The Way to Win Part 5

One and all are agreed that the German people are suffering from an actual shortage of food. It is not merely a question of prices, though these are far higher than they are in England, and the wealthy folk are still able to get almost all they want. There is, we are a.s.sured on evidence which it is practically impossible to ignore, a very serious shortage of many commodities of everyday use, the lack of which is severely felt, as, owing to the very high prices ruling, they are almost entirely beyond the reach of the people at large.

Now, in considering the question of the food supplies of Germany, it is important to remember that in normal times Germany imports some forty per cent, of the fodder used for feeding her sheep and cattle, and it is the scarcity of fodder that has produced the present shortage of meat.

That such a shortage exists we know from the ordinances made by the German Government providing for two, three, and even four meatless days per week for everyone in Germany. In the early days of the War, confident that the struggle would be a short one, the Germans took no special pains to keep up their supply of cattle. It was only after the battle of Flanders that they discovered their mistake, and that the question of the supply of meat was destined to be critical.

Then came the panic legislation which led to the slaughtering of swine on an enormous scale. It was decided to devote all the available fodder to the feeding of cattle, since these would be the most difficult to replace after the War. Pigs were killed _en ma.s.se_, orders being given that the flesh was to be tinned to form a reserve. But it was soon found that even this was not sufficient to save the situation. Owing to the growing stringency of the blockade fodder for the cattle began to give out, and then it was decided to fatten pigs. In consequence the slaughter of cattle has increased enormously, and hence arises the growing shortage of milk, b.u.t.ter, and cheese.

Now whatever may be the leakages in the British blockade, it is quite certain that only the barest fraction of Germany's former imports is getting through; nothing can reach her directly oversea, and our trade agreements with neutral nations to prevent reshipment, even if they are not all that we could desire, are certainly having a very great effect.

And it is certain that, despite smuggling on an unprecedented scale, Germany is very far from getting anything like all that she imperatively requires. The pinch is there, and it is growing, and that it is growing rapidly is shown by the increasing violence of the German threats against England and her incessant announcements that she is really getting ready for some new "frightfulness" that shall put all her previous efforts completely into the shade. We hear and note, but we are in no wise terrified.

Frantic efforts are being made by the Germans to purchase and import cattle food of all descriptions, and in addition such fats as b.u.t.ter, lard, and margarine, the shortage of which has produced an enormous effect throughout the Empire. It is our business to see that she fails; and with our Navy given a free hand, I am confident that we can do so.

We know how serious the shortage of bread has become; we know that no German can purchase bread without a "bread card," and that the amount he can purchase is severely restricted. We know that he is ordered not to eat meat on certain days of the week. We know, too, that in various towns, even in Berlin itself, the maddened people have already broken out into "bread riots," and that their mutinous gatherings have been dispersed by the police. Not even the well-drilled German will consent to go on indefinitely on an empty stomach. There have been cavalry charges in some towns, there have been violent riots in many, people have pillaged shops; "in fact," says the German writer of a letter found on a prisoner, "we have a war at home as well as abroad."

Another letter sent from Munich to "cheer up" a prisoner at Oleron says, "Wherever we go, and wherever we may be, we see nothing and hear nothing except misery and poverty." A letter from Greiben contains similar lamentations, and adds, "With all our strength we have accomplished nothing, and we shall soon be ruined."

Germany's chief imports at present, secured, of course, by devious ways since she is unable to import anything directly, are cotton, wool, copper, lead, paraffin, rubber, nickel, oils, wheat, rye, and barley.

These are all of vital necessity to her continued existence, not merely to her successful conduct of the War. With the food shortage growing day by day, she must import even larger and larger quant.i.ties, and unless she can do so the end is inevitable; a point must come at which German moral will simply go to pieces. Our blockade is hastening that moment. None the less, we have to remember that starvation alone will not bring Germany to subjection; she will always obtain and grow supplies to a certain extent, probably enough to stave off actual starvation on a scale which would induce her to sue for peace. We have to complete the process of attrition, valuable as it is, by force of arms, and only a decisive military defeat will put an end to German aims and ambitions. That is a cardinal fact of which we must never lose sight.

