# 41

 

 

Enemy Alliances Plot.

Reading between the Lines from Donald Britton Conrad's book: Kaiser Wilhelm: In the Service of  God and Evil.

1913.

 

Gossiping while they swept clean their porches, three middle-aged women garbed in smocks and kerchiefs greeted the early morning sun. A light breeze furled and unfurled the Union Jack high on the Boer War Memorial pole.

 

They put down their brooms when they observed a number of black limousines drive up and park across the street in front of the Red Lion Inn. Men in black suits and derbies surrounded the automobiles while the passengers emerged and quickly entered the Inn. The empty vehicles roared off, their drivers in search of a secluded place in which to park.

 

“Gawd,” exclaimed one woman, “It looks like an invasion of those creatures I saw in the cinema last week. Nellie, what was that flick called? Oh, yes, ‘War of the Worlds!’ ”

 

“Yes, Flo,” agreed her neighbor, “but they look more like those awful German spies we see in the comic strips!”

 

The third woman laughed and declared that the Inn would make more money today than they had made in a month!

A tall, heavily mustached man met the guests at the inn entrance. Clad in foxhunting uniform complete with a bright red coat, white pants and black boots he looked out of place.

“Good morning, Gentlemen! Welcome to the Red Lion Inn. I am William McMetz, concierge, at your service. The Inn is without guests for the entire day in order to provide you with complete secrecy. The government has provided security men throughout the building. Please follow me to our comfortable meeting room, especially arranged for your group.”

 

McMetz led the way inside a high-ceilinged room with spacious Georgian windows, wide wooden floors and colored walls whose richness had mellowed over the years.

 

Once inside the meeting room the group broke up into twos and threes. The military figures retained their ramrod stiffness. Jocularity among them created a sort of esprit de corps.

Other guests appeared more casual and chatted quietly.

 

Unexpectedly, the double doors leading to the meeting room were open by the efforts of the red-coated concierge. Two tall, middle-aged men entered and immediately began shaking hands with the visitors. Most of the conversation was in English, spattered with a sentence or two in French.

 

Without waiting for instructions, each man found a chair and sat around a dark oak, oblong table made up of individual tables pushed together. It was bare except for a covering of gray felt cloth.

The two latecomers took seats at each end of the table. One of them, a tall, gaunt, clean-shaven middle-aged man called the group to order. He wore thick, blue tinted spectacles. His pale face expressed both kindness and deep sincerity that might easily remove any fear of him by onlookers.

Every member recognized him as chairperson and immediately quieted down.

“A very good morning to this distinguished group! The Prime Minister has asked me as Foreign Secretary of Great Britain, to convene this meeting to discuss a practical plan that would meet potential German aggression in Europe. This is a time that tries men’s minds. I ask that you be brutally frank in your thoughts and considerations. Today, we are fortunate to have with us Horatio Kitchener and John French of Great Britain, Joseph Joffre of France, Pavel Rennenkampf of Russia, and his Majesty, King Albert of Belgium. From the British Fleet, we have Admiral Jellicoe. Admiral de Lapeyrere represents the French Fleet.”

 

Again, the double doors swung open and a short, stocky, middle-aged man strode into the room.

 

“Pardon my lateness gentlemen, but I was involved in the christening ceremony of the latest addition to the British maritime fleet, His Majesty’s Ship, the Britannic, sister ship to the unfortunate Titanic.”

"You are excused, Admiral Jackie Fisher,” laughed the Secretary.

One member stood up and said, “On behalf of this group, allow me to welcome you Secretary Edward Grey and to thank you for your confidence in us.”

 

“Thank you,” he replied through a tightly pinched mouth.

 

A giant of a man raised his hand to gain the Secretary’s attention.

 

“Yes, General Kitchener, what is your question?”

 

“Thank you, Edward Grey! If it is at all possible, I prefer that our discussions are limited to English or French. I notice that you have assigned a recorder to take notes. Therefore, I assume that this meeting is entirely secret, especially since you ordered all of us to wear these damned civilian clothes!”

 

A tittering brought a smile to Edward’s face. He said, “Thanks ‘H.’ This meeting is strictly secret. Need I say top secret? My companion today who will take notes for me is Lieutenant Bernard Montgomery. He graduated at the top of his class at Sandhurst and I believe that he has a great future ahead of him.”

“I think that this meeting is acceptable to all. However, remember we are, for all practical purposes, merely having conversations. I underline the word conversations because what we decide today will have important consequences for the future of our nations. It must never be made public that our Triple Entente ever involved itself in this type of meeting.”

