WHILE well aware of the fact that the central position is, from a military point of view, one of weakness for a power compelled to defend herself, or not prepared to take the offensive, Germany is equally aware of the undeniable fact that the central position, for a power which proposes to take the aggressive, possesses enormous advantages. She can attack either France or Russia with equal ease; her army is equally ready to defend her against both at the same time, thus affording her the maximum opportunity for utilizing her men to advantage. In addition, she holds the great strategic points of northern Europe, --- Alsace-Lorraine, the door to France; the Kiel Canal, giving her access to the Baltic without exposing herself to the necessity of utilizing the Sund; her allies hold the Swiss passes and the vital points affording passage into Russia and the Balkans. Everything vital to her, indeed, everything she owns, forms a compact territorial unit which can be defended by the minimum force with the maximum ease. She has no long chain of forts or islands to guard, no great stretches of land in Africa or Asia to protect, no subject races to pacify like the Hindus or Moroccans. She considers, therefore, that her strategic position, far from possessing the weakness which her enemies believe it has, is one of such strength that it affords her advantages which might almost be called conclusive in the sort of a struggle in which she proposes to engage. She is not vulnerable to attack from a fleet; England's greatest offensive weapon is useless against her; for, while the English fleet could stop the passage of German commerce through the English Channel, it is powerless to undertake any offensive movements which could endanger her existence. Nor could it stop her trade overland, a trade already great in volume, steadily expanding, and which would, with the outbreak of war and the consequent exclusion from Europe of English manufactured goods, attain unsuspected dimensions. Indeed, the outbreak of war might conceivably permit German merchants to take from the English their whole market on the Continent by the very simple fact that war would certainly close the harbors, while German goods could still cross the frontiers by rail. Such an eventuality the Germans consider something more than a possibility.

Germany, however, looks with greatest pride at her economic strength. She feels that she occupies in the economic world a truly extraordinary position, as one of the few nations who are still literally self-sufficing, who can even feed and clothe themselves. When she compares her population with that of England and France, she derives solid satisfaction from the knowledge that, in an area equal in size to France, she has nearly fifty per cent more people, and in an area more than one third larger than England's, she has a population one fourth larger. The number of men on whom she can call for active service in time of war will be naturally to that extent greater than those at her rivals' disposal. She is, therefore, not surprised to find that her standing army, ready to go to the front at a moment's notice, is twice as large as the English army on paper and almost four times as large as the French. When she adds her reserve army, nearly equal in size and efficiency to her standing army, she wonders how England and France can seriously consider opposing her wishes, and looks upon the outcome of any possible conflict with supremest confidence. The density of her population is 301 units as against England's 367, and France's 190; her revenue per capita is $10, while England's is $15, and France's is $20, proving the ease with which her people have borne and are bearing the cost of a military and naval expansion unparalleled thus far in German history. It is, however, when she looks at her public debt and compares its size with that of her rivals, that she feels most confident of the outcome of war. Her public debt per capita is something over $15, while England owes $80 per individual, and France carries the enormous burden of $150 per person. Germany, therefore, not only has more people and more acres, but has been able to accomplish vastly more with the imposition of much smaller burdens upon her population. Agriculture has reached a state of high perfection in Germany; manufactures have undoubtedly made great progress. Indeed, her great economic efficiency is clear from her success in competition with other nations in every field of industry; she has even beaten them in their own markets. The proof of the degree of her prosperity and the extent to which she is self-sufficing the Germans see in the fact that, while her exports per capita are $24, her imports are about $30, whereas England exports $40 per capita and imports $65.(15) Germany, therefore, is, like England, a creditor nation, and is clearly producing far in excess of the ability of her people to consume. This economic efficiency rests upon the solid basis of the possession within her own borders of a fairly adequate supply of most raw materials required to keep her factories at work, and, what is perhaps more essential, of all those materials peculiarly necessary for the maintenance of an army and a fleet, not excepting the most essential of all, food and iron. Nor is she at the mercy of England, as most other nations are, from the lack of a merchant marine of her own to distribute her products to the rest of the world. While her merchant fleet is new and does not upon paper compare favorably, either in number of ships or in registered tonnage, with the English merchant marine, at the same time no one doubts that in actual efficiency it can seriously be compared with England's.

Her vast resources Germany is prepared to utilize to the full. Her government is admittedly one of the most efficient in the world. Her capable bureaucracy, her local government conducted purely on scientific and business principles, her centralized imperial administration, provide her with the most advantageous methods of accomplishing the greatest results without wasting a man or a mark. The motto of German government has invariably been efficiency, the securing of the greatest results with the least expenditure of energy. To be sure, this has involved an amount of interference with individual rights and privileges which has in some cases almost amounted to the ordering of the individual's life by the government, and which has been sneeringly called, by other nations, paternalism, less, as most Germans think, because other nations dislike the results than because they despair of obtaining them. The average German is supremely satisfied with his government, and is above all pleased with the results. He feels that only jealousy can cause others to criticize.

The advantages of centralized government he feels to be great in times of peace, merely from the point of view of obtaining the most favorable results in internal administration. But the real benefits of centralized administration will be most apparent in time of war. Indeed, without such a centralized administration, the execution of any such gigantic scheme as Pan-Germanism, extending necessarily over a long series of years and requiring continuity of policy and careful preparations for eventualities known of necessity only to a few, would be utterly impossible. In England and in France, power is distributed in too many hands to make continuity of policy and vigor of administration really possible; in Russia, the country itself is too large to be directed efficiently by a single head; in Germany, the happy mean is found. The certainty, therefore, of the complete utilization of every ounce of the national strength in the struggle approaching, with nations whose governments are not able to utilize the whole of their strength, makes the Germans supremely confident of success. They are certain that they are stronger than England under any circumstances; they are sure that their resources are considerable enough to cope with France and Russia combined; and they believe that they are stronger than all three nations in the amount of force which they are capable of actually exerting.

