Reasons of statecraft also warned him to build up the Empire four-square while yet there was time. The rapid recovery of France, whose milliards had proved somewhat of a "Greek gift" to Germany, had led to threats on the part of the war party at Berlin, which brought from Queen Victoria, as also from the Czar Alexander, private but pressing intimations to Kaiser Wilhelm that no war of extermination must take place. This affair and its results in Germany's foreign policy will occupy us in Chapter XII. Here we may note that Bismarck saw in it a reason for suspecting Russia, hating England, and jealously watching every movement in France. Germany's future, it seemed, would have to be safeguarded by all the peaceable means available. How natural, then, to tone down her internal religious strifes by bringing forward another topic of still more absorbing interest, and to aim at building up a self-contained commercial life in the midst of uncertain, or possibly hostile, neighbours. In truth, if we view the question in its broad issues in the life of nations, we must grant that Free Trade could scarcely be expected to thrive amidst the jealousies and fears entailed by the war of 1870. That principle presupposes trust and good-will between nations; whereas the wars of 1859, 1864, and 1870 left behind bitter memories and rankling ills. Viewed in this light, Germany's abandonment of Free Trade in 1878 was but the natural result of that forceful policy by which she had cut the Gordian knot of her national problem.
The economic change was decided on in the year 1879, when the federated States returned to "the time-honoured ways of 1823-65." Bismarck appealed to the Reichstag to preserve at least the German market to German industry. The chances of having a large export trade were on every ground precarious; but Germany could, at the worst, support herself. All interests were mollified by having moderate duties imposed to check imports. Small customs dues were placed on corn and other food supplies so as to please the agrarian party; imports of manufactured goods were taxed for the benefit of German industries, and even raw materials underwent small imposts. The Reichstag approved the change and on July 7 passed the Government's proposals by 217 to 117: the majority comprised the Conservatives, Clericals, the Alsace-Lorrainers, and a few National Liberals; while the bulk of the last-named, hitherto Bismarck's supporters on most topics, along with Radicals and Social Democrats, opposed it. The new tariff came into force on January 1, 1880.
On the whole, much may be said in favour of the immediate results of the new policy. By the year 1885 the number of men employed in iron and steel works had increased by 35 per cent over the numbers of 1879; wages also had increased, and the returns of shipping and of the export trade showed a considerable rise. Of course, it is impossible to say whether this would not have happened in any case owing to the natural tendency to recovery from the deep depression of the years 1875-79. The duties on corn did not raise its price, which appears strange until we know that the foreign imports of corn were less than 8 per cent of the whole amount consumed. In 1885, therefore, Bismarck gave way to the demands of the agrarians that the corn duties should be raised still further, in order to make agriculture lucrative and to prevent the streaming of rural population to the towns. Again the docile Reichstag followed his lead. But, two years later, it seemed that the new corn duties had failed to check the fall of prices and keep landlords and farmers from ruin; once more, then, the duties were raised, being even doubled on certain food products. This time they undoubtedly had one important result, that of making the urban population, especially that of the great industrial centres, more and more hostile to the agrarians and to the Government which seemed to be legislating in their interests. From this time forward the Social Democrats began to be a power in the land.
And yet, if we except the very important item of rent, which in Berlin presses with cruel weight on the labouring classes, the general trend of the prices of the necessaries of life in Germany has been downwards, in spite of all the protectionist duties. The evidence compiled in the British official Blue-book on "British and Foreign Trade and Industry" (1903. Cd. 1761, p. 226) yields the following results. By comparing the necessary expenditure on food of a workman's family of the same size and living under the same conditions, it appears that if we take that expenditure for the period 1897-1901 to represent the number 100 we have these results:--
Period. Germany. United Kingdom. 1877-1881 112 140 1882-1886 101 125 1887-1891 103 106 1892-1896 99 98 1897-1901 100 100
| Period. | Germany. | United Kingdom. |
|---|---|---|
| 1877-1881 | 112 | 140 |
| 1882-1886 | 101 | 125 |
| 1887-1891 | 103 | 106 |
| 1892-1896 | 99 | 98 |
| 1897-1901 | 100 | 100 |
Thus the fall in the cost of living of a British working man's family has been 40 points, while that of the German working man shows a decline of only 12 points. It is, on the whole, surprising that there has not been more difference between the two countries[84].
Before dealing with the new social problems that resulted, at least in part, from the new duties on food, we may point out that Bismarck and his successors at the German Chancellory have used the new tariff as a means of extorting better terms from the surrounding countries. The Iron Chancellor has always acted on the diplomatic principle do ut des--"I give that you may give"--with its still more cynical corollary--"Those who have nothing to give will get nothing." The new German tariff on agricultural products was stiffly applied against Austria for many years, to compel her to grant more favourable terms to German manufactured goods. For eleven years Austria-Hungary maintained their protective barriers; but in 1891 German persistence was rewarded in the form of a treaty by which the Dual Monarchy let in German goods on easier terms provided that the corn duties of the northern Power were relaxed. The fiscal strife with Russia was keener and longer, but had the same result (1894). Of a friendlier kind were the negotiations with Italy, Belgium, and Switzerland, which led to treaties with those States in 1891. It is needless to say that in each of these cases the lowering of the corn duties was sharply resisted by the German agrarians. We may here add that the Anglo-German commercial treaty which expired in 1903 has been extended for two years; and that Germany's other commercial treaties were at the same time continued.
It is hazardous at present to venture on any definite judgment as to the measure of success attained by the German protectionist policy. Protectionists always point to the prosperity of Germany as the crowning proof of its efficacy. In one respect they are, perhaps, fully justified in so doing. The persistent pressure which Germany brought to bear on the even more protectionist systems of Russia and Austria undoubtedly induced those Powers to grant easier terms to German goods than they would have done had Germany lost her bargaining power by persisting in her former Free Trade tendencies. Her success in this matter is the best instance in recent economic history of the desirability of holding back something in reserve so as to be able to bargain effectively with a Power that keeps up hostile tariffs. In this jealously competitive age the State that has nothing more to offer is as badly off in economic negotiations as one that, in affairs of general policy, has no armaments wherewith to face a well-equipped foe. This consideration is of course scouted as heretical by orthodox economists; but it counts for much in the workaday world, where tariff wars and commercial treaty bargainings unfortunately still distract the energies of mankind.