GERMANY'S ECONOMIC POSITION.
IT would be futile to hope for any precise information for some considerable time to come as to the exact economic condition of Germany. That the Germans are in need of food is partly proved by the repeated appeals of Dr. Soli and others to President Wilson, supported by the personal testimony of prisoners of war escaped from Germany. The latter report that, though they have been purposely ill-treated in the matter of food, their belief is that the civilian popula- tion is to only a small extent better off. Apart from food, there is also clear evidence that the Germans are short of many important raw materials, particularly cotton. For a long time past their newspapers have intermittently been advocating the cultivation of nettles to provide a substitute for cotton. One syndicate seems to have gone so far as to acquire an estate of 28,000 hectares of land (70,000 acres) for the purpose of producing a large type of nettle (Urtica dioica) which grows to the height of nearly six feet and provides a strong fibre. Four kilograms of dried stalks are said to be sufficient to make a soldier's shirt. On the other hand, significant figures were published a few months ago showing that one agricultural industry, for which Germany before the war was almost world-famous, has been steadily declining. In 1914 the area of land devoted to sugar cultivation was 569,000 hectares ; in 1918 this figure has fallen to 378,000. Doubtless this heavy reduction in acreage is partly due to the decline in Germany's export trade, for before the war a large proportion of German sugar production was exported to England. In Austria apparently the effect of the war was, in the earlier years at any rate, to cause a glut of sugar, some of it being deliberately wasted. Multitudes of similar facts might be recorded ; but though such facts illustrate the disorganization of Germany's trade and industries, they do not provide sufficient material to form a judgment as to Germany's prospects of commercial revival.
That even a few weeks before the signing of the armistice the Germans were still calculating upon an instant revival of their trade is clear from the evidence of their newspapers ; nor is there any reason to doubt that the very moment the armistice was signed the minds of commercial men, and also of the members of the German Government, were at once directed towards trade revival. This consideration is clearly shown in the anxiety expressed by Dr. Soli in one of his appeals to President Wilson with regard to the trade and industries of the provinces which the Allie are to occupy on . h3 western side 'of the Rhine. He is evidently extremely anxious lest Cis portion of Germany, ltrgely industrial in character, should be cut off even temporarily. Nor had German writers, at any rate up to a recent date, begun to tak3 any account of the possibility that the Allied Powers might insist upon an indemnity. All their calculations seem to have been made on the assumption that directly the war ended Germany would be free to resume her trade relationships with the rest of the world for the sake of her own p ofit and recuperation. Months ago many schemes were in progress for the development of German industries across the Russian frontier and in the Balkans. For example, plans had been laid for establishing German beet-sugar factories in the Ukraine and for trade expansion in Bulgaria and Rumania.
As regards the more general problem of world trade, the German Press up to quite a few weeks ago was eagerly discuss- ing the question of th 3 rate of exchan:,e of the mark with the currency of other countries. Some writers were inclined to advocate keeping the value of the mark low, or in other words keeping prices high, in order that the burden of the interest of the internal Debt upon the German people might be lessened, because each mark paid in interest would represent less labour and fewer commodities. Others, more concerned with prospective profits in international trade, were eager to take steps to restore the mark to something like its pre-war ratio to the American dollar and the English sovereign. How ompletelv the Germans still imagine—or at any rate till recently have imagined—that they will be free to act in their own interest may be inferred from the suggestion ma 'e from the second point of view in one German newspaper that after the war Germany should strengthen her economic position throughout the world by forcing up the price of those of her exports which were in great demand, or of which she had almost a monopoly. Coal comes in the former category ; potash in the second. At the time this suggestion was made the Germans had not realized that they were going to lose Alsace and Lorraine, and consequently to lose their monopoly of potash, for the Alsatian supplies of potash are probably at least as important as those of Saxony. In addition, we may guess that the French will want to recover the coal basin that lies to the north of the frontier of Lorraine, but was included in Lorraine as recently as 1813. The coal from this area was largely used for the development of the French iron industry, and the control which the Germans were thus able to exercise over a most important French industry was extremely advantageous to them and disadvan- tageous to the French. Even if this coal basin is annexed to France, the Germans will still have very large supplies of coal in Westphalia ; but they will be Jess in a position than before to dictate terms to their French customers.
The reason for laying stress on these two points is that they contain a suggestion which the Allied Powers may profitably utilize. Assuming that it had been possible for the Germans on their pre-armistice calculations to win profit for themselves by selling their coal and potash at a high price, it must equally be possible for the Allied Powers when they come to dictate terms of peace to insist that these elements of natural wealth in Germany shall be used for the purpose of partly paying the bill which Germany owes to the nations against whom she has waged war. If, as seems probable, we shall have to put an army of occupation into Germany in order to compel her to pay full reparation for all the damage she has directly done or indirectly caused, then one of the principal points to which attention should be directed is the control of German coal-mines and potash-mines, so as to secure all profits beyond working expenses as a contribu- tion towards the payment of Germany's war bill. Again, it may be possible for the Allied Powers to use their control of essential raw materials in order to extract from Germany a higher price for the materials she requires so as to get another contribution from that source. We may safely assume that the nettle craze which took possession of the German mind while the war was in progress is not likely long to outlast the establishment of peace. Whatever merits nettles may have, the German people will probably prefer cotton as soon as they are able to get it.
As regards the schemes above alluded to for the expansion of German trade in Russia and the Balkans, issues are raised which are of political as well as of economic importance. The outstanding feature of German trade before the war was the deliberate combination of political ambitions with com- mercial enterprise. Ultimately that was one of the prime causes of the war, and it is of the utmost importance that the Allies should take precautions that Germany does not use her commercial activities across her eastern frontier in order to acquire political control of large portions of what was the Russian Empire. The problem is not an easy one, for the Germans have the great advantage of proximity. That not only means that they can send their goods both quickly and cheaply to the market whose. conquest they are aiming at, but it also means that they have personal experience of the human peculiarities of their customers, and consequently are able to trade with them to greater advantage. Unless the Ukraine and whatever other States may be formed out of Russia show a greater power of self-organization than they have yet displayed, there is a great danger that German influence will become pre- dominant. That is an additional reason for the Allied Powers to be absolutely firm in insisting that Germany shall pay the full cost of the crimes she has committed. If on that point we are firm, then the expansion eastwards or westwards of German trade does not greatly matter, for the steady payment of the war bill year by year will absorb the financial resources with which Germany otherwise might be building up again her military, naval, and political strength. For the moment the Allies have got to deal with the problem of shortage of food in Germany, but there is no reason what- ever why they should deal with that problem on purely charitable lines. Whatever foodstuffs they supply to Germany must be fully paid for. We are rightly helping to save the German people from starvation, but it would be quixotic to feed gratuitously those who for four years have sanctioned every atrocity that the German Army committed.
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