The efficiency of administration, the possibility and necessity of continuity of policy, is most apparent in the rapidity with which the Germans have developed their army and navy to the present point of high efficiency and size. They realize, certainly to a degree no other nation does, the extent of the preparation necessary for participation in modern warfare, and the number of years of preparation indispensable to success. War, indeed, is too terrible to be invoked without the certainty of success, especially by a nation strategically situated, as Germany is, between two enemies thirsting for her destruction. The Germans realize that a successful war must be prosecuted by a highly organized machine, equipped with exceedingly expensive apparatus, officered by men whose training must necessarily consume years, during which they and the troops they are instructing must be supported by the State and allowed to devote their whole time to learning the game of war. The Germans learned long ago that a citizen army drawn from farms and counting-houses at the outbreak of war cannot be expected to understand manoeuvring. It is a difficult thing for a hundred men to do something together; it is a much more difficult thing for a hundred thousand men to manoeuvre without getting in each other's way; but when a million men are to be transported to a certain spot, equipped, officered, fed, and expected to execute a complicated attack with efficiency and dispatch, nothing short of a most complicated organization can even put such an army into a field, and nothing short of years of practice can possibly make it efficient.

On the other hand, the Germans realize that a weapon of this sort is not to be successfully resisted by anything less highly trained. To-day an army to repel an invader can no longer be garnered from the countryside as the invader advances, armed with weapons taken from the wall of each man's house, officered by the nobility and gentry, and by them hastily organized into companies. The same elaborate preparations which were essential to its undertaking will be required to meet invasion. War is also expensive, not alone because of the length of time the men must be in training, but because the apparatus which they must learn to use is expensive to create and expensive to practice with. A gun crew, that is to be called upon in time of danger to hit a moving mark at the distance of several miles, a mark invariably out of sight, must have had considerable practice in time of peace to be able to hit anything in the excitement of battle. The expense of firing a twelve-inch rifle is in the neighborhood of a thousand dollars, and gun crews usually are instructed to see how many times they can fire the gun in so many minutes. Preparedness for war at this rate means that the nation must pay for it gradually, which means in turn that the money must be spent over a long series of years. The Germans are certain that no other nation in Europe has spent the same amount of money or exercised the same amount of forethought or possessed the same degree of belief in the necessity for preparation that they have. Why, then, doubt of success? In fact, the preparedness for war bears to-day so inevitable and obvious a relation to the result of the combat that actual fighting is likely to occur only between forces that are apparently equal in size and efficiency. The Germans hope to make their army so large and so competent that it can decide contests without appearing in the field.

Germany's greatest strength, however, lies, as her rulers think, in the hearty cooperation of the German people in the great scheme. They seem all to be willing to sacrifice and suffer whatever may be necessary for the realization of the great vision which has already enthused the nation for so many years. The government will be able to count on the active, willing cooperation of the whole people in the prosecution of any plans which may be deemed necessary for the preparation or the execution of this project. The Socialists, despite their hostile theories and speeches, have pledged themselves to play their part like men when "the day" dawns. Indeed, the very things which make expansion necessary for Germany's future are those things which will be her greatest assets in promoting the war and the most certain gauges of her success. Her rapidly growing population, her busy factories, the swelling volume of product, these are the very tools with which Pan-Germanism is to be built. They are the pledges fortune has given Germany of its realization; their existence furnishes Germans with all necessary proof of the expediency and morality of the course they have adopted.




WHILE it is hardly expedient to interrupt the exposition of Pan-Germanism in order to interject a complete consideration of the factors upon which England and France are depending for their own salvation, it is indispensable to make clear at this point some facts of their national development which give them confidence, and, above all, to describe in detail their economic position, for it is upon what they consider to be the elements of its greatest strength that Germany is counting to compass their downfall. In their own eyes, England and France have had a truly glorious past. They have been for at least three centuries the leading nations of Europe, France being the model, during the seventeenth and eighteenth centuries for language, literature, fashions, to say nothing of administration; England becoming in the nineteenth century the model upon which the rest of the world diligently strove to form itself. The Napoleonic Administration and the Napoleonic Code have had an extensive influence, say the French, in the formation of modern Germany; the English point out that the centralized government of which Germans are so proud is, after all, nothing but an adaptation of the English parliamentary system. France feels that but for her support the Catholic Church would hardly be what it is in Europe to-day; the English are more than positive that their support alone kept Protestantism alive. In science and literature they consider themselves not less preeminent. Surely, say the English, the doctrine of evolution is the most significant element in modern thought and the most purely English; truly, say the French, Voltaire, Rousseau, and the Encyclopaedists directed the thought of the world into new channels which it has not yet found inadequate. The industrial revolution, the new agriculture, the factory system, trade-unionism were all begun in England. If Germany is great, her greatness rests upon foundations laid by England and France. They ask the Germans to point out one conspicuous achievement in which they have not at least shared. Nor do they fail to derive comfort and satisfaction from the contemplation of the extension of their policy in the modern world. England controls one fifth of the total land area of the globe, one fifth of its total population; half of North America, a quarter of Asia, and nearly half of Africa are under her flag; while France may point with pride at the possession of a dominion in Africa, vast in extent and rich in resources. Certainly, there are no two nations in the world which control so large a share of its surface, its population, or its resources. Compared to what they hold, the Steppes of Russia and the vast frozen dominion of Siberia are valueless. In addition, the whole world governs itself on the English model; the whole world wears French clothes; the only two languages which have any claims to universal use, since Latin ceased to be the language of the learned, are French and English. Even if they should grant the truth of every statement made in pursuance of German greed as to their strength and position, these great cardinal facts must make it evident, they feel, that the German argument possesses some flaw which will not be less fatal because it is not obvious.

