ECONOMIC PRESSURE ON GERMANY.

TN regarding Germany as a great military Power we too 1 often forget that she is also, and even primarily, a great commercial Power. To our mind, what emerges most clearly from recent German comment on the prolongation of the war, and on the misty prospects of peace, is the fact that something like a panic has seized thoughtful Germans when they contem- plate their economic future. The misleading boasts of the military leaders and the inspired flights of optimism in the Press still serve their purpose for popular consumption, but on the people who think and who count depression is steadily settling down. It is very easy for the Gerinantlovern- ment to point to the war map and show what great tracts of territory the German armies have acquired during more than three years of war, but German thinkers know only too well that arguments based on the map are an appeal to the easily won applause of the gallery, and that in very truth if Germany made herself mistress of an Empire extending from the North Sea to the Persian Gulf, and were unable to command sufficient supplies of raw material, her so-called victories would profit her nothing. Every one understands that a man's feelings can be worked upon most easily when he is tackled upon subjects in which he knows his weakness. To find the weak

bpoint of the other side is the object of diplomatists, men of usiness, negotiators of every kind, and indeed all who have to deal with their fellow-men. And what is true of mankind is also true of nations. This is why it would pay the Allies to think out most carefully and at once the manner in which Germany can be hit at her weakest point, which is her economic position. Of course during the past months, in which Germany has been becoming progressively more alarmed about her

i economic position, she has been industriously attempting to hide the truth. The ingenuity with which she has tried to keep the truth from the world is the measure of her consciousness of her particular weakness. There is no doubt whatever that the name of every fresh Power (even of an insignificant Power) which has thrown in its fortunes with the Allies, and declared its detestation of Germany and German methods, has given a most disagreeable economic shock to Germany. Her public men and her writers have disguised their economic emotions by confining their comments entirely to the military aspects of each new situation. They have laughed at the South American Republics, at China, at Siam, at Liberia and the

rest as combatants, but the alarm among Germans who

understood what was happening became more intense with each realization of the fact that another field for the supply of raw material had been cut off, and would perhaps never he reopened for free, or comparatively free, exchange with Germany.

One of the most startling illustrations we have conic across lately of the alarm in Germany is the change of front on the part of Dr. Friedrich Naumann, author of the famous book,

Mittel Europa. It will be remembered that in that book Dr. Neumann described the Central Europe of his dream as a

perfectly self-contained and self-supporting economic entity. Critics of his scheme might always have objected that even the immense tract of land lying between the North Sea and the Persian Gulf would not supply all Germany's needs in raw materials, and that for many an essential element she would still be dependent upon trading with the outer world. But Dr. Newmann, quite oblivious of such an obvious difficulty, apparently assumed that Germany would be able to maintain the economically exclusive Empire of Central Europe, and would at the same time be able to obtain from the Entente Powers such " most-favoured-nation " treaties as she enjoyed before the war. It seems almost incredible that Dr. Naumann could have been so credulous, but we suppose that this form of credulity, which is perhaps a higher form of self-assurance, is characteristic of the German mind. However that may be, the dream has now faded. Dr. Naumann has gone over to what may be called the Hamburg school of economic thought. He has joined the ranks of those who admit that unless the raw materials of virtually the whole world are freely available for German industries, the bodily structure of German industrial. ism will collapse from starvation. Dr. Naumann sees clearly enough now that the Allies have the power to withhold from Germany innumerable materials which Germany cannot derive from any other source. He is openly alarmed at the prospect. He sees Germany deprived of cotton, which she can buy in sufficient quantities only from India, Egypt, and the United States. He sees her deprived of wool, of jute, of rubber, of zinc, of tin, of tea, coffee, and cocoa, of leather, of silk, of lubricating oil, and many other things. Though neither a profound thinker nor an economist, Dr. Naumann is a very skilful and engaging writer who had created in Germany a large and powerful school of disciples. It must bo supposed that now he has torpedoed his own scheme, his school has become dissipated. The leader is lost. Those who "learned his great language and caught bis clear accents " cannot listen to him with the same respect now that they recognize that his greatness was only speciousness and that he led them

into a wilderness. The figures are much too strong for Dr. Naumann. We see in the Imperial and Foreign Trade Sup- plement of the Times for October that in the year before the

war Germany depended on the British Empire for nineteen per cent. of her export trade and on our Allies for a further forty-one per cent. That is to say, appreciably more than half the trade of the German Empire is at the mercy of the Allies.