 

Kitchener ejaculated in a tone that sent a laugh around the table. “We know the real reason you brought the bright, young lieutenant. He probably knows how to spell!”

Montgomery also laughed at Kitchener’s inanity.

“By the way,” continued Grey, “Bernard’s family resided in Tasmania for some twenty years. His father is an Anglican bishop. I thank you Bernard for assisting me today.”

Then the Secretary indicated, with palm up, that His Majesty King Albert was with the group as a participant. “Your Majesty, would you care to say a few introductory words?”

 

Standing up, the tall, handsome, young monarch said, “Thank you, Edward. Gentlemen, whatever conclusions we reach today will assuredly affect the history of Europe! Let us put on our best thinking caps. God forbid, one mistake could cost us, not only our lives, but also our beloved countries! With your permission, I would like to delay my ideas until the guest speaker has concluded his remarks.”

Grey said, “Certainly, Your Majesty.”

The King sat down and folded his arms, satisfied with his decision.

The Secretary announced, “Professor Publius Decaisne is with us today. With the deductive ability of a Sherlock Holmes, the Professor has studied the German danger to Europe. I met with the Publius on several occasions in which he shared with me his diagnosis of the German military plans that if allowed to occur could lead to war.”

“Publius is a graduate of the Free School of Political Science in Paris. Since the turn of the century, he endeavored through his writings to draw the attention of the public to the immense danger that Germany presents by its so-called ‘Plan of German Expansion.’ In order to explain its constituent elements, direct and indirect of the nefarious plan, he lectured widely reaching more than one hundred and fifty cities and towns. Please give him your undivided attention.”

“Professor, Decaisne, the floor is yours.”

 

The professor, a small, elderly man whose gray hair was in disarray, strode up to an oak lectern upon which he carefully placed his notepapers. He spoke fluent English sprinkled with an occasional French phrase whenever he wished to emphasize a point.

 

“Merci beaucoup, Monsieur le Secrétaire! I am delighted to be here among such an august group who I believe is deeply interested in keeping peace in Europe.”

 

“Since this meeting is limited in time, allow me to give you the gist of my findings. Details, of course, are found in my numerous books and pamphlets that I wrote over the past ten years.”

 

“What is the plan of German expansion? The Germans contend not only that all those who are generally designated German by the rest of the world should be united but brought into the German fold.”

 

“The object of the German Government is to effect the whole or partial Germanization of countries inhabited by races that are not of German stock. In fact, I claim that the object of German expansion is to disregard all questions of racial and linguistic affinity and to absorb huge tracts of country, the possession of which is useful to advance Hohenzollern interests. In other words, Germany wishes to establish a world system whose leading and immediate feature is the creation of an empire stretching from the North Sea to the Persian Gulf!”

 

“That is a serious charge,” said General Joffre gravely.

 

“I have attempted by numerous lectures to give people in high places some notion of the peril of German expansion. I have not contented myself with warning my countrymen. I have also preached a cordial understanding between France and England.”

 

“My lectures attached enormous importance to German expansion as a decisive factor which has arisen in Germany and the Dual Monarchy of Austria-Hungary. It is part of a grand policy to extend the boundaries of both Powers. Please observe the map of Europe that I have placed upon the easel before you.”

 

“The offset to the German expansion is found in the Triple Entente of France, England and Russia."

 

“In particular, I feel that the Triple Entente can stymie German aspirations effectively only by encouraging the social and political development of the various Slavic peoples in the Balkan States. Such development has at its essence the interests of France, England and Russia.”

 

“To be more specific, there is a need for greater cooperation on our parts to parry the dangers of the near future. An obvious one is the building of the Berlin-to-Baghdad railway. I have concluded that from beginning to end, the logical and methodical spirit of Germany has gotten the better of your Triple Entente.”

 

Edward Grey started and looked around at his compatriots. Everyone had a disappointed look on his face.

“From my recent visits to heads of State in the Balkan nations, I constructed a general picture of the situation there. Since the Berlin-to-Baghdad railway will naturally run its tracks through the Balkans, the Triple Entente must reinforce Slavic resistance to any German intrusion through their ancient lands.”

 

“On the other hand, I consider it highly probable that the governments in Berlin and Vienna will not shrink from war for the purpose of undoing any attempts by the Entente to interfere with their plans to eventually reach the Persian Gulf. Germany wants to find a suitable way to avoid any blockade of the Mediterranean and the Suez Canal by England and France. Since the German navy cannot fight on land, it is, ergo, necessary to build a railroad to achieve important economic and military contacts in the Middle East and Asia. Soon, gentlemen, Germany will have its ‘road to India!’”

