 
 by all the disorder and uncleanliness which she sees 
 around her, sits at the stove and cooks the mid-day 
 meal for the family, which, whether abundant or not, 
 always savours of the unappetising surroundings in 
 which it is prepared. Such a picture will meet one, per- 
 haps, in three houses successively on the same estate." 
 
 But poverty is at the bottom of this deplorable 
 
 state of things. 
 
 " There is no denying," adds the Professor, " that, 
 as a rule, the labourers will rather have a couple of 
 bushels of com more a year and put up with their 
 defective housing than the reverse, and that they 
 estimate the value of a house rather by whether it is 
 warm, or can easily be made so, than whether it is 
 healthy or spacious." 
 
 Where, as sometimes happens, several families 
 are herded together in one house of this kind, the 
 demands alike of convenience, health, and morality 
 are outraged. No wonder that, as the same 
 authority tells us, amongst the children of the 
 
232 PROTECTION IN GERMANY. 
 
 rural labourers of this class there is a very high 
 rate of mortality, and that adults very often 
 prematurely fall victims to consumption. 
 
 So, too, Pastor Quistorp, writing of Pomerania, 
 says : — 
 
 " It is true that the rural labourer does not inhabit 
 a damp cellar or a cold garret, but lives comfortably 
 on the flat earth. Yet that is not the only require- 
 ment of a human habitation. Undoubtedly the 
 Christian disposition of those landed proprietors who 
 are earnestly concerned to provide their employees 
 with healthy and roomy dwellings worthy of human 
 beings should be acknowledged with gratitude, but 
 the great majority of the homes of rural labourers 
 may well be described in the words of their owners : 
 'They are good enough for the hands.' These dwell- 
 ings are, as a rule, so low and small that where there 
 is a fairly numerous family an intolerable atmosphere 
 is caused, particularly at nights ; the dusty earthen 
 floor is in general so uneven that the labourer's 
 children need special protecting angels in such 
 homes ; the walls are usually made of clay or of 
 thin lath and plaster, so that the massive cattle stalls 
 and barns of the landowner look much warmer and 
 more comfortable than such abodes." ^ 
 
 A Berlin journal recently described the homes 
 of East Prussian rural labourers in still more 
 realistic fashion as follows : — 
 
 " The houses are small and dilapidated, and the 
 walls falling in through age, being built in a very 
 primitive manner of clay and wood. The owner 
 hardly does anything at all in the way of repairs ; 
 the labourers themselves have to do all the necessary 
 patching. No wonder, therefore, that the wind 
 whistles unhindered through every niche and cranny, 
 
 1 a 
 
 Die soziale Not der landlicher Arbeiter," Leipzig, i8gi. 
 
THE AGRICULTURAL LABOURER. 233 
 
 and that rain and snow sweep through the rent roof 
 of straw. For each family there is but one small, 
 narrow living room, with a bedroom and a little 
 lumber room. The fioor is of clay, uneven and full 
 of holes ; a floor of brick is regarded as a luxury. 
 The rifts in the walls are stopped up with rags, 
 pieces of turf, &c. ; the windows have long been 
 broken, and the holes are either covered with paper 
 or are filled with rags, moss, or wisps of straw. The 
 internal arrangements correspond — a couple of rickety 
 chairs, a table, the indispensable ' settle,' and the 
 clumsy bedsteads. The limited space is naturally 
 insufficient to afford to the inmates sleeping accommo- 
 dation suited either to rational or moral ideas, 
 especially where there is a large family. Should 
 there be a lodger, and he has to sleep on the floor, 
 perhaps with hens for company, he must not be sur- 
 prised if the rain trickles down upon his head or the 
 snow drifts an inch thick upon his bed-cover. When 
 the frugal meals are being eaten it is no rare thing 
 for sand and pieces of earth to fall through the holes 
 in the rude plank ceiling if the hens should be 
 scratching above. It is by the provision of ' free 
 dwellings ' of this kind that the landowners manifest 
 their much-vaunted solicitude for their labourers. 
 In reality, the pigstyes of the agrarians east of the 
 Elbe are far better fitted up than the miserable huts 
 of the day labourers." 
 
 The landowners, against whom responsibility 
 for this state of things is alleged, plead perpetual 
 impoverishment, though they have now for a 
 quarter of a century had the benefit of pro- 
 tective duties. There is, however, a great deal of 
 truth in the words of a German critic of the 
 agrarian movement, who says : — 
 
 " Instead of meeting foreign competition, helped as 
 it is by the use of the most advanced technical 
 
234 PROTECTION IN GERMANY. 
 
 improvements, by the intelligent management of their 
 estates, the Junkers fall back, with lamentation, upon 
 the support of the State in the form of protective 
 duties and export premiums ; and instead of paying 
 and treating their labourers decently, training them 
 to greater productivity, and interesting them in their 
 work, they do exactly the opposite, and build their 
 expectations upon reactionary coercive measures 
 which shall bring the labouring masses still further 
 under their heel. A well-paid and energetic labour- 
 ing class would at once put an end to the labour 
 problem on the land, not simply because it would be 
 able to work in general more efficiently than the 
 present exhausted helots, but because it would facili- 
 tate the extended use of machinery, now comparatively 
 little employed in agricultural operations. At present 
 it is naturally difficult to procure good and capable 
 labourers for this machinery, but the blame rests 
 entirely with the large proprietors, and particularly 
 with the Junkers, who have done everything they 
 could to make it impossible for intelligent workmen 
 to live on the land." 
 
 Unfortunately, the relationship between the 
 landowner and his labourers is not in general a 
 friendly one. As respect is lacking on one side, so 
 is confidence on the other. " The feeling that 
 because of their social position they are regarded 
 and treated contemptuously by those from whom 
 they earn their bread weighs like an alp upon the 
 rural labouring population." So writes a Pome- 
 ranian pastor in a study of the agricultural 
 labourer,^ though the words apply equally to 
 other parts of the country where the system of 
 
 1 W. Quistorp, "Die soziale Not der landlicher Arbeiter," 
 Leipzig, 1891. 
 
THE AGRICULTURAL LABOURER. 235 
 
 great estates prevails. At an election meeting 
 held in East Prussia in 1903 by Prince Dohna, 
 a scene was created when, at the end of the 
 speeches, a Chief Forester got upon his feet and, 
 ascending the tribune, proceeded in quiet but 
 earnest language to say that while he had no 
 sympathy whatever with Socialistic views, he was 
 bound to say that, judging by his own experience, 
 if Social Democracy was growing in that district 
 as in others, the blame must be laid to the charge 
 of the large landowners, whose treatment of their 
 " people " (Leute) created sympathy for the 
 teaching of that party. 
 
