of making a more thorough study of Germany's eastern neighbors in preparation for closer economic relationship.a2

(5) A Liberal and Open Tariff Policy

Whether liberalism is a genuine attempt to give expression to the will of the German people, or whether it is merely a commercial maneuver upon the part of Germany to align herself with the political tendencies dominant elsewhere, the fact remains that German economists realize that corresponding to democratization internally a liberal trade policy is necessary. As SchulzeGaevernitz sees it, "If Germany seeks equality of treatment, she must abandon the practice of dumping which was so bitterly resented abroad." Furthermore, Germany stands firmly opposed to the proposed trade discrimination. One writer calls upon Germany to abandon the Central Europe idea and stand out as the opponent of England by championing the policy of the open door, now an anti-English principle. In this attitude she will undoubtedly have the support of the neutral states and others who under the plan of Imperial or inter-Allied preference would be less favored than British traders themselves. The advocacy by Germany of the open-door principle is conditioned primarily upon the rejection of any scheme for trade preference between Germany and any other country.

63

Two main principles proposed by Germany for dealing with the question of commercial policy after the war are:

"1. That the most important and essential agreements contained in the text of all the existing commercial treaties should be embodied in a homogeneous international commercial treaty, which should either be included in the peace terms or concluded concurrently with them.

"2. That in regard to all points not included in the treaty, especially tariffs, the status quo before the war should be restored

Journal of Commerce, Oct. 29, 1918, quoting Norddeutsche Allgemeine Zeitung of Aug. 25, 1918.

"Max Schippel, Sozialistische Monatshefte, Aug., 1918; Welthandel, Aug. 23, 1918.

and declared binding for some years, in order that the various peoples may at their leisure be able to restore their business connections with their foreign customers under the conditions to which they were accustomed before the war, and prepare gradually those alterations in tariffs which changed conditions may have rendered necessary.64

The attitude of official Germany was expressed by Von SchulzeGaevernitz in the Reichstag, who thought that the only basis for the reëstablishment of international commerce was the mostfavored-nation clause interpreted to mean an absolute and unqualified equality of treatment of all the nations, or the rejection of the scheme of international discrimination or preference.

"The most important war aim, not only for Germany but for all nations interested in world economy, is an equal place in the sun for everybody. Germany should declare its readiness to organize an international authority that would be charged with securing the honest observance of the most favored nation rule. Our declaration in favor of such a plan will be supported by all those who are hostile to the policy of exclusion. However, if we pursue this policy then the triple tariff system goes by the board and with it the possibility of conciliating our allies by means of special preferences. The whole world must be told that Germany does not claim any trade preferences, and that all she seeks is equal rights for all nations and the maintenance of her position." 65

(6) An Anti-British Alliance

But a world-wide liberal trade policy is not the sole reliance for checking anti-German trade policy. Some writers hark back to the trite device which was revealed in all its treachery in the famous intercepted cable of Under-Secretary Zimmermann to Mexico and Japan. Bernhard Dernburg, writing in the Berliner Tageblatt, assumes that there is a tension between Great Britain and Japan over the Indian Ocean. He revives the yellow peril, first conjured up by the late All Highest War Lord. He says 64 Deutsche Aussenhandel, June 20, 1917.

that while there are conflicting interests between the Mongols and the Anglo-Saxons, there is no such feeling between the Central European and the Far Eastern Powers. India and the Pacific Islands will be the commercial battleground between AngloSaxondom on both sides of the Atlantic, and the Yellow Empire. Therefore, Herr Dernburg proposes to improve Germany's economic position and bring the Entente to terms by throwing German prestige into a Mongolian anti-British alliance."