There is hardly an article of food or drink for which the German chemists have not succeeded in finding more or less satisfactory subst.i.tutes. Bread is one of the best known instances. The German "kriegs-brod" or "war bread," though it is nothing like so palatable or so nourishing as ordinary bread, is yet sufficient to sustain life, though there is reason to think it sets up digestive disorders.

Similarly, a glance at the German papers will show dozens of advertis.e.m.e.nts offering subst.i.tutes for endless other articles of diet.

These subst.i.tutes are very interesting; whether they are satisfying is another question, and one which we can leave the beleaguered Germans to find out for themselves. "Acorn coffee," "artificial fats," "artificial honeys," wooden instead of leather shoes, "German tea" (whatever that may be), "egg subst.i.tute," "wood meal," sausage subst.i.tutes with "more than the nutritive qualities of beef"--these are only a few picked at random. No more convincing testimony to the value and effectiveness of the British blockade could be asked for. These are not the announcements of the German Government, intended to deceive, but the advertis.e.m.e.nts of business men who have to pay good solid German cash-- or it may be notes!--for them. They speak more eloquently than any comment of ours could do.

A good deal of surprise has been expressed that, in view of the undoubted shortage of many necessities in Germany, there has been no apparent falling-off in the equipment or supplies of the German Army.

In reality this is not a matter that need disturb our judgment on the general question. We have to remember that Germany is organised on a military basis, and that the militarist party, who most decidedly hold the upper hand, will see to it that as long as there is a pound of food in the country it will not be the Army that will go short. In every department of German life everything is subordinated to the demands of the Army, and no one can question that this is the correct policy. Any serious shortage or discontent in the Army would bring the military structure crashing to the ground, and there can be no doubt that the shortage which exists will have to go much farther before its effects are felt in the field. It will come, beyond doubt, but it is more than likely that shortage of men will make itself felt first.

The views of Abbe Wetterle on this point are worth quoting. He was before the War Deputy for Alsace in the Reichstag. When war broke out he escaped to France, and has lived there since. He considers that the Central Empires are already beaten.

"Germany is at the end of her tether, that is the truth," he says.

"She can no longer obtain credit, and the value of the mark is falling every day. After having mobilised ten million valid and invalid soldiers, Germany, whose losses number three and a half millions, and whose auxiliary services behind her lines require 1,700,000 men, can no longer fill the gaps in her Army, and her battle-line grows in extent every day. Famine stares her population in the face. By February or March at latest the lack of food will be severely felt.

Riots have already taken place in her large cities, and they will gradually multiply and become more violent. Lack of men, lack of money, lack of food--such is the danger which threatens Germany."

Now we know very well that the German newspapers are controlled by the Government to an extent which is unknown in any other country in the world; not even the British censorship has such drastic powers. The columns of the German papers are therefore about the last place in which we should expect to find any inkling of the real situation as it exists in Germany to-day. It is the Government order that everything shall be painted _couleur de rose_. Yet even the German Press is becoming restive under the strain, and is beginning to say things which a very short time ago would have been impossible. Here is a telling extract from the Socialist paper _Vorwarts_, one of the few of the German journals which has risked a good deal in its insistence upon letting out at least some of the truth. It says:

In a few weeks the sowing and preparing of the fields for the new harvest will have begun, and upon that harvest everything will depend.

The coming harvest is of immeasurable importance for the German people. Fantastic speculations as to great imports of foodstuffs from the Orient have now become silent. Germany depends during the duration of the War upon her own production of food... It is evident now that our much-praised organisation of our economic system is in no way so good as enthusiastic amateurs would like us to believe.

This is not exactly the language of a conquering nation whose Chancellor declares that she has sufficient for all her needs, but I have no doubt that it represents the real situation and reflects the prevailing anxiety much more accurately than Dr Helfferich's boasting speeches, which are undoubtedly meant for foreign consumption.

It is not merely in the matter of food supply that Germans are face to face with conditions which are giving her leading men cause "furiously to think." It is true it is what makes the most immediate impression on the public at large. But there are men in Germany who realise that there is a world to be faced when the War is over, and that as the days slip by Germany slips into a worse and worse position for meeting the conditions she will have to confront after the declaration of peace. I will first deal very briefly with some of the social aspects of Germany's present condition.