 

“The entire scheme of aggrandizement that the Kaiser has nourished for over twenty years is about to see the light of day. The first consideration obviously is to control the Balkans either by treaty or by force.”

 

“One might ask how we came to this point in history. Official German diplomats do not prepare such plans. Instead, members of the Alldeutscher Verband, the Pan-German Union and its secret service agents, run the show. Planning of German expansion stemmed from the fertile, but evil, mind of the late Baron Friedrich von Holstein of the German Foreign Office. His fingerprints are found on every document that described Germany’s expansion desires."

 

The professor stopped his lecture briefly in order to take a sip from a handy glass of water.

 

“The results of his evil activities,” the Professor continued, “are reported by various agents to Wilhelmstrasse at the offices of the German General Staff! At the same time, the reports reach the Kaiser’s private study, where he sits upon a hobbyhorse to enable himself to store up all technical means necessary for the achievement of his plan of domination.”

 

“For several years, discontent in the Balkans favored Wilhelm’s aims. Recently events have suddenly raised serious and unexpected obstacles to the execution of the Pan-German plans. Against the will of Berlin, Italy, the third member of the Triple Alliance conquered Libya, a protectorate of Turkey. Remember, gentlemen, Turkey and Germany are defacto allies! Recently, Greece, Montenegro, Servia and Bulgaria united against the Ottoman Empire and defeated the Turkish armies. Not long after, Romania, once a puppet state of Austria broke away. Today, Servia has emerged as an opponent of Germany’s plan to unite all Balkan Powers into a unified entity. But bold Servia, to Germany’s and Austria’s dismay, tends to side more and more with the Triple Entente of England, France and Russia.”

 

“Turkey, who has suffered many military defeats in recent years, can hardly put a quarter of a million men under arms. Aside from her ally Bulgaria, Turkey could face a million or more troops from Ottoman Empire haters: Servia, Greece, Montenegro and Romania.”

 

“I feel certain that Germany plans to intervene directly, along with its allies Austria and Italy, somewhere in the Balkans. The most likely battle will begin in Servia. I fear that a World War is rearing its calamitous head in the very near future. However, an ace in-the-hole for the Triple Entente is that millions of Balkan people seek a deliverance from the hateful yoke of Austria-Hungary, piloted by its doddering, old Emperor, Franz Josef. My conclusion is that if Austria-Hungary unleashes the dogs of war, it will lead to the end of the Dual Monarchy because Russia will eat it alive! Only German arms might save her.”

 

The group murmured their concurrence with the professor’s words.

 

Secretary Grey asked, “Isn’t it true, however, Monsieur Decaisne that Kaiser Wilhelm frequently tries to show himself friendly toward France? Would the threat of war be avoided if the Triple Entente had accepted the Emperor’s advances for a European Union?”

“Messieurs, it is undeniable that at certain moments, the Kaiser has tried to draw France and Russia into his own orbit, but it is precisely in order to insure the accomplishment of his German plan, which has been his main preoccupation ever since his accession. The smile of the Berlin tempter beguiles France and England. Germany wants to reduce France to a state of absolute slavery as has never been achieved in history, except as the result of a ruinous war. Need I add a warning to Britain? I say Delenda est Germanica!”

 

 Wiping sweat from his brow, the professor sat down heavily in his chair.

Kitchener stood up while puffing away on his meerschaum pipe. “Pukka Sahib!” he shouted. “A damn fine job Professor!”

“Yes, thank you Professor, for your insightful remarks,” added Edward Grey.

 

When Professor Decaisne left the conference room, Secretary Grey said with an air of urgency, “Let’s take a pee break, “N’est-ce pas?”

After the men relieved themselves, Generals Joffre, Kitchner and Rennenkampf stood around in the hallway admiring each other’s mustaches.

 

Kitchener looked at Rennenkampf and said in English, “That is a cracking real cocksucking mustache covering your ugly face!”

 

Rennenkampf looked confused. “Shto ehta znahchyeet?”

 

Joffre punched Kitchener in the arm. “He doesn’t understand English.” He turned to the Russian waving his hands in Gallic tradition, “Il a dit que vous est un home merveilleux a cause de votre moustache!”

 

Rennenkampf brushed the lower part of his mustache with the knuckle of his index finger. Then slowly from his lips emerged a very red tongue. He wiggled it for a moment.

 

Kitchner laughed. “Why the son-of-a-bitch understands English!”