England and France feel, however, that, even if they were politically and strategically as weak as Germany believes them to be, they have still a tower of strength in their economic supremacy, based upon natural advantages whose potency cannot be denied. The conspicuous features of recent economic growth have been the interdependence of nations, the extension of the credit system, of international trade, and the rise of such huge aggregates of capital as the Rothschild fortune. The growth of the nineteenth century has made commercial development depend on the production of something which others need, which one nation makes better than others or produces more easily, and which that nation can exchange for those products naturally and easily produced by others. The old ideal of a people entirely self-sufficing has disappeared, not because it was bad in its effects upon the people, but simply because it has become clear that no single people can profitably devote their time to producing everything they need. The economic interdependence of the world has progressed with such rapid strides because it has proved more profitable to all nations than the earlier system. The truly progressive nation to-day will, therefore, not expect to be self-sufficing, and will abandon the industries in which it is not specially fitted to surpass by natural conditions or by its skill.

The credit system of international exchange, by which vast transactions are accomplished without the passing from hand to hand of even tokens of value, has entirely altered the methods of transacting the world's business and has increased the extent and profitableness of this interdependence. Moreover, out of the factory system and modern industry have grown huge aggregations of capital, available for immediate use and controlled by comparatively few men. There are individuals in the world to-day who themselves control revenues greater than those of many nations, whose incomes annually at their disposal are as large as most of the fortunes of antiquity. They thus may wield stupendous power in the development of nations. Indeed, modern business depends upon the possibility of utilizing such enormous aggregations of capital for the promotion of single enterprises. The English and the French make no idle boast when they claim that the modern economic structure, national as well as international, has been largely their creation and is now largely in their hands. Of certain staple materials, like wool, fur, fish, they practically possess a monopoly; in London and Paris are the centres of the world's exchange and credit system; to London and Paris bankers accrue the profits of handling the world's business.

Nothing short of a financial panic of the first magnitude, accompanied perhaps by the dislocation of all business traditions, can fail to result, they think, from the disarranging of these dispositions. The English yearly produce an enormous bulk of manufactured goods which has steadily increased in volume at the rate of from ten to twenty per cent each decade. England is steadily growing richer and not poorer, as the Germans insinuate. The French monopoly on such luxuries as jewelry, dress goods, and most articles of personal apparel is as complete to-day as it ever was. The world's carrying trade is practically in English hands and its profits are no small share of the English national wealth. Any one who supposes that the English merchant marine could be annihilated without dislocating the commerce of the world is either exceedingly misinformed or intentionally blind. London and Paris are, furthermore, the distributing centre for Eastern and African goods, for which the demand was never greater than it is at present. How is it possible, say the English and the French, for the world to get along without us? Is it in any degree credible that Germany can take our place, can rearrange the whole financial and commercial structure of the world, without causing an amount of suffering to herself which would more than counterbalance any possible benefits she might receive? Indeed, the English and the French are not altogether unreasonable in supposing themselves at present indispensable to the economic welfare of the world.

The interdependence of the world, moreover, which is so profitable to every one concerned, is absolutely contingent upon the continuance of peace. Every one will be injured by the inability to exchange what they produce for what they need. Anything like a general war will necessarily entail financial loss, and not improbably personal suffering, upon the individuals of practically every community in the world. It is, therefore, the peace advocates strenuously insist, to practically every one's economic advantage to maintain peace. The number of individuals, to say nothing of nations, who would be likely to gain by the outbreak of war are too few to be regarded, and consist, they claim, chiefly of those who make the materials or the weapons needed by armies and navies. These facts, indeed, are sufficiently apparent to furnish a solid basis for great organized movements in favor of international arbitration or conciliation, whose propaganda is so active, and whose logic and statistics are so unassailable, as to have convinced the great majority of every-day people in all nations of the inexpediency of war. Unquestionably, such movements and arguments, tending to the maintenance of a status quo, are greatly to the advantage of England and France, in whose hands lies the present control of the financial world.

The greatest economic strength of England and France comes from their possession of the greatest individual aggregations of capital in the world. The vast Rothschild fortune, known in Europe as The Fortune, is one twentieth of the total wealth of the French nation, and is not, like so many American fortunes, the estimated value on the stock market of certain securities which, in case of a financial panic, might almost lose all value, but consists of houses, land, railways, solid tangible assets which could be destroyed only by the destruction of France. In London, there is a group of individuals who between them control nearly as considerable and almost as solid fortunes. There are no doubt in Germany and Austria wealthy men. There are no such fortunes as these. In fact, the London and Paris bankers can almost control the available resources of the world at any one moment, and can therefore practically permit or prevent the undertaking of any enterprise requiring the use of more than a hundred million dollars actual value. Many schemes nominally more considerable than this have been floated independently, but the actual value of the assets behind the scheme was a mere tithe of their value on paper.

Modern warfare means that the degree of preparation essential to success is impossible without the use of immense resources, and that the nation can safely invest enough money in armies and navies to make them effective only when it boasts vast reserves of capital. The English and French consider it almost impossible for any nation to invest such a sum in war without straining its resources far beyond the danger point, or without somehow borrowing it from them, and they will certainly not loan it to their enemies. Therefore, they conclude, if Germany is thus investing her surplus, the time will come when her armies will cost her more than they are worth, --- indeed, more than the utmost success in war could ever enable her to repay. Actually to mobilize a modern army requires vast sums in ready money, and the English and French do not believe any nation can go to war without procuring the ready money from them. The conclusive proof of this supposition they found in the event following the appearance of the German warship Panther at Agadir. It seems that the Emperor would have been willing at any rate to mobilize the German army and sought the German bankers with a request for a loan to the Government. The bankers informed him that they had no money with which to meet their own pressing obligations and that the nation as a matter of fact stood on the verge of bankruptcy. Not only could it not go to war, it was doubtful even whether it could continue to do business for another week. No one seems to have realized in Germany the sum total of the private loans made in London and Paris. When war seemed probable, a concerted movement by the London and Paris bankers for the recalling of all loans practically stripped Germany of ready money, and the sale of securities on the Berlin Bourse to meet these demands almost precipitated a panic of the utmost seriousness. It transpired that Germany was conducting nearly ninety per cent of current business upon borrowed money subject to recall at a moment's notice. By the use of their economic weapons, England and France rendered Germany helpless and made war impossible. It is clear that in the present era there are weapons stronger than armies.