Germany's terrific losses in killed and maimed men, coupled with the terrible drop in the birth-rate, which has fallen far lower than it did in the Franco-Prussian War, are causing the gravest anxiety among the German economic thinkers. Next to the fall in the birth-rate, the rate of mortality among newly-born children is causing alarm; and when we remember how admirable are the German arrangements for the preservation of infant life, we can realise that very grave causes must be at work to account for the existing state of things. That those causes are connected in some degree with the efficacy of the blockade is probable, but a greater contributory cause has been the general distress caused by the War, and the failure of the munic.i.p.al authorities to provide the necessary relief.

The pensions payable to the widows of German soldiers who have died in action are very small; distress and misery have entered the families where there are many children, and many of those are succ.u.mbing to the prevailing lack of food. To such a pitch has Germany been brought by the insane ambition of her rulers!

Orphans in Germany now number 800,000, Many of these orphans must for years remain a tax upon the State; they will be _bouches inutiles_ until they reach the wage-earning age, and they will provide after the War, just as they are providing at present, a problem which will tax Germany's economic and administrative resources to the uttermost.

Another problem with which the Germans will have to deal is the appalling increase in crime. In spite of the fact that a great proportion of the men of the country are serving with the Army, the statistics of crime make appalling reading, and offences of all kinds are especially numerous among children. The juvenile Hun behaves as a Hun to the manner born once he is removed from the stern parental control which in times of peace keeps him within what, for Germany, are reasonable bounds. And even in times of peace the figures of juvenile crime in Germany are terrible. In the year 1912 the following crimes were committed in Germany by boys between the ages of twelve and eighteen:

Criminal a.s.saults, 952.

Murder and manslaughter, 107.

Bodily injuries, 8978.

Damages to property, 2938.

These figures _for boys alone_ are far more than the entire total of such crimes ever committed in England. For instance, the yearly average of crimes of malicious and felonious wounding in England for the ten years 1900-1910 was 1,262; in Germany for the ten years 1897-1907 it was 172,153. And the population of Germany may be taken at 65,000,000, with that of England at 45,000,000. These statistics give us some idea of the real character of the nation which holds itself up as the apostle of "kultur" to the rest of the world, and shows us what blessings we might expect under Teutonic rule.

It is naturally very difficult to get thoroughly reliable information as to the exact condition of things in Germany. Most of the "neutrals"

whose stories appear in the English Press appear to be rather too apt to say the things which they think will best please English readers. None the less, their stories cannot all be invented, and we have valuable corroboration of many of them in the shape of reports published by neutral observers in the neutral Press--especially in countries where the prevailing sympathy tends to be pro-German--and from our own people who have returned from Germany.

A particularly valuable example of the former comes from Copenhagen.

Dr Halvdan Koht, one of the foremost Norwegian historians, is known for his distinctly pro-German leanings. Yet, after a prolonged stay in Germany, he draws in the Christiania newspaper _Social Demokraien_ a decidedly dismal picture of German life and of the state of public feeling in Germany. "The people are tired of the War" is his conclusion. It is true the whole country considers that Germany is safe, but the whole country has arrived at the conclusion that its adversaries, especially Great Britain, cannot be crushed. The fact that Great Britain is still in full possession of all her territories, that she cannot be attacked on land, and is less affected by the War than Germany is rapidly dawning on the whole people. Moreover, it is being realised that, in spite of her immense military strength, Germany will never be able to enforce a definite decision in her favour. Dr Koht interviewed a number of people of all cla.s.ses on this subject, and all expressed similar views and heartfelt weariness of the War.

On this subject I might also quote the view expressed by a lady who reached England recently, one of the first batch of the so-called "reprisal women" who, the Berlin authorities have decided, are eating too much meat and b.u.t.ter, and must therefore be sent home. "Germans are suffering agonies," this lady said, "especially the poor people. They know, in spite of the lying Press, that their sufferings are merely beginning, and they are preparing themselves for more suffering until their rulers are forced to realise that the limits of endurance have been reached, and then sue for peace." The Germans, she added, "are ready to bear the financial losses and the appalling losses in men, but life on rations is simply driving them insane. The bread cards at first amused them like children, as one more opportunity of obeying orders, of which they are so fond. Now they have b.u.t.ter cards, fat cards, and, in some places, petroleum cards."