 " The Social Democrats," he proceeded, " are re- 
 proached with desiring to abolish religion, but what 
 is the state of religion in most parts of the country ? 
 Scripture says ' Six days shalt thou labour, and on the 
 seventh rest,' but can a farm labourer keep that 
 commandment ? What Social Democracy says about 
 the standard of life of the rural population contains 
 a certain amount of truth. One man comes to me 
 and says, ' My landlord will lend me no horses on a 
 week-day wherewith to work my field, and I have to 
 do it on Sunday.' Another comes and says, ' I should 
 have by right fuel free, but I get none.' Such a man 
 comes to the foresters and asks if he may gather 
 fallen wood in the forest, and when has that to be 
 done ? Again on Sunday, since the man with his 
 family has to work all the week for his landlord. I 
 fear," added this official, " that Social Democracy 
 will make good use of abuses like these, and attain 
 success in its agitation by means of them." 
 
 At the close of this unlooked-for addendum to a 
 hitherto harmonious gathering. Prince Dohna 
 
236 PROTECTION IN GERMANY. 
 
 himself had to admit that in the treatment of 
 labourers on the land there was *' much that was 
 improper" — a mild way of putting a truth whose 
 bearing upon the political thought and aspirations 
 of the rural classes of German}^ both peasants 
 and labourers, is vital. 
 
 As an illustration of the social position of the 
 rural labourer in North Germany, the following 
 sample labour contract, as now enforced upon 
 Mecklenburg estates, may be quoted : — 
 
 "The labourer must work faithfully, diligently, 
 and obediently for his employer and his representa- 
 tives, and must use his best endeavours to cause his 
 wife, children, and dependents similarly to conduct 
 themselves. He undertakes only to work for . . . and 
 to come daily to work unless hindered by sickness, 
 in return for which his employer binds himself to give 
 him work all the year round. 
 
 "The labourer receives : (i) A house with necessary 
 stallage, for which he is to pay a rent of £1 3s. Such 
 small repairs to the house or stall as mending floors 
 and walls, whitewashing, replacing window panes, 
 and the like must be done by the labourer himself, 
 material of stone, wood, clay, and lime being supplied 
 to him free. The re-setting of stoves is done at the 
 cost of the employer, but the labourer must keep 
 them in order at his own cost. (2) A garden of 
 about sixty square rods, so far as it goes with the 
 house. (3) Potato and linseed land in the open field 
 to the extent of eighty square rods. In the event of 
 his absenting himself in summer, the labourer will 
 only be granted tlie use of the garden, and no land 
 for potatoes and linseed. (4) Pasturage and forage 
 for one cow, and forty square yards of land for the 
 cultivation of cattle turnips or potatoes, which land 
 the labourer must work himself. 
 
THE AGRICULTURAL LABOURER. 237 
 
 " Permission to keep one breeding goose, with pas- 
 turage on the fallow for the geese. The labourers 
 must provide their own herdsmen, and each labourer 
 must supply to his employer at Michaelmas a young 
 fat goose of at least ten pounds weight. 
 
 " Two cartloads of fir-wood and 5,000 turves, or 
 more wood equal to the same, by way of wages for 
 fuel-cutting and preparing ; loading and unloading 
 to be done by the labourers free, but carting to be 
 done at the cost of the employer. 
 
 " Brandy money for the harvest — ^s. for the labourer 
 and IS. 6d. for his help. 
 
 *' Free medical attendance and medicine for himself 
 and his family in case of sickness, but entirely at the 
 discretion of his employer. 
 
 " Daily wages for every day of actual work — where 
 the work is not done by piece — as follows for himself 
 and his help : From October 25th to March ist, 2^d. 
 and 4 lb. of rye ; from April ist to June 30th, y^d. 
 and 4 lb. of rye; from July ist to x\ugust 31st, lod. 
 and 4 lb. of rye ; from September ist to October 24th, 
 y^d. and 4 lb. of rye. The labourer's wife receives 
 for washing, &c., 6d. a day, and for outdoor work — 
 from October 24th to March 31st, id. per hour ; from 
 April ist to May 31st, i^d. per hour ; from June ist 
 to August 31st, i^d. per hour ; from September ist to 
 October 24th, ihd. per hour. The time occupied in 
 going to and from work is not to be reckoned. The 
 wife must on demand do the milking, and she will 
 receive i^d. each time. 
 
 " Threshing pay. — The corn is threshed as far as 
 possible by machine, and as wages is given the 
 seventeenth bushel in case of hand threshing, and the 
 twenty-fifth in case of machine threshing. This pay 
 is divided amongst all the labourers engaged in the 
 
 work In machine threshing the labourer, 
 
 should he have no help, must cause his wife to work 
 instead, or arrange for a substitute with the other 
 workers, or receive proportionately less pay in corn. 
 The calculation is for at least eight labourers. 
 
238 PROTECTION IN GERMANY. 
 
 " The labourer undertakes to supply for farm use 
 sixteen besoms, receiving 6d. as pay, and to spin 6 lb. 
 of tow, to set a brood hen, and to perform other 
 small services as hitherto. The eggs for hatching are 
 supplied by the estate ; should more than three- 
 fourths yield birds, the labourer receives 3d. for each 
 in excess of that number, but if they yield fewer, he 
 must pay yL for each one missing. 
 
 " The labourer may not, without previous sanction, 
 take into his house for any period whatever any per- 
 sons not employed on the estate on pain of a fine of 
 IS. per night per person. 
 
 " The hours of work are from 6 a.m. to 8 p.m., and 
 on the short days of the year from daylight till dark. 
 An hour and a half is allowed for dinner, though in 
 busy seasons only an hour, or so much time as is 
 necessary for eating ; for breakfast and tea twent}' 
 minutes or half an hour, though no one may leave 
 his place of work, still less go home, at these intervals 
 without special permission." 
 