 

All three roared their approval.

Kitchener tapped Joffre’s chest. “I wonder what Kaiser Wilhelm would say if he knew we had this meeting?”

The French general laughed. “It certainly won’t be Pokka Sahib!”

# 40

                                        

                                    Economists Meet in England 1913

 

Part Two

 

 

“My beloved Russia has just delivered itself from a terrible war with Japan,” said Leo Yamarov. “It cost us thousands of casualties, a loss of an entire naval fleet. Today, Russia still faces bankruptcy because of the expense of needless imperialism!”

Professor Entaille said, “It is true that the enormous increase of the mineral, agricultural, and manufacturing output of Germany leads to the search for more outlets for her newly accumulated wealth. We can put a dent in their efforts for foreign markets by closing their options in Morocco, Egypt, China, Middle East, and elsewhere. Actually we have made quite a bit of success in this endeavor.”
Coughing on some hot tea that went down the wrong way, Professor Yamarov cried out, “Remember that Germany was frustrated at the Algeciras Conference in 1906, in seeking a bigger slice of Africa! Our countries are the main culprits for putting roadblocks before German ambitions. We are all aware that Germany sought to widen its markets by getting a satisfactory agreement at the Algeciras conference. France ended up by gaining nearly complete control of her share of Morocco, the other half being controlled by Spain.” The Russian wiped his mouth with a wrinkled handkerchief and asked, “So, my wise friends, would not further blocking German economic hopes anger the Germans and drive them to commit acts of war?” Silence was the answer. Instead, the others poured themselves fresh cups of coffee.“

On the other hand,” Professor Lambner continued, “for want of markets German manufacture articles have actually cut their prices. This must make it are hard to pay wages. The manufacturers have not dared to stop the output of their goods for fear of angering workmen and bringing on labor strikes.”

Professor Yamarov posed a question, “I don’t quite understand why Great Britain is so frightened of little old Germany? The aggregate of British overseas investment is ten times that of Germany and so is its aggregate income.”

“You are absolutely correct, my friend,” said Professor Lambner. “In the Transvaal, the Cape, Central Africa, India, the East, in the islands of the Southern Seas, and in the Far Northwest, German and English businessmen each struggle to be first in selling their wares. As I have pointed out, Germany’s industrial progress approaches that of Great Britain. England is first in world commerce so that all world affairs are her concern. Germany exists more and more by her world commerce and less by her home industries. However, trade figures do not make a world power. Germany yearns to reach the status of a world power. German trade competition in the world’s markets and its success is due to its pursuit of profit and not nationalism. Will nationalism move to the front burner in Germany?”

“Mon Dieu! Let us hope not.”

“Because of commercial rivalries abroad, British industry is at low ebb as far back as1879. Commission after commission has studied the problem and concluded that the trouble was German competition.” Let me try to answer your question in greater detail, Professor Yamarov. You see, only a small percentage of British foreign and colonial investment is placed in Europe. The remaining ninety-six percent is invested where, as I have said, it could not suffer from war. This is a most important point! However, Great Britain has an Achilles’ heel! If  Germany strangles industry in Great Britain, it would be like killing the head of an octopus. The tentacles would eventually wither away. Napoleon understood this and sought ways of invading the British Isles. I fear that Germany may have the similar plans. Even if they cannot invade us physically, they can do so by forcing our iron and steel industries to close down. Iron and steel are the lifeblood of the British Isles!”

 His colleagues yawned and grunted in agreement.

“Should iron and steel industry in the British Isles fail and the efforts of Germany to build the Baghdad Railroad succeed, all of our commercial efforts could fall like a house of cards!”

 The Undersecretary lay back in his chair, his hands behind his head inquired, “Outside of war, what can we do?”

 Lambner waved his finger and said, “We must know what Germany plans to do. If we listen carefully, we will hear them say that they need a union that would draw neighboring nations into a single economic group. It would help lessen the distrust of Germany’s neighbors by a great civilizing enterprise. It would be a huge customs union, supported by Kaiser Wilhelm, and would prove to the world that the foundation of the German Empire has been a necessity and could be a genuine benefit to Europe. Imagine German power in thirty years! If they could demonstrate that the concentration of national forces had made them capable of solving great problems of civilization, then, we could no longer accuse then if merely increasing armaments, universal military service and an elaborate militarism that is sucking the marrow from the bones of all nations today. Then, they will become the new world leader.”

 “Isn’t that a bit too theoretical?” said Undersecretary Bacon.

