In Great Britain, economic activity has been developed on the assumption of continued peace. In Germany, however, though there were those who would "base all economic policy on an imaginary permanent peace,"[1] the Government has had in view the possibility of war. "Every conscientious Government," writes von Bülow, "seeks to avoid [war] so long as the honour and vital interests of the nation permit of so doing. But every State department should be organised as if war were going to break out tomorrow. This applies to economic policy as well."[2] It is with this idea in mind that the German Government has striven to maintain the importance of agriculture. "Economic policy must foster peaceful development; but it must keep in view the possibility of war, and, for this reason above all, must be agrarian in the best sense of the word."[3] It is held that in the event of war the home market in Germany would be an important factor in maintaining intact the fabric of industry. "The home market," we are told, "is … of very great importance. It would be called upon to replace the foreign market if in time of war our national frontiers should be wholly or partly closed. But in the home market agriculture is by far the most important customer of industry; only if agriculture is able to buy, if it earns enough itself to enable others to earn too, will it be able, in critical times, to consume a part of the products which cannot be disposed of abroad. The old proverb, "If the peasant has money then every one else has too," is literally true, as soon as industry is forced, to a greater extent than is necessary in times of peace, to find its customers at home."[4] "As in time of war industry is dependent on the buying power of agriculture, the productive power of agriculture is a vital question for the nation."[5]
[Footnote 1: Imperial Germany, by Prince Bernhard von Bülow, p. 221.]
[Footnote 2: Ibid. p. 220. See also Bernhardi, Germany and the Next
War, pp. 157-159 and 260 et seq.]
[Footnote 3: Imperial Germany, pp. 220-221.]
[Footnote 4: Imperial Germany, p. 219.]
[Footnote 5: Ibid. p. 221.]
The importance of agriculture in Germany is undoubtedly great; it may be, as Bülow says, that "the value of its produce is equal to that of the produce of industry, or even surpasses it."[1] But if the demand for it were to shrink because the industrial population lost their work through a shortage of raw materials or in any other way, agriculture would also suffer. The population at present engaged in agriculture will in times of peace buy up to the practical limits of its purchasing power, and is hardly likely, especially in the early stages of a war, to "consume a part of the products which cannot be disposed of abroad," except in so far as they buy German goods (the production of which the declaration of the war may have seriously impeded), instead of commodities produced abroad. But it is questionable whether they will be able to maintain their aggregate purchasing power. Prince Bülow ignores the fact that production for the home market will be hampered by the possible non-arrival of foreign raw materials in war time; yet Germany imported raw cotton to the value of over £29,000,000 in 1913. Her foreign purchases of hides and skins amounted to over £22,500,000 and of wool to £10,000,000. With even a partial suspension of imports of these and similar commodities, industries dependent on foreign products must be severely hit; unemployment must increase and the purchasing power of the urban workers diminish. The agricultural community must suffer also, and in all likelihood will not be able to take their normal share of goods off the market. It is true, of course, that Germany buys large quantities of food-stuffs from abroad, and that home produce will be required to take their place; but they cannot be grown immediately; in the interval, industrial disorganisation must result, and before agriculture can begin to profit by the lack of foreign supplies the harm will have been done. Moreover, agriculture must be impeded, as, owing to the size of the German Empire, the transport of troops must seriously interfere with the conveyance of goods to the larger centres of population. It would seem, therefore, that the policy of developing German agriculture at the same time that her dependence on foreign commerce is increasing is not an effective reply to the British Navy. The position in Germany then is that she must for the present be satisfied with a much smaller amount of imported food-stuffs and of the raw materials of industry; and that in any case, even if the industrial machine could be kept at work, there will be practically no outlet for goods abroad. Commercially isolated, she must, therefore, suffer an industrial and commercial collapse. On the other hand, the total volume of unemployment, which would have been enormous during the first weeks of the war, has of course been considerably reduced by the withdrawal of great masses of men to join the colours, and by the stimulus which the war has given to industries supplying the needs of the German armies. Then also Rotterdam, through which Germany does a great deal of its trade, remains open, whilst a fraction of her foreign trade is being carried on through Denmark, Scandinavia, and Switzerland. Nevertheless, the amount of economic distress within a very few weeks after the outbreak of war, especially in the large towns, was considerable even on the showing of German newspapers.[2] The amount of distress was increased and intensified by steadily rising prices. As the rise has taken place not only in commodities of which there is a shortage, but in others such as sugar, it may be concluded that it is due largely to the inflation of the currency, owing to the adoption of the fatally easy expedient of issuing large masses of paper money.
[Footnote 1: Ibid. p. 217.]
[Footnote 2: "Let us imagine," says Bernhardi, "the endless misery which a protracted stoppage or definite destruction of our oversea trade would bring upon the whole nation, and in particular on the masses of the industrial classes who live on our export trade" (Germany and the Next War, p. 232).
According to The Times (Sept. 18, 1914) the German nautical newspaper Hansa on Sept. 12 admitted that England had captured many millions of marks worth of German shipping, and that "the cessation of business will cost our shipowners many millions more." "It will hold up the development of our shipping trade for years." The Neue Freie Presse of Vienna on Sept. 11 admitted that the activity of the exporters in Germany had been crippled. According to The Times (Oct. 7), the German Socialist paper Vorwaerts, stated that "the state of want has reached an alarming extent, even though we are now only at the beginning of the catastrophe which has befallen the people of Europe." "Masses of unemployment grow every month.">[