PROTECTION AND TAXATION. 239 
 
 CHAPTER XIV. 
 PROTECTION AND TAXATION. 
 
 There remains to be considered the strictly 
 fiscal aspect of Protection, i.e., the place of 
 customs duties in the revenue of the Empire and 
 the incidence of these duties upon the population. 
 In treating the first of these questions I naturally 
 leave untouched the whole subject of Imperial 
 expenditure as one which belongs to the domain 
 of domestic policy and has no direct bearing upon 
 the general problem of Protection. 
 
 How far the financial intentions of the revision 
 of economic policy undertaken in 1879 have been 
 realised, may be explained in a few words. To 
 this end it will be necessary to retrace our steps 
 for a moment. Up to that year the Government 
 had been secured a revenue from customs and 
 excise, for the purposes of the Empire, of nearly 
 ;£"5,7oo,ooo a year, and it was estimated that the 
 new tariff would give a net additional return of 
 :£'3>5oo>ooo> making in all ;£'9,200,ooo. The calcu- 
 lation was arrived at in this way. The value of 
 imported goods in 1877 was 3,877,000,000 marks, 
 but goods to the value of 2,853,000,000 marks were 
 free of duty. Bismarck estimated that under the 
 new tariff half of these free imports would be taxed, 
 
240 PROTECTION IN GERMANY. 
 
 and assuming an average tax of 5 per cent. 
 ad valorem, he counted on an additional revenue 
 of 70,000,000 marks. But ;^g, 250,000 was more 
 than the Reichstag was wilHng to entrust the 
 Chancellor with, and for a time the Tariff Bill 
 seemed to have struck against an insuperable 
 obstacle. Even the parties of Protection, ready 
 though they were to keep the Empire in funds, 
 insisted that these funds should allow of no 
 extravagance and that the Imperial Diet should 
 retain its old power over the purse. To this 
 attitude was due the so-called Frankenstein 
 Clause, which originated with the Ultramontanes, 
 and was adopted July 15th, 1879, providing that 
 the Empire was to retain only 130,000,000 marks 
 (;^6,50o,ooo) of the revenue from the customs and 
 excise duties, and to return the remainder to the 
 individual States in proportion to their matricular 
 contributions, in other words, according to popu- 
 lation. In that way the reliance upon the old 
 obnoxious system of "grants in aid " was formally 
 perpetuated, and the Chancellor's cherished pro- 
 ject of an independent, self-supporting Empire 
 was once again frustrated. But beggars cannot 
 be choosers, and Bismarck in asking for more 
 elasticity in Imperial finance had asked for too 
 much. He surrendered the point rather than 
 imperil the Bill. 
 
 Up to the year 1893 the grants which the 
 Empire was able to make to the States out of the 
 customs revenue exceeded — and thus practically 
 
PROTECTION AND TAXATION. 241 
 
 nullified — the matricular contributions. During 
 the ten years 1883-1893 the amount so distributed 
 was £24,300,000. Then came a period of deficits. 
 In 1893 the increase of the peace strength of the 
 army threw the Empire in an increased degree 
 upon State relief, and in the financial year 1893- 
 1894 the matricular contributions exceeded the 
 customs grants to the extent of £"2,000,000. 
 Hence new proposals of Imperial taxation were 
 devised to restore the balance by providing the 
 Empire with an additional £5,000,000 of revenue, 
 and side by side with these a modification of the 
 Frankenstein Clause, providing that out of the 
 proceeds of Imperial taxation a minimum of 
 £2,000,000 should be passed to the States after 
 deduction of the sum of the matricular con- 
 tributions in any one year. The project fell to 
 the ground for the time being. In 1894 the pro- 
 posal was altered to the effect that for the coming 
 five years the Empire should bind itself not to 
 require from the States more contributions than 
 would be covered by the grants legally due to them 
 in virtue of the Frankenstein Clause. This pro- 
 posal likewise failed to secure the approval of the 
 Reichstag, which objected that it would have 
 made the Imperial taxation too easy and too auto- 
 matic to be safe, and would virtually have allowed 
 the Federal Council and the Chancellor to dis- 
 pense with the formality of Parliamentary votes. 
 Then for a time the greater buoyancy of the 
 Imperial revenues seemed to make the question of 
 p.G. R 
 
242 PROTECTION IN GERMANY. 
 
 reform less urgent. In the fiscal year 1894-1895 
 the matricular contributions exceeded the grants 
 in aid to the extent of ^725,000, but in the two 
 following years, on the other hand, the grants 
 exceeded the contributions. In the year 1896- 
 1897 the Empire was empowered by a special 
 law to retain ^Tg, 000,000 instead of ;£'6,5oo,ooo, 
 owing to exceptional non-recurring expendi- 
 ture on the army, navy, and the colonies, so 
 that only £100,000 remained out of the taxes 
 for the States when the matricular contributions 
 had been deducted. In later years Imperial 
 finance has gone from bad to worse, until now 
 deficits are systematic. Moreover, these deficits 
 would have been more frequent and more serious 
 had not the Empire covered its needs by prodigal 
 borrowing. The Empire only began to indulge 
 in the luxury of being in debt in 1876 ; by 1888 
 its loans had reached £36,000,000 ; and they now 
 exceed £155,000,000, while the debts of the 
 federal States have also largely increased in the 
 meantime, until the aggregate of Empire and 
 States has reached £680,000,000. Nevertheless, 
 passing in review the twenty-four years 1880 to 
 1904, the States fourteen times received back in 
 grants more than they gave to the Empire 
 in contributions, to an aggregate amount of 
 £27,150,000, and paid in eleven years more than 
 they received to the aggregate amount of 
 £7,300,000, a balance in favour of the States of 
 £19,850,000, against which must, of course, be 
 
PROTECTION AND TAXATION. 243 
 
 placed the disadvantage that they have made 
 over to the Empire many sources of revenue which 
 otherwise would have stood them in good stead. 
 