"Germany must make herself independent of British raw materials by forming a new coalition. She must ally herself with Japan and China, and give Japan a free hand in the Far East. She must support the political claims of Spain in order to get Spanish ores. She must enter into close political relations with Mexico and the South American countries. Germany's future policy will have to aim at securing an adequate supply of raw materials. This means permanent support on principle of all those efforts which aim at the destruction of the British Empire as the most effective means of permanently breaking the English rawmaterial ring. It involves the promotion of movements for independence in India, Egypt, and South Africa. In the long run this policy will lead to the desired goal, the smashing of British economic power. The wall which England holds around her line of Asiatic possessions would not hold against the coalition of Germany, Russia, Persia, Japan, and China. The fixed goal of German policy in Asia is plain."

The "drang nach Osten" is to be not merely an economic program, but more than that, a political policy.

"New York Times, June 20, 1918.

"A. Goetz, in the Vossiche Zeitung, quoted in Journal of Commerce, Oct. 31, 1918.

CHAPTER V

FRANCE

A. Pre-War Conditions and the Effects of the War

(i) The Decline in Prestige before the War

The war has accentuated what was clear to French economists prior to 1913. From many quarters were heard the repeated warnings of French merchants and professors that France was retrogressing commercially and industrially.

"France, formerly first among the nations, now is third or fourth industrially, and is rapidly sliding backward. Even with a sweeping victory we are lost as a people if we do not make the effort to raise ourselves industrially to the level of the Germans. German barbarity should not blind us to the fact that Germany represents a higher state of economic development. She is so far ahead of us that nolens volens we must follow her methods." 1

In 1875, Germany and France, with areas approximately the same (541,000 sq. km. in Germany and 536,000 sq. km. in France), had populations of 42,000,000 and 37,000,000 respectively. In 1910, Germany had increased her population to 65,000,000 an increase of 23,000,000, or 55 per cent, while France barely attained 39,000,000, an increase of 2,000,000, or less than 6 per cent. In spite of a stretch of seacoast which should enable France to become a maritime nation par excellence, France, in 1909, had a merchant marine of 1,300,000 tons, as compared with Germany's 2,800,000 tons, or counting only steamships of over 100 tons capacity 801,000 tons for France, as against 2,350,000 tons for Germany. Of about 49,000,000 tons cleared Lysis (pseud) Eugene le Tailleur, Pour Renaitre.

in French ports in 1909, 36,000,000 tons were foreign bottoms. The figures of foreign commerce tell the same story. In 1891, the sum of the imports and exports of Germany were equivalent to 9,160,000,000 francs, while that of France amounted to a little less, 8,340,000,000 francs. Twenty years later, in 1911, these figures had grown to the equivalent of 22,000,000,000 francs and to 14,000,000,000 francs, respectively. While Germany was opening up her mines of coal and metal, and developing new industries, chemical, electrical, and metallurgical, France seemed to be becoming industrially decadent. From 1870 to 1909 French commerce increased 91 per cent and she declined from second to fourth place, being outstripped by the United States and Germany, with Great Britain still maintaining leadership. On the other hand, in the 30 years from 1872 to 1902, the trade of Germany increased 172 per cent, of the United States 303 per cent, of Belgium 305 per cent, and of the Argentine 980 per cent.3

However, the war has saved France. It required the shock of threatened extinction at the hand of the merciless military class of Germany to awaken France to the reality of the peril of gradual decay. Like England, France suffered from the lethargy that characterizes the family or nation that has inherited wealth. Germany, on the other hand, exhibited all the virility and tireless effort of an individual or a nation that rises from poverty and is disciplined in effort and stimulated by success. Germany would have peacefully conquered both Great Britain and France in another generation or two had pre-war conditions continued. But the war has revealed not only the political danger to the Allied countries from Germany, but also the possibility of developing industries and commercial connections independent of Germany. If but a small fraction of the magnificent zeal which France displayed to an astonished world during the war is shown in the field of commerce, France will easily recover her economic prestige. She has the raw mate

'Lysis, op. cit.

George Rénard, "Les Répercusions Économiques de la Guerre Actuelle sur la France," p. 109.