I do not think we can disregard all the evidence that is rapidly acc.u.mulating as to the widespread distress in Germany to-day. And I do not think that that distress is likely to decrease. We have it on the authority of Mr Asquith that the tightening of the blockade is proceeding, and the tighter we pull the strangling knot which the British Navy has drawn round the German neck, the sooner we shall return to the days of peace.

But, in the words of Lord Headley, "When Germany wobbles we must hit as hard as possible in the right place and in the right way. But let us make sure of our own set purpose and fixed resolve, that now that we have made up our minds, there shall be no indications of wobbling on our part." That, I think, expresses the judgment of the nation as a whole.

We do not want to sit down in the hope that the "war of attrition" will do our business for us. It is "the long push, the strong push, and the push all together" of Britain and her Allies which alone will bring us to a triumphant success. The "war of attrition" is helping to bring nearer the day when the great push will be possible, but of itself alone it will never compel victory over an enemy who--it would be foolish to think otherwise--will fight to the last gasp.

CHAPTER SEVEN.

GERMANY'S BANKRUPT FUTURE.

I have no hesitation in saying that from our point of view one of the most encouraging features of the whole situation is the extraordinary collapse of German credit--extraordinary, I mean, in comparison with her apparent successes in the campaign on land. The heavy decline in the value of German and Austrian money in neutral countries is an absolutely unmistakable sign that the finances of our enemies are, after eighteen months of War, reaching a condition which before long must prove a source of the gravest embarra.s.sment to the Central Powers.

As I write, the exchange value of the sovereign in the United States is about two per cent, below normal, and the same condition exists in Holland and Scandinavia. Considering how much we have been buying abroad, such a trifling depreciation in our credit is a wonderful testimony to the stability of British inst.i.tutions. But if we turn to German and Austrian currency we find that it has declined in value from twenty to thirty per cent. In other words, neutral countries are beginning to show themselves unwilling to take German money; and as Germany can now buy only from neutral countries, it is quite obvious that she not only has a difficulty in paying for her purchases, but that she has also to pay an exceedingly inflated price for them.

My readers will remember the sensation that was caused when, owing to our heavy purchases of food and war material from America, the value of the sovereign dropped something like six per cent. That meant that for every hundred pounds we paid to America for goods bought we were losing six pounds owing to the fall in the exchange; and when it is recalled that our purchases were on a scale which involved hundreds of millions, it will be seen that the decline was a very serious matter for us. But so good was our credit that there was no difficulty in floating a huge loan in America, and the result was that the value of the sovereign at once appreciated, and it has never seriously dropped since; in fact, it has steadily risen. The process was helped by selling American securities, of which we hold huge sums. We can repeat both processes as often as we like in reason, because our credit is good, and our holdings of American securities are still enormous. Germany can do neither-- firstly, because her credit is utterly impoverished, and, secondly, because, whatever she may sell, she and those with whom she would like to deal have no security that the goods would have more than a very slender chance of getting through the British blockade. Here, again, we see how our overwhelming sea power is helping the cause of the Allies.

In spite of the huge sums we are spending, Germany is infinitely worse off than we are, and there is every reason to believe that the tremendous fall which her money is now experiencing means that her credit abroad is rapidly nearing the exhaustion point.

The fall in the value of German money tends to show that our blockade is operating with increasing stringency and success. It seems probable enough that Germany can still manage to obtain through the neutral countries many of the things of which she has most pressing need. But apparently her export trade has been much more severely hit. She depends for this trade upon the import of raw materials, most of which are extremely bulky and quite unlikely to escape the unremitting vigilance of the British Navy. Consequently Germany finds herself unable to pay for her imports by the ordinary channels of international trade, and the difficulty of paying at all has become serious. Nearly all modern business is done on a paper basis; that is to say, on promises to pay--in other words, on credit--and credit obviously depends upon the financial stability of the concern or the nation which seeks thus to obtain goods. That is why the continued decline in the value of the paper mark shows the declining confidence of the neutral nations in Germany's power to redeem her pledges when the time for payment comes.