 The latest endeavour to reform Imperial finance 
 is seen in the Finance Reform Bill now before 
 the Reichstag. The Government propose to 
 abandon altogether the Frankenstein compro- 
 mise ; they ask that in future the whole of the 
 revenue from customs duties shall be ear-marked 
 for Imperial purposes, and that the States shall 
 share in the excise duties on spirit, which realise 
 about £5,000,000, while under the obligation 
 as hitherto to make good the Empire's yearly 
 deficits by the old matricular contributions. It is 
 further proposed that contingent surpluses shall 
 not be regarded in any distribution of revenue to 
 the States, but shall form a fund out of which to 
 meet extraordinary expenditure for which pro- 
 vision may not be made in the yearly Budgets. 
 The great objection to this arrangement from 
 the constitutional standpoint is that it would 
 make the Government less dependent than before 
 upon Parliamentary control, inasmuch as taxes 
 once legalised cannot be repealed save with the 
 assent of the Federal Council and the Emperor, 
 who would not easily be persuaded to relinquish 
 any existing source of revenue except in exchange 
 for a better. 
 
 While, thus, the fiscal aspect of the question is 
 still beset with difficulties, it must be unhesitatingly 
 conceded that so far as mere productiveness 
 
 R 2 
 
244 PROTECTION IN GERMANY. 
 
 goes the customs duties have altogether ful- 
 filled the expectation based upon them : they 
 have yielded a large and increasing revenue, and 
 if that revenue has not proved sufficient the reason 
 lies with the unforeseen expansion of the Empire's 
 liabilities and the tendency of its spending depart- 
 ments to outrun their means, an experience which 
 is not by any means peculiar to Germany. Hence 
 the comment of a Free Trade critic. Dr. Schaffle, 
 " The duties have been a complete fiscal success," 
 must be unreservedly endorsed. In 1874 the 
 revenue from customs and excise duties realised 
 £12,324,400, but in 1893-1894 £"31,045,990, an 
 increase of £"18,713,550 ; and in 1903-1904 
 £"40, 512, 600, a further increase of £"9,466,610, and 
 more than threefold the revenue of thirty years 
 before. That considerations of revenue influenced 
 the Government in the latest revision of the 
 tariff may be concluded from the fact that over 
 £5,000,000 is expected to accrue to the Trea- 
 sury as a result of the increased corn duties 
 alone, 447 per cent, falling to wheat, 13 per cent, 
 to rye, 8'8 to oats, 147 to barley, I4'7 to maize, 
 1*8 to lentils, and 7*4 to rape and rapeseed. No 
 increase of revenue is anticipated from the indus- 
 trial duties, the effect of which, it is expected, 
 will be to restrict imports. 
 
 Here, however, the question is not exhausted. 
 While the customs tariff has yielded an unex- 
 pectedly large and progressive revenue, there 
 has been a dangerous shifting of the burden of 
 
PROTECTION AND TAXATION. 245 
 
 taxation more and more from articles of luxury 
 and convenience to those of necessity and even of 
 life. In 1878 the revenue of the principal food 
 duties fell as follows : — 
 
 , 3 1 '20 per cent, of the whole. 
 
 and those on other common articles of consumption 
 were : — 
 
 Coffee 
 
 Tropical fruits 
 Herrings ... 
 
 Tobacco 
 Wine 
 Salt 
 Brandy 
 
 i7"o6 per cent, of the whole. 
 8-09 
 
 4-06 „ „ 
 
 i"56 
 
 In the year i8go the entire incidence of taxation 
 was altered : — 
 
 Corn (which 
 
 tool 
 
 c 
 
 
 
 the first place).. 
 
 . 28-98 
 
 per 
 
 cent, of the whole. 
 
 Coffee 
 
 
 • ii"97 
 
 
 
 Petroleum 
 
 
 . 11-28 
 
 
 
 Tobacco ... 
 
 
 . 4-86 
 
 
 
 Wine 
 
 
 . 4-86 
 
 
 
 Lard 
 
 
 2-30 
 
 
 
 Cattle 
 
 
 . 1-85 
 
 
 
 Brandy . . . 
 
 
 172 
 
 
 
 While in 1878 corn contributed nothing to the 
 revenue, in 1884 io'94 per cent, of the total duties 
 came from corn, which took the fourth place ; the 
 percentage in 1885 was I2'63 (fourth place), and 
 in 1888 20*24 (fii^st place) ; to-day it still holds the 
 first place with over 30 per cent. 
 
 The gross revenue from customs duties in 1902 
 was ;£"26,969,3io against £26,680,300 in 1901, 
 
246 
 
 PROTECTION IN GERMANY. 
 
 £26,055,000 in 1900, 5^25,305,000 in 1899, 
 £25,765,000 in 1898, and £23,745,000 in 1897. 
 A comparison of the two years 1897 and 1902 
 gives the following results in values and per- 
 centages : — 
 
 
 1897. 
 
 1902, 
 
 Article Taxed. 
 
 Duty Yielded. 
 
 Percentage 
 of Total. 
 
 Duty Yielded. 
 
 Percentage 
 of Total. 
 
 Wheat . . 
 Rye 
 
 Barley . . 
 Maize . . 
 
 £ 
 2,140,000 
 1,430,000 
 1,065,000 
 1,015.000 
 
 90 
 6-0 
 4-5 
 4"3 
 
 £ 
 
 3,633,000 
 
 1,620,000 
 
 1,125,000 
 
 720,000 
 
 13-5 
 60 
 4-2 
 27 
 
 
 /5, 650, 000 
 
 23-8 
 
 ;^7,o98,ooo 
 
 26*4 
 
 Coffee (raw) . . 
 
 Meat (fresh and 
 
 prepared) . . 
 
 3,416,000 
 435.000 
 
 12-7 
 
 1-6 
 
 2.720,000 
 420,000 
 
 "■5 
 
 So, too, petroleum for light yielded in 1902 a 
 revenue of £2,935,000 or 10*9 per cent, of the 
 whole, against £2,765,000 or ii*6 per cent, in 
 1897. 
 
 Taking the duties in groups, as classified in 
 the official returns, the following was the estimated 
 yield in 1902, with the percentage of the whole in 
 each case : — 
 
 
 £ 
 
 Percentage. 
 