Not only does the credit system of the world centre in London and Paris, but the world's supply of the only tangible basis for international exchange is also in their hands. From South Africa comes a large share of the world's gold; in the London and Paris banks are probably the world's greatest accumulations of coin and bullion, while probably there are in France. greater sums of cash in the hands of the nation itself than in any other country in the world. When the close of the Franco-Prussian War imposed upon France a war indemnity so heavy that the Prussians exulted openly upon their success in crippling France for a generation, the French nation produced the entire sum from its savings, and paid the indemnity with a rapidity which astounded the world. The French are undoubtedly more capable of repeating such a feat to-day than they were in 1870. Such financial strength rightly inspires the French and English with confidence in their ultimate ability to cope with Germany.

It is an astounding fact, of whose truth the average man is gradually becoming conscious, that England and France own probably the major part of the bonded indebtedness of the world. Russia, Turkey, Egypt, India, China, Japan, and South, America are probably owned, so far as any nation can be owned, in London or Paris. Payment of interest on these vast sums is secured by the pledging of the public revenues of these countries, and, in the case of the weaker nations, by the actual delivery of the perception into the hands of the agents of the English and French bankers. In addition, a. very large share, if not the major part, of the stocks and industrial securities of the world are owned by those two nations and the policies of many of the world's enterprises dictated by their financial heads. The world itself, in fact, pays them tribute; it actually rises in the morning to earn its living by utilizing their capital, and occupies its days in making the money to pay them interest which is to make them still wealthier. Such facts as these are of transcendent importance in evaluating the conditions in the world which make war possible or impossible. In the estimation of the statesmen in London and Paris, Germany is not economically strong enough to utilize what she thinks is politically and strategically an advantageous position without involving an injury to herself which might ultimately destroy her prosperity.

In fact, they find it difficult to believe that Germany possesses any economic strength. The factors which the Germans consider favorable to them, the English and French consider their greatest weakness. Germany's imports somewhat exceed her exports and create the impression to the superficial observer, say English and French experts, that she is a creditor country like England, receiving more than she gives, and therefore undoubtedly solvent. In this case the statistics are misleading. Germany's imports are not really the insignia of wealth at all, but are the proof of national poverty. The balance in international trade, as every economist knows, is paid in goods and not in money. The English imports are vastly in excess of exports, because England is really a creditor country and is thus receiving the interest owed her upon her investments. But Germany's surplus of imports is not interest payments upon her own investments, but payments to her of the capital of her own enormous loans. She receives the sum in goods, because only in kind can great exchanges of value between nations take place; she pays the interest with her exports. Germany is in truth economically weak, and in order to finance so many public and private enterprises, as she has in the last thirty years, has been compelled to borrow heavily. In fact, in an economic sense Germany does not own her own business. The capital which created it, the ready money which keeps it alive, are both borrowed and are not yet paid for. Instead of devoting a part of the proceeds of the use of this capital to the discharge of a part of her capital indebtedness, she has reinvested all of it, has therefore expanded her transactions at a rate all out of proportion to the amount of business she was really doing, and has therefore exposed herself to the peril of being called upon suddenly to pay her debts and of being forced into national bankruptcy because of her inability so to do. Such financiering is simply folly, to the thinking of England and France.

The small national debt of Germany, too, cannot fairly be compared with the large national debts of England and France as a sign of the comparative strength of the three nations. She owes her debt mostly to them. They owe their debts to their own citizens. A nation's position in the international scale is not affected at all by the existence of public indebtedness which is owed to its own citizens, because the total national assets are comprised of the public funds plus the actual assets of all individuals, including all the debts owed either the nation or its citizens by other nations or their citizens. The public debts of England and France are for the most part national assets, while Germany's is almost entirely a national liability. If the English and French should pay their debt, they would pay it to themselves. In other words, they would merely alter the form of recording the national wealth on the national books. When Germany pays her national debt, she will have to part with actual value which will accrue to other nations. Nor do the Germans seem to realize that, from the point of view of international finance, the national debt is not the money which the nation has borrowed in its own name, but the total amount of indebtedness which the nation itself and all its citizens combined owe in any way to all other nations and their private citizens combined. The public indebtedness plus the private indebtedness is the true indication of the money which the nation may be called upon to pay. England and France, publicly or privately, owe very little money outside their own borders. Germany owes money in every quarter of the globe on the transactions of her citizens. For these reasons, other nations find it hard to believe that Germany possesses any economic strength at all, and therefore find it difficult to understand why she promotes such vast schemes of aggression. They can be prosecuted only upon borrowed capital and must inevitably increase her inherent weakness. Certainly, should she lose, she can hardly recover from the catastrophe for a century; and they cannot see how she can possibly win.




GERMANY freely admits the great economic strength of England and France, so long as peace prevails. Once war breaks out, their economic strength will become weakness and the position, which they depend upon to secure for them control of the world, will in very fact bankrupt them. Indeed, the weapons, in what the Germans are fond of calling "The next war," will not be confined to armies and navies, nor do the Germans consider that the state of war will be confined to actual hostilities. To their thinking, the war is already in progress and is being fought and will continue to be fought, with those weapons, infinitely more deadly than cannon and small arms, economic crises. They propose to destroy England and France, not in the field, but in the counting house and in the factory, annihilating the basis upon which in the long run armies must depend for maintenance.

The interdependence of the world is economically profitable to England and France, so long as the existence of peace gives full scope to the play of economic forces which produces that steady and uninterrupted interchange of goods upon which they rely for their very existence. The extent of modern economic development, the amount of produce they depend upon receiving from abroad, the amount of manufactured goods that they depend upon exporting yearly, is the measure of their economic weakness at that moment when a state of war makes the transportation by sea of their necessities dangerous. In particular, England must be fed from oversea, and must bring from a distance all the raw materials which she needs to keep her factories in constant operation, and which she must have to keep her great population steadily employed and able to support itself. This dependence upon others is not strength, but weakness of the most vital description, for it makes England's prosperity contingent upon the continuance of certain conditions which the Germans are by no means willing to agree are normal or natural. They deny strenuously that peace differs from war in anything except degree. There is a large school of thinkers in Germany who insist that all living is war, and that upon the continuance of this battle the healthy life of the community absolutely depends, in support of which assertion they cite the doctrine of evolution in its varied forms and phases. If this be true, a nation which expects to survive in this normal struggle for existence must not depend upon fighting its battles with other nations under what are really technical limitations. By depending upon the absence of anything like physical force in the struggle for existence, England is building her house upon the sands.

