The Iron Ration: Three Years in Warring Central Europe

by George Abel Schreiner

The first, second, and third war loans in Central Europe were subscribed to with much, though later dwindling, enthusiasm. Patriotism had a great deal to do with their success. Real money was required by the government, moreover. Bank accounts, government securities, sound commercial paper, and savings deposits were turned over. The loans made later were devoid of many of these features. Those who bought war-loan certificates did so because it was necessary for one reason or another, and many of the war bonds obtained in the first loans were converted. The war and all that pertained to it was now entirely a matter of business with those who could subscribe. The poor were tired of any aspect of war.

The government could not prevent their being tired, but it could see to it that indirectly the masses supported the war policy, no matter what they thought. That was not difficult. The high cost of living took from the producer-consumer what the government needed, and there is no system of discipline that is quite so efficacious as keeping a man's nose to the grindstone.

Sleek bankers used to inform me that there was much prosperity in the country. There was from their point of view. The margin between the wages paid the producer and the prices asked of the consumer was great enough to satisfy the interested parties, government and middleman alike. The war loans had hardly been closed when a good share of them was again in circulation. The whirligig of war economy was spinning lustily, and there was no danger of things going wrong so long as the producer-consumer was kept well in hand.

How the war loans made the rounds is quite interesting. It is the closest approach to perpetual motion I have come across.

Since the Central states could buy in foreign countries only by means of special trade agreements that called for an exchange in commodities rather than for the medium of exchange, the money raised by the war loans remained within the realm. Much of it went to makers of arms and ammunition, of course. In their case a million marks—I am using this small amount as a unit only—would lead to the following results: To the manufacturer would go 60 per cent. of the total and to labor 40. Subdivided these shares paid for raw material, plant investment, operation expenses, and profits so large that the government could impose a tax of 75 per cent. without making it impossible for the manufacturer to subscribe to the next loan. Labor, on the other hand, found itself barely able to sustain life, and if a few marks were saved by some, little or nothing could be bought for them. The man who was earning 70 marks a week, instead of 55, was paying for his food and necessities 115 instead of 48 marks—an economic incongruity at first glance, but perfectly feasible so long as those affected could be induced to live on about 85 per cent. of the ration needed to properly nourish the body, and had given up entirely the comforts of life. That scheme left him hope for better times as the only comfort. No matter how often the money of the war loans rushed through his hands, none of it ever stuck to them.

Before long it was plain that in this fashion the Central Powers could keep up the war forever. Their financial standing in foreign countries need not worry them so long as they could not buy commodities in them. To be sure, the public debt was increasing rapidly, but the very people to whom the government owed money were responsible for that money. If bankruptcy came to the state they would be the losers, and that responsibility increased as their wealth increased. Capital and government became a co-operative organization, and both of them exploited the producer-consumer, by giving him as little for his labor as he would take and charging him as much for the necessities of life as he would stand for—and that was much. When now and then it seemed necessary to placate the producer-consumer, he would be told that in the interest of the Fatherland the government was compelled to do what it did. But the necessity for this came not often. The small man was generally overjoyed when the government was able to announce that the war loan had been a success or had been over-subscribed. That is all he wanted to know, so long as he was not required to go to the front. The success of the war loan meant that he would have work—and live to see the end of a war which everybody claimed had been forced upon the state.

It is certain that the Central states governments would have been bankrupt long ago had they been able to buy in the foreign market ad libitum, though in that case the foreign trade connections would have also seen to it that war loans were made to the Germans and Austro-Hungarians. There is no doubt at all that a Germany permitted to buy abroad would have later been less able to organize herself as efficiently economically as she did when her financial strength was still unimpaired for internal purposes. To this extent the swift descent of the British blockade is one of the gravest errors booked on the debit side of the Entente's politico-military ledger. Absolutely nothing was gained in a military sense by shutting the import door of the Central states. Far-seeing statesmen would have allowed Germany to import all she wanted and would then have seen to it that her exports were kept to a minimum, so far as the shortage of man-power in the country did not automatically bring about that result.

As it was, the Central states supplanted and substituted right and left, made new uses of their own natural resources, and fitted themselves for the long siege at a time when doing that was still easy. The British blockade, if applied in the winter of 1915-16, would have had effects it could not hope to attain in the winter of 1914-15, when almost any rational being knew that to starve out the Central states was not to be thought of. The Central states would have continued to live very much as before, and by the end of 1915 the governments would have been obliged to shut down on imports of food for the civilian population if the gold reserve was not to be exhausted completely, as would have been the case if exports could not balance imports to any extent. Production and consumption would then not have been as well organized as they were under the auspices of the premature blockade, and the downfall for which the Entente has until now vainly hoped, and which will remain the greatest spes fallax of all time, would then have surely come. That bolt was shot too soon by Great Britain.

Though the Central governments were fully aware of this, as some of their officials admitted to me, they had no reason to bring this to the attention of their publics or the world. The British Aushungerungspolitik—policy of starvation—was the most potent argument the Central governments had to present to their war-tired people. What the German air raids on London accomplished in promoting the British war spirit the blockade of the Central states effected in the German Empire and Austria-Hungary. In a war of such dimensions it was foolish to thus drive the governed into the arms of their governors.

The financial condition of the Central European states to-day is as sound as that of the Entente states. That would not be true if any great share of the Central European war loans had been raised in foreign countries. But, as I have shown, this was not done.