 Comestibles other than 
 
 
 
 corn (groceries and tro- 
 
 
 
 pical produce generally) 
 
 10,729,000 
 
 ... 3978 
 
 Corn and other produce 
 
 
 
 of the land 
 
 8,336>78o 
 
 ... 30-91 
 
 Hops 
 
 20,148 
 
 ... o-o8 
 
PROTECTION AND TAXATION. 247 
 
 Cattle 
 
 Animals and animal pro- 
 ducts not otherwise 
 
 specified 
 Iron and iron goods 
 Earths, ores, precious 
 
 metals, and asbestos . . . 
 Instruments, machines, 
 
 and vehicles ... 
 Copper and other base 
 
 metals not otherwise 
 
 named, and goods of 
 
 the same 
 Zinc and zinc alloys, and 
 
 goods of the same ... 
 Tin, and goods of the 
 
 SH.nic ••• ••• ••• 
 
 Lead, and goods of the 
 
 sariie ••• ••• ••• 
 
 Hardware (ironmongery) 
 Petroleum and other 
 
 mineral oils (light and 
 
 lubrication) 
 Oils and other kinds of 
 
 tat ... ... . • • 
 
 Timber and wood ware . . . 
 Cotton and cotton goods 
 Wool and woollen goods 
 Silk and silk goods 
 Linen yarn and linen 
 
 goods ... 
 Clothing and personal 
 
 linen 
 Leather and leather goods 
 
 Furriery 
 
 Glass and glass goods ... 
 
 Earthenware 
 
 Stones and stone ware ... 
 
 Paper and paper goods ... 
 
 I 
 
 300,037 
 
 Percentage 
 
 fll 
 
 156,800 
 
 292,144 
 
 ... 0-58 
 ro8 
 
 2,201 
 
 O'OI 
 
 100,369 
 
 - 0-37 
 
 31,273 
 
 9" 1 2 
 
 1,917 
 
 O'OI 
 
 1,295 
 
 O'OI 
 
 479 
 99,218 
 
 O'OO 
 
 ... 0-37 
 
 3,571,300 
 
 ... 13-24 
 
 916,364 
 950,229 
 
 424,558 
 
 234.145 
 210,999 
 
 ... 3'49 
 
 ••• 3"52 
 
 ••• 1-57 
 ... 0-87 
 
 078 
 
 78,808 
 
 0'29 
 
 78,601 
 
 109,016 
 
 4,820 
 
 62,585 
 
 31,513 
 21,682 
 
 51,268 
 
 0"29 
 
 0*40 
 
 0-02 
 
 0*23 
 
 0-I2 
 
 o-o8 
 o-ig 
 
248 
 
 PROTECTION IN GERMANY. 
 
 £ 
 
 Percentage. 
 
 42,043 
 
 9-15 
 
 Caoutchouc and gutta- 
 percha, and goods of 
 the same 
 
 Drugs, apothecary's, and 
 dye stuffs 
 
 Soap and perfumery 
 
 Straw and wicker work . . . 
 
 Horse and human hair, 
 and goods of same, 
 feathers, and bristles ... 
 
 Wax-cloth, muslin, and silk 
 
 Brushes, &c. 
 
 Candles ... 
 
 Playing cards 
 
 How the pressure of taxation has changed 
 since Protection was introduced may further be 
 shown by a table giving the relative percentage of 
 total revenue raised at different times upon some 
 of the commonest articles of use : — 
 
 38,970 .. 
 21,725 .. 
 
 . 0-15 
 
 . o-o8 
 
 31,518 •• 
 
 0'12 
 
 7,705 •• 
 
 6,096 .. 
 
 0-03 
 0-02 
 
 3,010 .. 
 
 O'OI 
 
 1,731 •• 
 
 84 .. 
 
 0"0I 
 0"00 
 
 1S7S. 
 
 
 1890. 
 
 
 1902. 
 
 
 Per cent, of the whole. 
 
 Per cent, of th 
 
 i whole. 
 
 Per cent, of th 
 
 e whole. 
 
 Coffee 
 
 31 20 
 
 Corn 
 
 28-98 
 
 Corn 
 
 30-91 
 
 Tobacco . . 
 
 1 7 "06 
 
 Coffee . . 
 
 11-97 
 
 Coffee ... 
 
 12-7 
 
 Wine 
 
 8-09 
 
 Petroleum 
 
 11-28 
 
 Petroleum 
 
 10-9 
 
 Tropical 
 
 
 Tobacco . . 
 
 10-84 
 
 Tobacco . . 
 
 97 
 
 Fruits . . 
 
 4'io 
 
 Wine 
 
 4-86 
 
 Wine 
 
 2*5 
 
 Salt 
 
 4 '06 
 
 Timber . . 
 
 3 "95 
 
 Timber . . 
 
 30 
 
 Woollen 
 
 
 Lard 
 
 2-30 
 
 Lard 
 
 2-0 
 
 Goods . . 
 
 3'44 
 
 Iron 
 
 2-07 
 
 Meat 
 
 1-6 
 
 Cotton 
 
 
 Cattle . . 
 
 1-85 
 
 Brandy . . 
 
 i-o 
 
 Goods . . 
 
 2*25 
 
 Brandy . . 
 
 1-72 
 
 
 
 Herrings . . 
 
 1-94 
 
 1-84 
 
 
 
 
 — 
 
 Roots 
 
 
 
 74'3i 
 
 Brandy . . 
 
 1-56 
 
 
 80-82 I 
 
 Der cent. 
 
 per 
 cent. 
 
 
 75-54 
 
 per cent. 
 