Take, too, the vast capital of whose existence England and France are so proud and upon whose operations they depend for the perpetuation of their predominance. The fact that they have invested it in every quarter of the globe, intending, thereby, to protect themselves from too considerable loss in case war should break out or countries become bankrupt, has actually forced them to part with the reality of their wealth and to substitute for it unreality. They have placed the tangible results of their investment the width of the globe distant from their shores, and therefore from their armies, and they have taken in exchange a promise to pay, which they do not possess the force to exact, and whose whole value depends upon the willingness of the debtors to consider it binding and to liquidate the debt of their own free will when it becomes due. They have invested their money everywhere except at home, and have therefore exposed themselves to its loss, because their ownership of these debts and investments depends on the continuance of the present notions of commercial morality. This is not investment. This is speculation. The reality, --- the railways, factories, mines, --- which represents the capital they have invested, belongs literally to the borrower. He has the only tangible thing in existence in the world, the only thing which possibly can exist in the world, as the equivalent of that value. Whatever is written on paper is paper, and is not to be made into factories or railways or tangible assets of any kind by any process of jugglery such as the mediaeval bishop performed when he baptized the roast and called it carp. Things are, and writing on paper does not change the thing or its position. The real wealth of England, the surplus of which she is so proud, comes not from her soil nor from her own factories, --- in other words, from those things which no one can take away from her except by force of arms and which she necessarily protects as long as she continues her national existence, --- but from her income from the accumulations of the past with whose actuality she has parted, and from which she has received for decades the payments represented by the excess of her imports over her exports. The world has paid her tribute, but the world need continue to pay that tribute only so long as it wishes. The moment the borrowers refuse longer to recognize the validity of her claims upon their revenues and incomes, and begin to realize that they hold, with a clutch which she cannot loosen, the actual substance of wealth, then they will begin to see that her wealth is not real, but depends purely upon their willingness to continue to pay her revenue, which they may stop paying her at any moment without suffering any consequences. To be sure, such notions as these presume the violation of every notion of commercial morality and expediency at present existing in the world, but, as the Germans say, if they were violated, what could England and France possibly do to avert destruction? It is true, they admit, that such a wholesale repudiation of debts would undoubtedly make it difficult for nations to borrow from each other for some time to come, but, they retort, if such a repudiation took place, the debtor nations would not need to borrow money for generations to come.(16)

Now if we suppose that the German fleet should secure control of the sea, either by defeating the English or by securing predominance in number, it might promptly cut England's communications with the rest of the world and effectively bankrupt her by stopping the remittances of goods, in which alone the debts owed her by other countries can be paid. Germany, to be sure, would not get the property England owns elsewhere; she might not be able to secure the repudiation of English debts by England's debtors; but she could quite as effectively compel England to lose the only tangible evidence of ownership and forego the payment of the incomes of thousands of her private citizens who would infallibly be ruined. In this connection, the Germans eagerly claim that, if a nation's debts consist of the national indebtedness plus the private indebtedness, it is not less true that the nation's resources are the national revenues plus private incomes. If the latter should suffer severely, those upon whom the Government chiefly depends for the payment of taxes would be unable to respond and the nation, as well as its citizens, would be bankrupt. To secure so stupendous a result as this is well worth the expenditure of money for building a fleet. That money so far as the German nation is concerned is merely invested in an enterprise from which they confidently expect returns perhaps one hundred fold.

As was said at the beginning of this account of Pan-Germanism, the Germans are acutely conscious that their position in the world depends less upon the actual force they are prepared to exert and the actual wealth within their own borders than upon their ability to exert more than their rivals can. The existence throughout the world of a state of war they believe would effectively bankrupt England and France. Each nation which owed the latter money would be unable to remit the usual sums, because they would be forced to spend the money, and more likely the goods already in existence, upon preparation for war. This would effectively rob England and France of their incomes, of the only tangible evidence they receive of their vast nominal wealth. Failing to receive the usual remittance either in money or in goods, they might themselves be unable, simply from the lack of materials, to prosecute the war with the vigor and dispatch they intended. Of course, should England retain control of the sea, she would be able even in time of war to protect the remittances to her; but the Germans depend upon their fleet to interfere, at least with the regularity of remittances to England, and depend upon their allies and upon the necessities of various nations elsewhere to stop the remittances at their source. They thus hope to cripple England and France temporarily by the mere force of economic factors which could be put into operation by simply beginning a war.

The Germans claim that those financial factors, which seem to be weaknesses in time of peace, would be in case of war a tower of strength. Germany is almost, if not quite, self-supporting, and, with the trade between herself and other European nations overland in time of war, she could become entirely self-sufficing. Nor is she dependent upon her imports for the raw materials to keep her factories busy or to maintain her army and navy. Whatever the balance may be upon the books of the world, she is actually rich, actually richer than England or France. So long as her army is unbeaten, no one can take away from her her factories, mines, and fields. Whoever may own them on paper, she owns them in reality and will continue to own them so long as she is strong enough to keep them. Supposing now that she should repudiate the whole debt which she owes other nations, should seize the capital out of which her economic development was created, what then? Would she not actually possess her economic development for nothing? Could she ever be compelled to pay for it by anything short of actual conquest, and is there in the world any nation strong enough to subdue her upon her own soil? Would not such an economic blow destroy her enemies with greater certainty than any conquest by sea or land? Indeed, has she not everything to gain from war and nothing to lose? So long as peace prevails and she continues to recognize the validity of present notions of commercial morality, she must continue to pay huge sums, must continue yearly to part with actual wealth in goods until the debt is paid. The moment war breaks out, she need pay nothing. If she is defeated, she will merely be compelled to pay what she was already obligated to pay. If victorious, she need never pay interest or principal. Would that not be a stake many times worth playing for, compared to a war indemnity of any size whatever, and, when such a manoeuvre might also not improbably compass the control of the world's commerce, what German would doubt that the chances of war are better than those of peace? Suppose, too, that the rest of the countries who owe money to England and France should adopt Germany's tactics and seize the occasion of the war as a signal for the repudiation of what they owed, and should therefore take possession of their own industries; would not England and France be literally destroyed, reduced to the acres within their own boundaries and to those few industries which they could prosecute without cooperation from other nations?

