My Four Years in Germany

by James W. Gerard

Although free ports do not exist in the United States, an attempt has been made to give certain industries, by means of what are known as "drawbacks," the same benefit that they would enjoy were free ports existant in our country.

Thus the refiners of raw sugar from Cuba pay a duty on this sugar when it enters the United States, but receive this duty back when a corresponding amount of refined sugar is exported to other countries.

There has lately been an attack made upon this system in the case, however, of the sugar refiners only, and the question has been treated in some newspapers as if these refiners were obtaining some unfair advantage from the government, whereas, as a matter of fact, the allowance of these "drawbacks" enables the sugar refiners to carry on the refining of the sugar for export much as they would if their refineries existed in free ports modelled on the German system.

The repeal of the provision of allowing "drawbacks" in this and other industries will probably send the industries to Canada or some other territory where this system, equivalent to the free port, is permitted to exist.

A few days before I left Germany I had a conversation with a manufacturer of munitions who employs about eighteen thousand people in his factories, which, before the war, manufactured articles other than munitions. I asked him how the government treated the manufacturers of munitions, and he said that they were allowed to make good profits, although they had to pay out a great proportion of these profits in the form of taxes on their excess or war profits; that the government desired to encourage manufacturers to turn their factories into factories for the manufacture of all articles in the war and required by the nation in sustaining war; and that the manufacturers would do this provided that it were only a question as to how much of their profits they would be allowed to keep, but that if the Government had attempted to fix prices so low that there would have been a doubt as to whether the manufacturer could make a profit or not, the production of articles required for war would never have reached the high mark that it had in Germany.

As a matter of fact, about the only tax imposed in Germany since the outbreak of the war has been the tax upon cost or war profits. It has been the policy of Germany to pay for the war by great loans raised by popular subscription, after authorisation by the Reichstag. I calculate that the amounts thus raised, together with the floating indebtedness, amount to date to about eighty billions of marks.

For a long time the Germans expected that the expenses of the war would be paid from the indemnities to be recovered by Germany from the nations at war with it.

Helfferich shadowed this forth in his speech in the Reichstag, on August 20, 1915, when he said: "If we wish to have the power to settle the terms of peace according to our interests and our requirements, then we must not forget the question of cost. We must have in view that the whole future activity of our people, so far as this is at all possible, shall be free from burdens. The leaden weight of billions has been earned by the instigators of this war, and in the future they, rather than we, will drag it about after them."

Of course, by "instigators of the war" Helfferich meant the opponents of Germany, but I think that unconsciously he was a true prophet and that the "leaden weight of the billions" which this war has cost Germany will be dragged about after the war by Germany, the real instigator of this world calamity.

In December, 1915, Helfferich voiced the comfortable plea that, because the Germans were spending their money raised by the war loans in Germany, the weight of these loans was not a real weight upon the German people. He said: "We are paying the money almost exclusively to ourselves; while the enemy is paying its loans abroad--a guarantee that in the future we shall maintain the advantage."