 
PROTECTION AND TAXATION. 249 
 
 Figures like these, without reducing them to 
 further detail, give a plain indication of the 
 incidence of taxation in Germany ; it falls over- 
 vvhelmingl}' not upon luxuries, as with the more 
 truly revenue system of duties in vogue in Eng- 
 land, but on the first needs and utilities of life. 
 This appears still more clearly when we inquire 
 what these taxes on food and convenience mean 
 in the concrete. Naturally the corn tax suggests 
 itself first. Estimates vary as to the sacrifice which 
 this tax entails on the community. Under the 
 old duties, as reduced for treaty purposes, the 
 Treasury raised by taxation of all kinds of grain 
 eight and a third million pounds in 1902, but this 
 was only a part of the tribute which the duties 
 entailed. Assuming that the price of corn was 
 not increased beyond the amount of the duty, it 
 has been estimated that the total sacrifice imposed 
 on the community would not fall far short of 
 5^40,000,000, or 14s. ^d. per head of the popu- 
 lation. Some German writers have even placed 
 the entire tribute levied in the interests of 
 agriculture as high as ^^'so, 000,000 a year, 
 and Professor Lotz estimates that the minimum 
 duties of the new tariff will entail a further 
 yearly impost in the one item of corn alone of 
 5^i5j75o>ooo. Yet the proportion of this large 
 tribute which finds its way into the Treasury is 
 very small. 
 
 That corn is actually made dearer by taxation 
 is proved by comparison with free markets. Thus 
 
250 
 
 PROTECTION IN GERMANY. 
 
 the price of wheat in BerKn from 1886 to i8go 
 was 31S. yd. per ton higher than in London ; 
 from iSgi to 1895 it was 46s. higher, and from 
 1895 to 1899 it was 34s. 6d. higher, and the duties 
 during these three periods were 30s. increasing to 
 50S., 50S. falHng to 35s., and 35s. The steadiness 
 of the increase in the cost of agricultural food- 
 stuffs generally which set in after the second 
 revision of the tariff is shown by the following 
 comparison of average prices in twenty-three 
 Prussian markets : — 
 
 Per Ton. 
 
 
 1892. 
 
 1891. 
 
 1890. 
 
 .1889. 
 
 1888. 
 
 Wheat 
 Rye 
 Barley 
 Potatoes . . 
 
 £ s. d. 
 
 980 
 
 8 i5 
 7 15 
 340 
 
 £ s. d. 
 
 II I 
 
 10 7 
 
 870 
 
 3 13 
 
 £, s. d. 
 
 9 II 
 880 
 820 
 290 
 
 £. s. d. 
 920 
 7 15 
 7 10 
 2 12 
 
 ;£ ^. d. 
 
 8 14 
 6 14 
 6 14 
 2 10 
 
 Per Kilogramme. 
 
 
 Marks. 
 
 Marks. 
 
 Marks. 
 
 Marks. 
 
 Marks. 
 
 Beef 
 
 1-28 
 
 1-28 
 
 1-27 
 
 ri8 
 
 ri4 
 
 Mutton 
 
 1-24 
 
 1-28 
 
 1-26 
 
 1-17 
 
 i'i3 
 
 Veal 
 
 125 
 
 127 
 
 1-24 
 
 1-15 
 
 1-07 
 
 Pork 
 
 1-35 
 
 132 
 
 1-42 
 
 1-31 
 
 ri7 
 
 Butter 
 
 2-30 
 
 2'24 
 
 2 "23 
 
 226 
 
 2'12 
 
 Lard 
 
 I 64 
 
 1-65 
 
 174 
 
 r6i 
 
 1-50 
 
 Since then the price of corn has fallen con- 
 siderably, but there has been a continuous increase 
 
PROTECTION AND TAXATION. 
 
 251 
 
 in other articles of food during the past decade, as 
 witness : — 
 
 Per Kilogramme. 
 
 Per Kilo- 
 gramme. Per lb. 
 
 
 1892. 
 
 1902. 
 
 Increase. 
 
 
 • Marks. 
 
 Marks. 
 
 Marks. 
 
 
 Beef 
 Veal 
 
 Mutton • . 
 Pork 
 
 123 
 ri6 
 
 1-27 
 1-22 
 
 I -So 
 I -So 
 I -80 
 I -60 
 
 0-57 
 0-64 
 
 0-53 
 0-38 
 
 5¥- 
 
 3d. 
 2d. 
 
 Here we have the obvious explanation of the 
 fact attested b}' the Board of Trade, who in the 
 fiscal Blue Book show that the cost of living "has 
 fallen very much less " in Germany during the 
 twenty-five years 1877 to igoi than in this country. 
 Taking igoi as the test and 100 as the index- 
 number, the movement of prices of food has been 
 as follows : — 
 
 
 TJ 
 
 nited Kingdom. 
 
 Germany. 
 
 1877 . 
 
 
 . 143 ••• 
 
 .. 115 
 
 1878 . 
 
 
 . 134 ... 
 
 no 
 
 1879 . 
 
 
 . 128 ... 
 
 no 
 
 1880 . 
 
 
 . 136 ... 
 
 .. 114 
 
 I88I 
 
 
 133 
 
 in 
 
 1882 . 
 
 
 • 133 ... 
 
 109 
 
 1883 . 
 
 
 . 133 ... 
 
 107 
 
 1884 . 
 
 
 122 
 
 .. 98 
 
 1885 . 
 
 
 III 
 
 .. 98 
 
 1886 . 
 
 
 . 105 ... 
 
 95 
 
 1887 . 
 
 
 100 
 
 95 
 
 1888 . 
 
 
 100 
 
 .. 96 
 
252 
 
 PROTECTION IN GERMANY. 
 
 
 United Kingdom. 
 
 Germany 
 
 1889 
 
 104 
 
 104 
 
 i8go 
 
 102 
 
 
 •• 105 
 
 1891 
 
 .. 104 . 
 
 
 .. 116 
 
 1892 
 
 .. 104 . 
 
 
 112 
 
 1893 ... 
 
 .. 98 . 
 
 
 97 
 
 1894 ..• 
 
 95 • 
 
 
 95 
 
 1895 ... 
 
 91 . 
 
 
 .. 96 
 
 1896 ... 
 
 .. 87 . 
 
 
 95 
 
 1897 ... 
 
 94 . 
 
 
 lOI 
 
 1898 ... 
 
 100 
 
 
 .. 103 
 
 1899 ... 
 
 93 . 
 
 
 .. 98 
 
 1900 
 
 .. 96 . 
 