The securing of ready money with which to begin this war the Germans do not consider a vital difficulty despite the fact that it must be in some way secured from their enemies.(17) Nor do they consider it a vital difficulty that they can in all probability procure only from the same source the sums of money necessary for the completion of the preparations for war. So long as the trusting citizens of England and France are willing to lend their private fortunes on no better security than the promise to pay interest and capital at some future day, there is every reason why she should continue to borrow every cent they are willing to lend, for by that measure will she increase the extent of the ruin which may in time overtake those nations, and by that extent will she increase the amount of wealth which she may get for nothing. She has, of course, continued to reinvest in her businesses the whole profits which she has derived from her skillful management, and she has not made as yet extensive preparations for sinking funds to pay the principal of her debts, because she may not need to pay that principal. Every debt makes her stronger, every loan makes her enemies weaker. She is well aware that many of her private citizens have invested money in other countries, that she, too, is entangled in the network of international investments, but she knows that the profits will still be enormous, even if her citizens lose every penny they have invested outside her borders. She will get the cash with which to begin the war by borrowing from her enemies, and she will this time either commandeer the money in the banks before war is declared, or she will make war too quickly to permit any repetition of the manoeuvre executed by the London and Paris bankers in the summer of 1911. She cares very little who claims title to that money, so long as she has it, so long as they can take it from her only by force. She is conscious that German securities will everywhere fall in the foreign stock exchanges when war actually begins; she also knows that English and French stocks will tumble likewise, and, she believes that when the reaction of economic forces is complete, the destruction of values in England and France will be too great to make the loss of value in her own securities of any significance. Besides, who own her securities? Who, therefore, will bear the fall in value? Her securities are only paper. The factories and fields they actually represent are not changed in value by operations on the stock market. The foreign investor will lose money and will bear the only ostensible losses and will thus be dealt an additional blow. Germany, in other words, can fight her enemies with their own money, and may obtain not only her industries for nothing, but her army and navy and the whole cost of the war as well. The foreigner may even provide her with the money necessary to begin the war.

Once more the Germans hear around them outcries against the morality of this procedure. Once again the Germans insist that morals and ethics have nothing to do with this particular issue. The moral code of the financial world, like the moral code of the political world, is based upon the notions of England and France, upon ideas obviously themselves the result of a peculiar situation, on whose continuance the welfare of England and France depends. Their moral code is based on their ownership of the world and their desire to continue it in perpetuity, and their moral code, therefore, condemns Germany to insignificance. The Germans refuse to recognize as moral anything which jeopardizes their national existence. They claim the right to protect themselves by any weapons which will secure the desired result, and they have no intention of foregoing the use of these terrible economic weapons, simply from a supine acceptance of so-called ethical notions, whose very presumptions militate against them. The international economic situation chances to press less heavily upon Germany than upon other states, and thus affords her a significant natural advantage over other states which it would be suicidal to forego. If worst comes to worst and all else fails, she can resort to weapons so powerful as to destroy her adversaries.




BEFORE so vast a scheme as Pan-Germanism can be actually put into operation many prerequisites will be necessary to insure its ultimate success, for Pan-Germanism aims at obtaining for Germany and her allies control of the world and at insuring their retention of that control for at least a generation. The absolute prerequisite is necessarily the creation of a great fleet, large enough to insure freedom of passage of German commerce through the English Channel under any and all circumstances. The fleet must be large enough to make dubious the outcome of a battle with the English fleet, in order to prevent England from risking battle. Germany, in sooth, does not intend to use her fleet for war. It is a purely defensive weapon, intended to insure the continuance of the position she now holds and of that freedom of passage through the Channel, which is the prerequisite of all expansion. Until that is assured the possession of colonies, the entrance to markets, the ability to manufacture, are all worthless. She must not permit herself to remain in a position where the outlet for her commerce depends upon England's good will. She intends to create so large a fleet that it will command, as a matter of right, what Germany desires. Furthermore, unless her fleet is large she will not he able at the same time to intimidate England in the Channel and Russia in the Baltic. Unless she can maintain her control on the southern shore of the Baltic, all of the normal outlets for the commerce of North Germany might be closed by Russia, and it is almost as essential to insure their freedom from Russian interference as it is to make sure the English will not close the Channel. Germany wishes nothing which she must hold on sufferance. Again, if the Germans do not succeed in building their fleet fast enough actually to endanger England's predominance in the Channel, they may still compel her to concentrate her fleet in the North Sea, and leave necessarily exposed to the attacks of Germany's allies the long chain of forts and strategic places upon which England depends for the protection of her water routes to Asia and Africa.

No less necessary than a great navy is a great army, large enough and efficient enough to prevent Russia and France by reason of its existence from thinking of war. The army is, as the Germans claim, primarily defensive. It is the only barrier between Germany and her enemies. It takes the place of the English Channel, of the Alps, of the Pyrenees. The army, too, must be large enough to enable Germany, in case of war, to invade England without so much exposing herself to France and Russia as to invite assault from either or both. Indeed, it is highly essential that the army should be so efficient that there could be no doubt of its repelling a combined attack from both should they take the offensive. But sufficient strength to discourage them from fighting is even more desirable from the German point of view, for the Germans do not wish to fight. They wish to secure the results of war without the concomitant disadvantages, and they consider as the only probable offensive use of the army the necessary invasion of England. Again, an army large enough to make possible such movements would also be large enough to put into operation the economic factors, which Germany expects will prove so advantageous to her and so fatal to England and France. Hence, every step in the development of such an army is a step toward the achievement of Germany's purposes by that type of offensive weapon euphemistically known as peace.