Germany's ultimate solvency depends upon her ultimate victory, and we can see by the reluctance of the neutral nations to give credit to Germany that they are very far from satisfied with Germany's prospect of coming out "on top." And when neutral financiers come to the conclusion that the War will end in Germany's absolute bankruptcy--that is, in her inability to pay more than a few shillings in the pound of her debts-- the value of her paper promises will sink almost to vanishing point, and there will be such a financial crash as this world has never seen. The faith of the neutral in German stability is wavering already, while the Allies still hold the confidence of the world. That is a factor of supreme importance. The day will come when not a single neutral will trade with Germany except on a gold basis, and when that day dawns the utter collapse of the Central Powers will a.s.suredly be close at hand.

We have just seen a very striking evidence of Germany's impoverishment in regard to the supply of wheat which Germany desired to purchase from Rumania. If there is one commodity which Germany needs more than any other to-day it is wheat. Rumania demanded that the wheat should be paid for in gold in Bucharest. The German and Austrian Governments offered anything and everything else except gold. They offered first ammunition, then paper, then Rumanian Treasury bonds, ammunition, and paper. The Rumanians, however, insisted upon gold, and the deal fell through for the simple reason that Germany had no gold to spare. Few instances have been more eloquent of the state to which Germany is reduced. And what Rumania says to-day the rest of the neutrals are likely enough to say to-morrow--"Either gold or no goods." We can be quite sure that if Germany meets with a single great defeat in the operations which are a.s.suredly near at hand, there will be a revulsion of feeling in the neutral countries which will render the demand for gold insistent. And if Germany cannot find gold to pay for the wheat she so sorely needs from Rumania, what are her prospects of finding it for other countries?

Now the German method of financing the War has const.i.tuted one of the most extraordinary gambles known in the history of finance. She has piled up an enormous debt in paper. The _Economist_ estimates the total of Germany's war credits up to the end of December last at 1,500 million pounds sterling, and the average monthly war expenditure at 92.350 million pounds. Towards this Germany had raised up to September 15, 1915, 1,280 million pounds. In Germany these loans have been cited as a proof that financially the country is impregnable. But this a.s.sertion does not convince. The loans have been obtained only by wholesale inflation through borrowing on Treasury bills from the Reichsbank. The amount of these bills outstanding is carefully concealed from the world, but it is certainly enormous, and it seems to be rising rapidly again, though Germany's third loan was floated quite recently. The amount of these bills on January 15 was estimated at 250 million pounds. It is easier to trace the amount of the inflation of the currency by paper, and by paper without any gold backing. Between July, 1914, and January 15, 1916, the amount of Reichsbank notes in circulation increased from 95 million pounds to 319 million pounds and the amount of Treasury notes from 7 million pounds to 16 million pounds, while another 54 million pounds in paper was added in the form of Loan Office notes. That is to say, since the outbreak of war the amount of paper currency has increased from 101 million pounds to 389 million pounds, or about 285 per cent. How much the financial position has been worsened by the extension of banking credits we do not know, as the bi-monthly statements of the great banks have, most significantly, been discontinued. It is true that during the same period the amount of gold in the Reichsbank has been increased by 55 million pounds. But a large part of this increase, it is believed, came from the reserve of the Austro-Hungarian Bank, and in any case it is not nearly sufficient to have the smallest effect in counteracting the flood of paper. The effects of the inflation of the currency and its debas.e.m.e.nt by the huge issues of paper money are seen in the rapid collapse of the mark and the equally rapid rise in prices which in Germany to-day is making the lives of the poorer people well-nigh unbearable. And it is most noteworthy that in those countries where Germany has been able to trade with the greatest freedom the collapse of German credit is most unmistakable.

That is for Germany, as well as for ourselves, a grave and unmistakable fact; it is verily the writing on the wall. Germany has been weighed and found wanting in the balance of the neutral nations who are more friendly disposed towards her.