 
 ... 98 
 
 1901 
 
 100 
 
 
 100 
 
 Thus up to 1900 there was a fall of 49 points 
 in the United Kingdom against one of 17 points 
 in Germany. The Board of Trade investigators 
 come to the conclusion that during the quin- 
 quennium 1897 — igoi "a German workman 
 has been able to purchase as much food of 
 the kind to which he is accustomed for 100 
 marks as he could get previously for 112 marks, 
 while the English workman has been able to 
 make 100 shillings go as far in purchasing food 
 as 140 shillings would have gone twenty years 
 before." 
 
 What the corn tax pure and simple means to 
 the working classes will be better understood 
 when it is remembered how large a part bread 
 plays in the economy of the German household. 
 Professor Walther Lotz estimates that 16 per 
 cent, of the workman's income is spent in bread 
 alone, though in many places the percentage is 
 
PROTECTION AND TAXATION. 253 
 
 larger ; thus the average in Halle is 20 per cent., 
 and amongst the weavers of Zittau it is from 
 25 to 30 per cent., though amongst the better- 
 paid artisans of Nuremberg it has been found to 
 be but 9*2 per cent. Taking, however, a con- 
 sumption of 16 per cent, as fair for the working 
 classes generally, and further assuming even 
 wages of i8s. per household, it follows that 2s. lod. 
 per week is expended a head, and of this 2S. 10^. 
 yd. is tax paid to the State. 
 
 In addition there are the duties upon other food- 
 stuffs and indispensable domestic requisites. How 
 such duties work out, on the basis of the last 
 available complete return of revenue, is shown by 
 the following figures : — 
 
 Yearly tax Yearly tax 
 
 per head of per house- 
 
 Article taxed. the popula- hold of five 
 
 tion. persons. 
 
 s. d. s. d. 
 
 Wheat and rye ... ... i io| ... 9 42 
 
 Coffee I 2| ... 6 o^ 
 
 Petroleum i o| ... 5 2| 
 
 It is estimated that the duty now paid on every 
 shilling's purchase is as follows : — On lard 2|^., 
 on butter and margarine i^d., on baked goods 4^d., 
 on coffee and surrogates 5f^., on cocoa and choco- 
 late 3|^., on cooking oil 2d., on eggs |(i., on 
 cheese ifi., on lard i^d., on rice 2^d., on 
 tea y^d., on salted herrings i^d. To put the 
 matter otherwise, taking customs duties and 
 excise taxes together, the taxation which at present 
 
254 
 
 PROTECTION IN GERMANY 
 
 falls upon commodities of commonest use is as 
 follows : — 
 
 Bread 
 
 Meat 
 
 Lard 
 
 Bacon 
 
 Salt 
 
 Sugar 
 
 Rice 
 
 Per pound. 
 .. H 
 id. 
 ^d 
 
 .. Id. 
 .. lU. 
 .. id. 
 
 The population of the Empire has grown far 
 beyond expectations since 1871, but its taxation 
 has progressed at an even greater rate. In that 
 year the customs duties cost every inhabitant (man, 
 woman, and child) 2s. i0(i. per annum, and in 1878 
 the rate had fallen to 2S. y^d. ; in 1888 it had 
 reached 6s. 6d., in 189 1 8s. i^^., and last year it 
 was 9s. 8^. per head. The similar tax in England 
 was I2S. 8^. Taking customs and excise together, 
 the advantage is apparently still further on 
 Germany's side, and arguing from these bald 
 figures, a German economist of the leading rank, 
 Professor Adolf Wagner, has seriously contended 
 that the German taxpayer, with his yearly tribute 
 of 15s. ^d. in customs and excise duties, is better 
 off than the Englishman with his ^^i 5s. id. and 
 still more than the Frenchman with his ^^i 12s. gd.^ 
 It would be just as reasonable to contend that the 
 man who on an income of £500 pays income tax 
 of ;£"20 is better off than the man who pays £"50 
 
 1 I give the figures as published, unable to analyse their 
 composition. 
 
PROTECTION AND TAXATION. 255 
 
 upon an income of -^1,000. Obviously the height 
 of taxation must be estimated relatively to the 
 sum of the national and individual income. Not 
 only so, but an equally important question, in 
 comparing the incidence of taxation, is the cha- 
 racter of the taxes paid — whether on the necessities 
 or on the superfluities of consumption. With the 
 facts which have been given on both these points 
 before him, the reader will be able to form his own 
 conclusions. To carry the inquiry further into the 
 domain of direct taxation would hardly be pertinent 
 to our purpose, though there is room for reflection 
 in the fact that while in England there is exemp- 
 tion from income tax below an income of 5^150 
 the exemption stops at ;^45 in Prussia, and at 3^20 
 in Saxony, with the result that a large section of 
 domestic servants are regularly assessed to this tax 
 twice over — once by the State and again by the 
 municipality, whose " class tax " is based on the 
 income tax, since in estimating their income the 
 equivalent of board and lodging is taken into 
 consideration. Thus a servant with money wages 
 of ;^20 or upwards may pay from 12s. to 20s. a 
 year in State and municipal taxes, according to 
 locality. 
 
 
 
 ^-'^^/TY 
 
 
INDEX. 
 
 -♦ — 
 
 Agrarian Movement and 
 Agrarian League, the, 128 — 
 140 
 
 Agricultural Labourer, Condi- 
 tion of the, 224 — 238 
 
 Agricultural Protection and its 
 Effect, 72, 73. 84, 85, 104— 
 106, 128 — 140, 142 — 160, 202 
 —223 
 
 Altenstein, von, 16 
 
 Bismarck, Prince, Economic 
 Views, 21, 63 — 66, 69 — 74, 
 88, 89 ; Theories of Taxation, 
 
 41—57 
 Bohmert, Victor, 24 
 Brentano, Professor Lujo, 127 
 Bulow, Count von, (1) 13, 16; 
 
 (2) 140, 143, 147, 152, 154. 
 
 157. 158 
 
 Camphausen, Otto, 25, 60 
 
 Canada, Tariff War with, 122 
 —124 
 
 Caprivi, Count von, gS, 106 — 
 iiS, 127, 130, 143, 147, 1S3, 
 210, 217 
 
 Chambers of Commerce, Testi- 
 mony of, 80, 91, 92, 124, 162. 
 