The seizure of Belgium and Holland will very likely be the first German movement when the actual accomplishment of Pan-Germanism seems fairly assured. The position of these two countries, their wealth, and the traditions of European policy have gained them so much prominence and have caused all nations to attach so much importance to them, that Germany will certainly not take possession of them until the last moment. Indeed, it has been so long held that an attack upon the autonomy of Belgium or Holland would be the equivalent of a declaration of war upon Europe that Germany will certainly avoid any such outspoken manifestation of her intentions. Notwithstanding, their position is an absolute prerequisite of the ultimate success of Pan-Germanism, and the railway lines for landing troops in the proper places are already built and the canals for supplying those troops with food are already being dug. When the German Emperor recently visited Belgium a remark was made by a certain dignitary that Belgium was prepared, to which he is reported to have replied that they were wise to prepare.

But Germany needs the strategic points which those two countries control. The Netherlands alone can furnish her a suitable naval base on the Channel from which to contest its possession with the English or from which to intimidate the English fleet into permitting German ships complete freedom of passage. So long as the German fleet must operate from a base of supplies as far removed as Kiel from the naval base of the English in the Thames, her position must be at the best anomalous. The occupation of Holland would make it a reality. From Holland, too, the German army could most advantageously invade England. From Belgium, it can most easily reach Paris. With both countries in their hands, an attack on either capital would be equally feasible, and the capture of either would be equally fatal to the Triple Entente.

The commercial significance of the position of Belgium and Holland is no less striking. They control the outlet of the Rhine, and therefore can prevent Germany's complete utilization of the splendid natural highway, draining so large and so rich a section of her land, a highway so easily connected with her other river systems by a network of canals. Plans are already being executed for a network of canals between the Rhine and the Westphalian coal fields, by means of which they expect to supply the fleet at its new base and which promise largely to increase at once the facilities of transportation, and, above all, to reduce its cost, for the every-day trade of the Empire. The possession of these two countries, moreover, would at once give Germany the great colonial empire of which she dreams. Holland owns Java and the Celebes, admirably fitted for colonization, from whom for three centuries she has drawn a princely revenue; she owns a fertile section of Guiana and rich islands in the West Indies whose strategic value would also be great; Belgium owns the vast Congo Free State, one of the wealthiest of European dependencies. Here would be an outlet for German manufactures of the first importance. If their colonies alone could be retained, Germany could restore the autonomy of those states in Europe, pay a heavy war indemnity, and yet find the war well worth while.

Another prerequisite of final success would be the seizure of Denmark, Sweden, and Norway. With them in her hands, the Baltic would be to all intents and purposes hers. Russia would be squeezed into its furthermost corner. The Sund could be closed at will and all Russian access to the outside world effectually prevented. If such a catastrophe were not sufficient to detach her from the Triple Entente, it would certainly prevent the general financial panic, which would in all probability result in Europe on the outbreak of war, from expending its force upon Germany itself; for the Russians, once the Baltic was closed, would be compelled to sell their products to Germany in exchange for her manufactured goods.

Conceivably there might thus be created a nexus between the two nations which might permanently bring about some relationship freeing them both from the spectre of war. The annexation of the Scandinavian countries would also put into Germany's hands beyond a peradventure the great supplies of iron, coal, and wood which the outbreak of war would make far more valuable than their intrinsic worth in time of peace. Nor does she forget that Denmark still owns a valuable colony or so in the West Indies, which would be worth her while. Some arrangement with Switzerland would also be necessary, although its exact nature could only be indicated by the exigencies of the moment. Napoleon's phrase that Switzerland was the key to Europe the Germans constantly bear in mind. Through Switzerland an attack could easily be delivered upon the German rear by France in case of war. Germany or Italy might profitably utilize it themselves for an attack upon the French rear, while the Austrians have not forgotten that a military road to Vienna runs through Switzerland. However, Germany's arrangements with Switzerland will probably be made rather to prevent the utilization of the Swiss passes by others than from an expectation of utilizing them herself.

A most essential part of the structure of Pan-Germanism is a confederation of states in the Balkans either outwardly independent and secretly controlled by Germany or Austria or dependent in some way upon Austria or Italy. The great stretch of mountain, tableland, and valley, extending from the heights of the Tyrolese and Transylvanian Alps to the Ægean and the Mediterranean, has long been loosely designated, from political rather than geographical reasons, the Balkans. It boasts no real geographical unity and has been divided for political reasons into so many different entities at so many different times that it is in reality from every point of view nothing but a geographical expression. At the moment of the conception of Pan-Germanism, the states of this region were partly autonomous, partly in the hands of Austria, and partly controlled by Turkey. The creation out of them in some way or other of some kind of an entity or entities, which the Triple Alliance could keep under its control, is absolutely essential to the success of the most striking part of Pan-Germanism. For in those defiles and valleys are the keys to Europe. Down along the coast of the Black Sea runs the great road from Russia to Constantinople and the East; down the Danube valley, across the river at Belgrade, through the Balkans by way of Sophia and Adrianople, runs the great continental highway, trodden for a thousand years by Roman, Barbarian, Crusader, Infidel, leading from the Rhine and Danube valleys to Constantinople and the East. Round through Macedonia and Albania runs the perfectly practical road, used long ago by the Visigoths, leading from Constantinople to Trieste, Venice, and the valley of the Po. At Saloniki is a great port from which a fleet might control the Ægean. The western side of the Balkans is the eastern shore of the Adriatic, and its possession would insure to the Triple Alliance complete control of that important sea. Could they secure, therefore, by controlling the Balkans, possession of the great roads between Europe and Asia and of the strategic positions necessary for controlling the Ægean and the Adriatic, the English position in the Mediterranean might be made untenable. At any rate, the English so-called Protectorate over Turkey and Greece would be at once terminated, and the possession by Italy and Austria of naval bases in the Adriatic and the Ægean would practically render useless all the English dispositions based upon Malta as a centre. Thus the Triple Alliance would secure a foothold and probable control of the eastern Mediterranean, and would throw back upon their base in the western Mediterranean the English and French fleets, and might be enabled without practical interference to take possession of Egypt and Suez. Even if so much were not accomplished, the trade route overland through Constantinople into the neutral territory of Turkey, and so by way of the Baghdad Railway to the Persian Gulf and India, would be a reality, and it would be unassailable by the English fleet, nor would it ever be exposed to those dangers which so constantly threaten the English Empire with dissolution.

