Germany and the Next War

by Friedrich von Bernhardi

Against this brilliant prosperity must be placed a very large national debt, both in the Empire and in the separate States. The German Empire in the year 1910 had 5,016,655,500 marks debt, and in addition the national debt of the separate States on April 1, 1910, reached in—

Marks
Prussia 9,421,770,800
Bavaria 2,165,942,900
Saxony 893,042,600
Würtemberg 606,042,800
Baden 557,859,000
Hesse 428,664,400
Alsace-Lorraine 31,758,100
Hamburg 684,891,200
Lübeck 666,888,400
Bremen 263,431,400

Against these debts may be placed a considerable property in domains, forests, mines, and railways. The stock capital of the State railways reached, on March 31, 1908, in millions of marks, in—

Marks,
Prussia (Hesse) 9,888
Bavaria 1,694
Saxony 1,035
Würtemburg 685
Baden 727
Alsace-Lorraine 724

—a grand total, including the smaller State systems, of 15,062 milliard marks. This sum has since risen considerably, and reached at the end of 1911 for Prussia alone 11,050 milliards. Nevertheless, the national debts signify a very heavy burden, which works the more disadvantageously because these debts are almost all contracted in the country, and presses the more heavily because the communes are also often greatly in debt.

The debt of the Prussian towns and country communes of 10,000 inhabitants and upwards alone amounts to 3,000 million marks, in the whole Empire to some 5,000 million marks. This means that interest yearly has to be paid to the value of 150 million marks, so that many communes, especially in the east and in the western industrial regions, are compelled to raise additional taxation to the extent of 200, 300, or even 400 per cent. The taxes also are not at all equally distributed according to capacity to pay them. The main burden rests on the middle class; the large fortunes are much less drawn upon. Some sources of wealth are not touched by taxation, as, for example, the speculative income not obtained by carrying on any business, but by speculations on the Stock Exchange, which cannot be taxed until it is converted into property. Nevertheless, the German nation is quite in a position to pay for the military preparations, which it certainly requires for the protection and the fulfilment of its duties in policy and civilization, so soon as appropriate and comprehensive measures are taken and the opposing parties can resolve to sacrifice scruples as to principles on the altar of patriotism.

The dispute about the so-called Imperial Finance reform has shown how party interests and selfishness rule the national representation; it was not pleasant to see how each tried to shift the burden to his neighbour's shoulders in order to protect himself against financial sacrifices. It must be supposed, therefore, that similar efforts will be made in the future, and that fact must be reckoned with. But a considerable and rapid rise of the Imperial revenue is required if we wish to remain equal to the situation and not to abandon the future of our country without a blow.

Under these conditions I see no other effectual measure but the speedy introduction of the Reichserbrecht (Imperial right of succession), in order to satisfy the urgent necessity. This source of revenue would oppress no class in particular, but would hit all alike, and would furnish the requisite means both to complete our armament and to diminish our burden of debt.

If the collateral relations, with exception of brothers and sisters, depended on mention in the will for any claim—that is to say, if they could only inherit when a testimentary disposition existed in their favour—and if, in absence of such disposition, the State stepped in as heir, a yearly revenue of 500 millions, according to a calculation based on official material, could be counted upon. This is not the place to examine this calculation more closely. Even if it is put at too high a figure, which I doubt, yet the yield of such a tax would be very large under any circumstances.

Since this, like every tax on an inheritance, is a tax on capital—that is to say, it is directly derived from invested capital—it is in the nature of things that the proceeds should be devoted in the first instance to the improvement of the financial situation, especially to paying off debts. Otherwise there would be the danger of acting like a private gentleman who lives on his capital. This idea is also to be recommended because the proceeds of the tax are not constant, but liable to fluctuations. It would be advisable to devote the proceeds principally in this way, and to allow a part to go towards extinguishing the debt of the communes, whose financial soundness is extremely important. This fundamental standpoint does not exclude the possibility that in a national crisis the tax may be exceptionally applied to other important purposes, as for example to the completion of our armaments on land and sea.