CHAPTER II.

THE ACTUAL PROGRESS OF GERMANY: THE AGRICULTURAL WORKING CLASSES.

FAR easier than an international comparison is the question of Germany's own experience during the last quarter of a century, and to that we will now address ourselves. As before, we shall confine ourselves to the condition of the body of the people. And let me say at once, in the most emphatic terms possible, that I shall not maintain, I do not even desire to suggest, that all the facts now to be set forth are the results of a policy of protection. It will remain open to any one to maintain, as a matter of pure deductive argument, that even more favourable conditions would have resulted from a policy of free trade. He may argue, as some economists have been wont to do in other cases, that such progress as may have taken place has been brought about in spite of, and not in consequence of, protection. If I entered into that discussion at all, I should myself want to distinguish between this and that measure under these and those circumstances. To approve of all that calls itself Protection is just as uncritical as to approve of all

that invokes the principle of Freedom. My primary concern, however, here and now, is simply to establish the facts.

A quarter of a century is the period indicated for our review, by the circumstance that it was in 1879 that Germany embarked on the policy she has since pursued with modifications from time to time; and it is sufficiently long for general tendencies, if they exist, to make themselves apparent. But, before setting about this review, some little explanation is necessary with regard to the date of the several stages in the history of the matter.

In the first half of the nineteenth century Germany preceded, and set an example to, Great Britain in its advance towards greater commercial freedom. The Prussian tariff of 1818 was much lower than that of England, and was held up by Huskisson to the admiration of his countrymen; while some important states, like Saxony and Baden, had a system which nearly approached complete liberty. When the Zollverein was formed (1834 onwards), a series followed of compromises and modifications; and, under the influence of List's agitation, the duties were raised on cotton and iron goods. But Prussia remained the champion in the counsels of the Union of a relatively free-trade policy, because, among other reasons, her squirearchy was anxious to maintain its export of grain to England. Great Britain, it must be remembered, by no

means went over to complete free trade in manufactures when it determined upon abolishing the protection of domestic corn. Even the great measure of 1853 left a duty of 10 per cent. on manufactures, and the last remnants of protection did not disappear till 1860. Germany therefore-which had preceded England in moderating its protection-lagged but little behind her in going over to a practically complete free trade. For in 1862 Prussia, following the example of Cobden's negotiations, entered into a treaty of reciprocity with France, which by 1865 it managed to induce the smaller States of the Zollverein to accept; and in that year all the agricultural duties were repealed together with some others. By a series of other measures the remaining duties were removed or reduced; until finally in 1875 it was enacted that the last considerable remnant of protection, the moderate iron duties, should cease in 1877. 1875 represents the high-water mark of the free-trade movement in Germany.

Only four years later, i.e., 1879, Germany suddenly reversed her policy, and imposed protective duties on both agricultural produce and on manufactured goods. Since then the stages in the further development of that policy have been as follows. (1) A great increase -a trebling indeed on rye and wheat-of the agricultural duties in 1885. This was of course due to the alarm produced by the competition of the corn of

the new countries, the United States, Argentina, and (in a sense) Russia. It may be recalled that it was in 1884-85 that the great permanent drop took place in the price of wheat in England. (2) The period of commercial treaties negotiated by the Chancellor Caprivi with Austria-Hungary, Italy, Switzerland and Belgium (1892), with Roumania (1893), and, most important of all, with Russia (1894)—so arranged as all to last till 1903-4. The last treaty secured, among other things, a reduction of Russian duties on German manufactures in return for a lowering of the tariff barrier against Russian rye. (3) Caprivi's policy, which was justified on the ground of the greater stability it gave to trade, met with the keenest opposition from the "Agrarians" or representatives of the agricultural interests, with the result that in 1902 a new tariff was enacted, mainly at the instance of the Agrarians, which has considerably raised the minimum duties on the basis of which it will be possible to negotiate any other series of commercial treaties.

For such a summary review of the condition of the great body of the people during the years 1879-1904 as I purpose to attempt, it will be necessary to take the period as a whole. No sort of judgment can be expressed as to its various phases: as to whether, for instance, the Caprivi policy was a wise one, or whether the Agrarians had sufficient reason for attacking and finally upsetting it, and certainly not as to whether

this or that interest may not have got, at one time or another, a relatively unfair advantage. Unless one can give careful attention to all the details, discussions like these are best left to German economists conversant with the circumstances. It may be pointed out, however, that with the exception of a few writers, the discussion in Germany is not, as we are wont to raise it in England, one between absolute Free Trade and absolute Protectionism. It is rather a question of more or less protection. Thus the German economists whose calculations as to the incidence of corn duties are relied upon by English free-trade writers, will often be found to be supporters of the duties existing in 1902, though opposed to their increase.2

The same abstinence from criticism on my part will prevent my commenting on the fluctuations, or the

1 Much the best account of the whole tariff history of modern times is to be found in the second volume, which has just appeared, of Professor Gustav Schmoller's Grundriss (1904), pp. 570-652. It may not have said the last word about some parts of the subject, but for width of knowledge, secure grasp of a vast material, and a seldom failing sense of proportion, it is a masterpiece. It is a splendid justification of the "historical method" of which its author has been the leading champion; not that it gives us ultimate truth, but because it gives us a more living sense of the complexity of historical movement, and a more patient and tolerant spirit in setting about our further inquiries.

2 See below, p. 73, as to the instructive case of Professor Conrad.