Chiefest of all, however, the existence of the Balkans, their geographical position, their racial and religious character, their traditions and history, would furnish Germany with the necessary prize to offer Austria as the price of her assistance in the execution of Pan-Germanism. The rulers of Austria have long seen that her expansion to the north and east was improbable and undesirable; that her expansion to the west was permanently blocked by the Alps, and that she could only expand to the south along the great plains of the lower Danube and Black Sea, down through the valleys of Servia to the Ægean, and to the southwest to the Adriatic. Like all other nations, she sees the permanent assurances of her continued national existence only in the possession of an outlet to the sea, and a possible share in the commerce with the less developed parts of the world, from which her rivals are so rapidly obtaining wealth and position. She early found in the Balkans no less powerful a rival than Russia, one as determined as she to secure similar opportunity for expansion, and one to whom that opportunity is not less essential than it is to her. Between the two no compromise is possible. Austria may keep Russia out of the Balkans, but in the face of Russian opposition she cannot unaided take possession. The necessary assistance, Germany and Italy proposed to afford her through the execution of the great schemes for the aggrandizement of all three.

With the Balkans in their hands, the reorganization of Turkey would be the next essential step. Its undeniable importance is the result of the very factors which have kept the Turk so long in possession. In the past, Europe considered its many strategic points too valuable to be owned by any nation not so inefficient and weak as to render their use improbable. The incurable malady of the Sick Man alone caused the doctors to allow him to live. First of all, Turkey holds the bridge between Europe and Asia, for whose possession throughout the centuries Roman and Barbarian, Christian and Infidel, had so vigorously fought. The Turk also holds Asia Minor, from whose rich fields Rome had drawn a vast revenue, whose roads lead into the great vales of the Tigris and Euphrates, where in antiquity stood the greatest of the old empires. In Asia Minor, too, are marts of trade from which Phoenician and Greek cities almost without number had grown rich and powerful and cultured. The whole North African littoral owes allegiance to the Sultan; Tripoli was still nominally administered by him, and would furnish to the Turk's master a strategic point of the first consequence, flanking Egypt on the one hand and Tunis on the other, furnished with harbors whence a fleet might assail with confident expectation of success the English lines of communication with Suez. Above all, the Sultan is head of the Mohammedan religion, ruling still over the countless hordes of Moslems in the English and French possessions in Africa and Asia, to whom they owe implicit obedience and for whose safety they have often evinced the utmost concern. Indeed, around him is already centering the great movement known as Pan-Islam, which contemplates nothing less than the expulsion of the unbeliever from the lands of the Prophet's followers by a great Jehad of unheard-of dimensions. Might not the Sultan, properly "inspired" in some way, be induced to instigate or proclaim such a war at a time when English and French authority in Africa and Asia might for all practical purposes be extinguished by it? An outbreak as general and as powerful might conceivably compel them to send reinforcements from Europe to such an extent as to weaken them at home and permit Germany to begin the final stages of the war with every prospect of complete success. Naturally, Germany does not expect to receive everything and give nothing. She has undertaken the reorganization of Turkey, the building of an army and a navy adequate for the prosecution of such enterprises, and she has, as a matter of course, provided the necessary financial backing to relieve the Turk of pressure from his old supporters, England and France, and from all future fears as to deficits.

From the Turk could be secured the railway concession of vital commercial importance which should join Constantinople with the Persian Gulf, and whose existence would alone repay Germany and her allies for all their expenditures and risks. It would, of course, be adequately protected by the new Turkish army and fleet. To insure its safety from an attack by Russia, Persia would be reorganized as an independent nation under the German ægis. Thus also would be secured the coast road along the Persian Gulf to India which Alexander had followed, thus also would be insured to Germany the control of navigation in the Gulf itself. Both would put into her hands invaluable points. She would be led by the coast road into the valley of the Indus behind the great defenses at Quetta; in the rear, therefore, of the British position. A fleet emerging from the Gulf would enter the Indian Ocean behind the English naval defenses, and see all India lying before her, undefended.

The Germans do not fail to appreciate that, although they are the originators of Pan-Germanism and may perhaps not unreasonably expect to be the chief gainers by it, they cannot hope finally to achieve success without the hearty cooperation of Austria, of Italy, of Turkey, of Persia, and, above all, of the Balkans. They realize that these states will by no means enter a conflict of this magnitude out of love for Germany; that they are not likely to be held to any agreements that they may make by a moral sense of obligation, which the Germans themselves frankly deny is of any validity in international agreements; that, unless they are fully satisfied with their own gains, they will themselves interfere at some awkward moment and perhaps prevent the completion of the scheme at all. Therefore, the ultimate success of Pan-Germanism will depend, as much upon the division of the spoils when the victory is won, as upon any single factor, and upon the acceptance beforehand of such plans for the allotment of territory as to satisfy the ambitions of the various parties without vitally offending any other equally essential party. Divide et Impera. In all probability, Austria is to get the Adriatic, access to the sea through the Balkans, and Egypt and Palestine; Italy will certainly expect the rest of the North African littoral, while the Balkan States, European Turkey, and Persia will insist upon a guarantee of their autonomy so far as their own local affairs are concerned. Germany, therefore, will surrender the Mediterranean to her allies in exchange for India, the rest of Africa, and the East and West India Islands. Spain might have to be paid with a slice of western Morocco. Whether or not the coalition will be strong enough to lay its hands on South America in defiance of the United States will have to be determined by the circumstances of their victory.

Chapter Nine

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