Surely this weakness and this alarm in Germany should be made use of in our attempts to shorten the war. Our knowledge of the facts should not be allowed to be of no profit to us. If we continually bear in mind the obvious truth that Germany is holding out only because she hopes

that something will turn up, and that in the end she trill obtain better terms than her present declension in power seems to promise her, we shall not find it very difficult to hit upon a

plan of making use of German fears. In November, 1916, we wrote a series of articles in which we advocated the appli- cation to Germany of the policy of the parable of the

Sibylline books. Every one knows the story of how when

Tarquin kept refusing to buy the books of wisdom, the Sibyl after each refusal destroyed three of the books and raised the price of the remainder. Tarquin was so much impressed

that in the end he bought very little for a great price, though earlier he might have had much more for a lower price. Now if we make it perfectly clear to Germany that instead of getting better terms by holding out she will certainly get worse terms, we shall almost infallibly shorten the W31. Nearly a year ago we made numerous suggestions for progressively tightening up the terms we would offer to Germany. There is no need to repeat those argu- ments now, but the same principle of the Sibylline books could, we are convinced, be applied at this moment with enormous, and probably crushing, effect to the mind of commercial Geimany. It is very curious to notice that many Liberal newspapers in Great Britain which greatly exaggerated both the intentions of the Paris Resolutions and the risks they involved are combining now in a demand for economic threats against Germany of a very drastic kind. We heartily welcome this state of feeling, for we take it to mean that there would be unanimous support for the Government if they asked our Allies to adopt a scheme for the economic punishment of Germany. We would like to be able to say to Germany : " You can have peace now on such-and-such terms. For every month, or say every three months, that you delay your admission that you are beaten a longer and more severe economic boycott will be applied to the German Empire. You ate dependent upon the outer world, which is the civilized world, for your materials. You know it, and we know it. The power to stifle your future growth is absolutely in our hands If you persist in continuing this brutal and ruinous war, we shall not scruple to put you under the ban of civilization. The remedy for your industrial loss is entirely in your own hands."

The Germans are making a great mistake if they think they are dealing with people who are so easygoing, or so sentimental, or so completely guided by the interests of their pockets that, when the reconstruction of the industries of the world comes, Englishmen and Americans within a few weeks or months will be trading with the Central Powers on the old terms. From the purely German point of view it would be much better that the Allies should agree upon a plan of an increasing economic boycott, and scrupulously and in detail apply it. The alternative is something much less desirable from the German point of view. Any treatment of Germany that depended upon individual action might be much more vindictive. The Germans probably have no conception of the furious indignation and hatred they have excited among even the most complacent people. If the war went on on its present lines much longer, and the relations of Englishmen and Germans were left to the initiative of individuals, probably no British ship for a long time to come would carry a German passenger, no British hotel would house a German visitor, no British shop of repute would sell to German customers, and so on. As it is, we see signs of this feeling iu the resolution passed by the representatives of the seamen and firemen of the Mercantile Marine. On the whole, the tone of these resolutions is surprisingly reason- able. We think, indeed, that Mr. Havelock Wilson is almost entitled to exclaim " I am amazed at my own moderation I " The resolution instructed all master mariners to refuse to salute or recognize the German flag on the high seas or in ports abroad for two years after peace terms had been arranged, and went on to say that one month of this boycott should be added for every offence committed by the Germans on land or sea against the Hague Convention or against international law. But these words were added : " Should, however, the German people decide to establish full Parlia- mentary control over their Kaiser and Government, a mitiga- tion of the boycott may take place with the approval of the Merchant Seamen's League members."

The possibilities of a boycott have never yet been properly tested, and we think they have not even been fully imagined. Before the war the Powers of Europe were beginning to experi- ment in the uses of a commercial boycott as a means of discipline in their treatment of Turkey. The experiment did not go very far, and there is really very little literature on a subject which we cannot help believing will occupy the attention of the world in time to come, and will be a very powerful, and perhaps the most common, instrument of compulsion. Of course it will be said that a boycott would injure the Allies scarcely less than Germany. That may be true in a sense. We agree that a permanent boycott is not a reasonable proposal. But what we should lose through a boycott would be far less than we should lose by a considerable protraction of the war. Germany may be sure that if a boycott were threatened, the threat would be thoroughly carried out. We have only one suggestion to add, and that is that the Government, if they attempt to formulate a scheme definite enough to be placed at once before our Allies, including the United States, will do well to avail themselves to the full of the advice of Lord Robert Cecil. His conviction about the value of a boycott has been the cause, or the outcome, of a most painstaking and unremitting study of the whole question.