 163 
 
 Colonial Movements, Early 
 
 Prussian, 5 
 Commercial Treaties, 21, 47, 
 
 68, 85, 108—127 
 Commercial Treaty Era. 98 — 
 
 127 
 
 Corn Prices, 86, 88, 89, 96, 99, 
 
 136, 206, 212, 213, 250 
 Creuzbacher, G., 197 
 Customs Tariffs of 1879, 26 — 
 
 40, 58—77 ; of 1885, 87—95 ; 
 
 of 1887, 95—97; of 1902, 
 
 141 — 160 
 Customs Union, the, 17 — 25 
 
 Delbruck, M. F, R., 25, 39. 
 
 59. 72 
 Dolma, 16 
 Dumping, 71, 170, 175—177 
 
 Emigration Returns, 180, 
 
 181 
 Exports and Export Trade, 7, 
 
 32 — 34. 81, 101—106. 125, 
 
 126. 166 — 169 
 
 Faucher, Julius, 23 
 
 Food, Cost of, 82, 192 — 199, 
 
 250, 251 ; Consumption by 
 
 Working Classes, 192 — 199 
 Frederick the Great, Economic 
 
 Policy of, 3—5, 115, 213 
 Frederick William II., 7 ; 
 
 III., 9. 13 
 Free Trade Markets, German 
 
 Trade in, 165, 166 
 Free Trade Tendencies, 21 — 
 
 25, 183, 184 
 French War, Effect of, 29, 30 
 
 Gneisenau, 16 
 
 Goltz, Professor von der, 225, 
 231 
 
 P.O. 
 
258 
 
 INDEX. 
 
 Hammerstein, Baron von, 206 
 Hardenberg and Stein, Laws 
 
 of, 9 — 16 
 Heydt, August von der, 25, 60 
 Hirschfeld, F., 195 
 Hohenlohe, Prince, 140, 143, 
 
 217, 218 
 Humboldt, Wilhelm von, 13, 16 
 Huskisson, William, 16 
 
 Imperial Taxation, 49 — 57, 
 
 69. 70, 239—243 
 Imports and Import Trade, 
 
 81, loi — 106, 125, 126, 168, 
 
 169 
 Industrial Protection, 71, 146, 
 
 148, 161 — 184 
 Industry, The Beginnings of 
 
 German, 2 
 
 Kanitz, Count, and Corn 
 Monopoly, 136—138, 218 
 
 Labour, Condition of: Indus- 
 trial, 185 — 201 ; Agricultural, 
 224 — 238 
 
 Lette, W. A.. 23 
 
 List, Friedrich, 15 
 
 Lotz, Professor Walther, 39, 
 75, 149, 178, 249 
 
 Matlekovits, 96, 214 
 Mercantile System, the, 3, 8 
 Michaelis, Otto, 23 
 Miquel, Dr., 205 
 Moritz, Dr. Eugen, 78, 164, 
 171. 183 
 
 NlEBUHR, 16 
 PiCKFORD, 24 
 
 Prince Smith, John, 23, 24 
 
 Protection, the German Tradi- 
 tion, I 
 
 Protection and Agriculture, 
 72, 73, 84, 85, 104—106. 128 
 — 140, 142 — 160 
 
 Protection and Taxation, 239 
 
 —255 
 
 Protection and Trade, 100 — 
 
 106, 161 — 184 
 Protective Tariffs of 1879, 26 — 
 
 40, 58—75 ; of 1885, 87—95 ; 
 
 of 1887, 95 — 97; of 1902, 
 
 141 — 160 
 Prussian Fiscal Traditions, 
 
 1—25 
 
 QuisTORP, Pastor, Testimony 
 of, 232 
 
 Reaction of 1879, Protec- 
 tionist, 26 — 40 
 
 Richter, Eugen, 124 
 
 Rubow, Dr., 21S, 219 
 
 Russia, Tariff War with, 119, 
 120 
 
 ScHAFFLE, Professor Albert, 
 21, 22, 27, 94, 98 — 106, 182, 
 206, 244 
 
 Scharnhorst, 16 
 
 Schon, 16 
 
 Schultze - Gavernitz, G. von, 
 199 
 
 Schulz, Dr. A., 204 
 
 Schulze-Delitzsch, 23 
 
 Small Farming, Value of Sys- 
 tem of, 220 — 223 
 
 Smith, Adam, 10, 15 
 
 Soetbeer, 96 
 
 Stein and Hardenberg Laws, 
 the. 9 — 16 
 
 Syndicates, the, 170—173 
 
 Tariff of 1879, 26 — 40, 58 — 
 77; of 18S5, 87—95; of 
 1887. 95—97; of 1902, 141 
 — 160 
 
 Tariff Duties, 20—25, 76, 90, 
 
 91.95. 156 
 Tariff War with Russia, 119; 
 
 Canada, 122 — 124 
 Taxation, Prince Bismarck's 
 
 Theories of, 41 — 57 
 Taxation and Protection, 239 
 
 —255 
 
INDEX. 
 
 259 
 
 Thirty Years' War, Effect of, 
 
 2,3 
 Trade and Protection, 100 — 
 
 106, 161 — 184 
 Treitschke, H. von, 31 
 
 Varnbuler, Baron von, 62 
 
 Wages : Industrial, 82, 83, 97, 
 
 171, 186 — 191 ; Agricultural, 
 
 225 — 227 
 Wagner, Professor Adolf, 254 
 William I., Emperor, and 
 
 Protection, 39, 77 
 Wirth, Max, 23 
 Working Man, Condition of 
 
 the Urban, 185 — 201 ; Rural, 
 
 224—238 
 
 THE END. 
 
 BRADBURY, AGNEW, & CO. I-D , PRINTERS, LONDON AND TONBRIDGE. 
 
Demy 8vo. Cloth, 256 pp. and Index. 3s. 6d. net. 
 
 ELEMENTS OF 
 THE FISCAL * 
 
 PROBLEM * * * 
 
 BY 
 
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 Fclloxv of the Royal Statistical Society ; 
 
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 THEORIES OF 
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 BUTION IN ENGLISH POLITICAL 
 . . ECONOMY FROM 1776-1848. . . 
 
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 EDWIN CANNAN, M.A., LL.D., 
 
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 CHAP, CONXENTS. 
 
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