The agricultural population of Germany in 1850 was 65 in the 100; it is now less than one third. In 1911, after a bad year for the farmers, Germany was obliged to pay out some $200,000,000 more than usual for food. The total loans of the German banks on industrial securities rose from $107,000,000 in 1890 to $632,000,000 in 1910, and bankers themselves admit that Germany has fallen into the error of seeking and accepting credit far beyond the value of the capital that they have to work with. Still more dangerous is the fact that 55 per cent. of the savings-bank moneys of Germany is locked up in mortgages. In 1907, 217 new companies were formed in Germany, issuing $62,050,900 in securities; in 1909, 179 new companies issued $54,929,450 of securities; in 1910, 186 new companies issued $57,437,700 of securities. In 1910, 340 companies increased their capital by $142,657,200. In 1910 there were 5,295 companies in Germany with a nominal capital of $3,680,979,400. It is estimated that since 1895 there has been invested in industrial companies in Germany $1,200,000,000. It is to be said also that since 1897 German agricultural production has doubled, German industrial production increased sevenfold, and Germany is said to have $4,750,000,000 in her savings-banks. The value of imports for home consumption, exclusive of the precious metals, in 1911 was $2,386,200,000; the value of the exports of home produce, exclusive of the precious metals, was $2,025,450,000. It is a quaint result of her temperament and her good forestry, that Germany sells $25,000,000 worth of toys a year; she is veritably the workshop of Santa Claus, and many more than 25,000,000 children would bless her did they know.
German financiers affirm that she can stand alone financially, while others assert that one sixth of her capital, I have heard it placed at one third, is borrowed from France and England. It is certain at least that the American panic of 1907, and the recent war in the Near East, have seriously embarrassed Germany financially.
As Germany can only feed, even in good harvest years, forty-eight or forty-nine millions of her people, a large proportion of her profits from industry must necessarily go to the purchase of food for the other sixteen or seventeen millions. The consumption of meat has increased among all classes in Germany, and both the demands of the individual and of the state have increased with the increased wealth of the country. In Prussia alone the number of those subject to income tax has increased from 2,400,000 in 1892 to 6,200,000 in 1912; but the taxes have increased as well, or from $800,000,000 to $1,675,000,000.
In the endeavor to increase the manufacturing output and to find new markets German credit has been stretched to a dangerous tenuity. While the war feeling was at its height the Kölnische Zeitung, a conservative and able journal, wrote: “In case of war both France and Germany will be obliged to borrow; but it is certain that the credit of Germany cannot as yet be compared with the credit of France: this is a strong guarantee of peace. Wermuth, said by impartial judges to be the ablest secretary of the treasury the German Empire has had in a quarter of a century, resigned in 1912, on the general ground that he would not be responsible for the finances of the empire, if it was proposed to continue the constant increase of national expenditure, by a constant increase of borrowing, and an ever-increasing amount of interest-bearing liabilities. He must have smiled to himself when an Imperial issue at four per cent. put out in February, 1913, was not only not over-subscribed but not even all taken.
Unlike the French, who invest their savings small and large in national loans, the Germans neglect even their own national loans, preferring the higher returns for their investments from the innumerable industries launched in modern Germany; so pronounced is this form of investment, that a director of the Deutsche Bank has warned his countrymen, that every month’s profits are no sooner gained than they are put out again in new enterprises, either by the individuals themselves, or by the banks in which they are deposited. As a result, the liquid capital at the disposal of Germany is dangerously out of proportion to her borrowings and her working capital. It shows a fine confidence in the future, and it proves what needs no proof: the immense industrial and commercial progress, and the immense sea-carrying trade of Germany. Germany is like a man with $1,000 in the bank to check upon, but doing business with $100,000 of borrowed capital, upon which he must pay interest, and out of which he must take his running expenses. Such a one has no provision for a bad year, and must depend upon more credit in case of trouble; and in the case of Germany, it may be added, his personal and family expenses have largely increased. The German imperial debt had increased during the first twenty-two years of the present Emperor’s reign, or from 1888 to 1910, by $1,040,000,000, and of that sum some $650,000,000 were added in the ten years from 1900 to 1910, when Germany was building her fleet.
Between the years 1905 and 1910 the total export trade of Germany increased by $408,225,000, but the whole of the increase was due to the heavier forms of manufactures: machinery, iron ware, coal-tar dyes, iron wire, steel rails, and raw iron. The increasing competition is shown by the fact that during those same years her exports of the finer manufactures, such as cotton and woollen goods, clothing, gold and silver ware, porcelain, maps, prints, and the like, actually decreased by $66,975,000!
I am not maintaining for a moment that these problems are peculiar to Germany, but merely that, owing to the rapid progress, they are aggravated, and that to point out Germany as a model of successful achievement, along these and other lines, in order to bolster up political cure-alls at home, is a betrayal of crass ignorance of the general internal situation of the country, and once such prejudiced pleaders are found out, the rebound will go too far the other way. That were a pity, too, for we have much to learn from Germany.
The $30,000,000 in gold in the Julius Tower at Spandau, called the war-chest, and the income from railroads, forests, and mines, are to be put down on the other side of the ledger, but as a year’s war, it is calculated, would cost France, England, or Germany some $2,300,000,000 each, these sums are of negligible importance.
The Prussian railways cost $2,250,000,000, and are now valued at twice that sum, and pay an average of seven per cent. on the invested capital. Maintenance costs are included in the total annual expenses, and there is no, so it is claimed, actual depreciation. Of the net revenue of $157,330,417 in 1909, about $55,000,000 are transferred to the state revenue, out of which all charges of the state, including interest on bonds, are paid. The rest is used for new construction, sinking funds, reserve funds, and so on.
The report of the Interstate Commerce Commission of 1909- 1910 states that there are nearly $19,000,000,000 of railway capital outstanding in America. There are 240,438 miles of single track in the United States; 59,000 locomotives, 35,000 for freight, and a total of 2,290,000 cars of all kinds; and the railways carried in one year 971,683,000 passengers and 1,850,000,000 tons of freight. In 1910, 386 persons were killed, but, what is often forgotten, more than one half the total accidents were due to stealing rides and trespassing on the tracks. The railways in the United States are our largest purchasers by far, and for every dollar they earn 42 cents is spent in wages, 26 cents for material, raw or manufactured, before anything is given out for interest on loans or dividends.