To meet the expense of the War Germany has issued paper to her own population on a scale of which the world has had no experience. In return for the paper promises of the Government they have poured out with a lavish hand everything of which the Government stood in need, and it is impossible not to marvel at what is either patriotism or a very high order of gullibility carried to the extremest limits. In either case Germany's people have lent to her vast sums for a mere paper security, quite apart from the amounts she has expended in other countries and which she will have to pay for in gold or exports, which come to the same thing. What, we may well ask, will be the position when, after the War, German merchants want money--not paper--to resume their trading with the rest of the world, to purchase the raw material upon which the very life of her commerce depends? How is the Government to raise the gigantic sums that will be required not merely to pay interest on this stupendous pile of debt, but to begin to form a sinking fund to pay it off?

My own view--and it is shared by many others--is that Germany's borrowings on such a stupendous scale were made possible only because the German people, convinced that they were really and truly the supermen they fancied themselves to be, were firmly persuaded that they were going to win the War "hands down." They were a.s.sured _ad nauseam_ that speedy victory was certain, that France was to be instantly crushed and Russia crippled, that Britain could not intervene in anything like decisive fashion in time to save her Allies, and that the end of the War would come in a few months at most, with a triumphant Germany extorting untold millions in the shape of indemnities from her trampled and bleeding enemies. The War was to be, in fact, a highly profitable trade undertaking, in which Germany's losses in killed and maimed were to be more than compensated for by increased wealth drawn from the coffers of her enemies, and especially England, the worst enemy of all.

But the War has not quite "panned out" to schedule, and Germany is to-day rapidly realising the fact. "In my opinion," said Lord Inchcape, speaking at the annual meeting of the National Provincial Bank of England, "Germany is already irretrievably beaten, and no one knows this better than she does herself." That is a very strong expression of opinion from a man who is in a position to know what he speaks of when he deals with matters of finance. As I have said before, I do not believe that money alone can win the War, but there can be no reasonable doubt that the growing financial difficulties of Germany are swiftly bringing her to a position in which she will find it impossible to oppose with any hope of success the steadily growing power of the Allies. So much at least money can do and is doing, though the final blow must be dealt in decisive military action. Otherwise Germany will never be convinced that she is really and truly beaten, her people will be told again that they are unconquerable, and she will begin with all her wonderful organising powers to prepare for a renewed campaign of aggression in the future.

I cannot see how Germany is to be preserved from national bankruptcy; I cannot conceive any means by which she can hope to pay off the enormous debt she has piled up. Her export trade is utterly smashed, and it must take years to get it back even if the Allies are foolish enough after the War to allow her the commercial privileges she has enjoyed in the past, which is most unlikely. Her losses in men and material have been stupendous, she is eating herself up, she is blazing away her piled-up wealth at a time when she cannot keep going even a fraction of her commerce to make up for the steady drain upon her. We at least are free to trade overseas to as great an extent as we can manufacture, and it is a very gratifying fact that the trade of the United Kingdom has in the past few months shown a steady increase; February showed an advance of 10 million pounds on the corresponding month of 1915. We are not losing our markets to the extent that Germany is, for the simple reason, again, that our Fleet can keep open our trade routes. And we have also to pay regard to the fact that the German is not going to be a popular individual for a good many years to come in any civilised country. At the best he is going to have a good deal of trouble to persuade any of the Allies to do business with him on any terms whatever; at the worst it is more than likely that he will find himself shut out completely by an overwhelming tariff from every British, French, Russian, Italian, and j.a.panese market. How, under such conditions, Germany will ever succeed in paying her debts I cannot understand.

Borrowing in such a War as this is unavoidable for any of the belligerents; it is impossible to defray the stupendous cost out of income. The whole problem to be solved is whether it is possible to secure by taxation the interest on the increased debts and also a margin of revenue which during the War will help to pay for it, and after the War will provide a sinking fund to gradually pay off the sums borrowed.

Germany's paper system is all wrong, because, in the first place, she has not the gold to back it up, and, in the second place, because no provision has been made by taxation to raise sums sufficient to provide interest and sinking fund. Even before the War Germany's yearly budgets have been showing a series of deficits, and with the stupendous amount she has added to her debts it is difficult to see how after the War is over she will be able to avoid defaulting. She will certainly not succeed in securing any indemnity as she did from France in 1871; she will far more probably find herself condemned to pay at least sufficient money to provide for the rehabilitation, so far as is possible, of Belgium.