"They believe that they could transform alliance treaties into an instrument to serve the interests of peace. Imagine, a customs organization open to all friendly nations. It is possible that states united by such a customs union could then readily enter into military conventions. France’s inclusion in the proposed customs union is a major objective of Germany.”

 Everyone took a moment to allow Victor Entaille to fill their glasses with booze.

 “Let me discuss for a moment,” continued Professor Lambner, “the economics of iron and steel, are the backbones of Britain, France, and Russia and, of course, Germany. In the last ten years, world steel production increased from fifty million tons annually to seventy five million tons. Guess which the European power leads in this. It is Germany! Pig iron, as you gentlemen know, is the first step in the making of steel. Mix coke with it and the miracle of steel occurs. Unfortunately, Great Britain’s pig iron output is only sixty percent of the German output. Our steel production is half that of the German.production! In 1875, Britain accounted for half of the world production of pig iron and forty percent of the world production of steel. By the new century, the British share of world production had fallen to thirty percent for pig iron and twenty-five percent for steel! Gentlemen, Britain’s iron and steel industry is on a downward spiral compared to Germany!”

 Yamarov stood up and shook his head a half-dozen times to limber up his stiff neck muscles. “It is unimaginable that the greatest power on earth has fallen on such hard times!”

“But, by Heaven,” said the Scotsman, “British exports of steel and steel products rose twenty-five percent since the turn of the century. Hurrah! However, wait just one minute, dear friends. Germany’s export of the steel and steel products rose nearly seventy-seven percent! That, gentlemen, is an ominous sign, don’t you agree?”

 Yamarov sipped his whisky. He pounded the table as he drank. “That is terrible news!”

“For years, our advantage over Europe,” said the Scotsman, with slightly slurred speech, “was that we possessed raw materials, production and transport far greater than most nations. It is now no longer sufficient to undersell continental iron makers at or near their own works.”

As Lambner seemed willing to continue on, Professor Entaille spoke up. “Pardonnez moi, mon ami, le professeur, mais je voudrais faire pisser!”

No one waited for a reply from the man from Edinburgh, but hurriedly left enmasse for the outdoor toilet. Farting sounds emitting from the loo, startled the farmwoman. “My Gawd!” she exclaimed. The Professor Entaille emerged, buttoning up his fly. Sensing the lady’s dismay, he said “Excusez-moi, madam!” She mumbled, “Damned Frogs! They are all alike!”

After a reasonable amount of conviviality, the group returned to the meeting room. They found several bottles of Scotch whisky on the table. The conference stalled until everyone filled their glasses and tasted the golden liquid. Lambner toasted the Triple Entente. Yamarov toasted the governments of England, France and Russia. Entaille slightly inebriated toasted the Follies Bergere. “Cheers!” said George Bacon. “Let us not lose our sense of purpose.”

 A refreshed Lambner took up where he left off. “Now, let me take us back to the tariff problem. Germany turned to economic protectionism in 1879 because they claimed cheap imports threatened her industries and agricultural interests. The dirty little secret, known to all, is that the grain duties proved an important source of revenue to fill German coffers. Its government has encouraged the growth of gigantic industries devoted to the manufacture of iron and steel. Germany believes that anyone visiting the vast Krupp works of Essen would admit that no government would venture on a policy that interferes with the prosperity of such establishments. The acquisition of the Lorraine ores and iron works by the German victory over France in 1871, and the creation of the German Empire heralded a burst of industrial activity never before seen in Europe! They keep their works going at full capacity by underselling Britain’s home markets. Germany’s trade expansion was helped by its geographical proximity to developing markets in central Europe.”

 The undersecretary asked, “What is behind Germany’s amazing success?”

 The professor looked surprised at what he considered a stupid question. Then, he exclaimed forcefully, “Cartels! Hundreds of them formed a single syndicate. By George, the syndicate assists Germany in becoming a formidable a competitor in world export markets. Does the Undersecretary comprehend my meaning?”

 Bacon shrugged his shoulders.

  “A thoroughgoing regulation of German production and sales means that foreign competition in its home market is limited. Tariffs protect their entire iron and steel industry. Today, about three hundred cartels exist throughout German industry. They are a monopoly of great magnitude. For example, its iron and steel industry is one huge cartel. The working of the cartels requires an assessment of each company’s works, carried out by a team of experts. The country has a number of districts and a proportion of the anticipated demand for the product concern allotted to each for distribution among the local works. Orders go to a central office. The orders go to various firms according to the established capacity of each. Payment goes to the central office, which reimburses the firms. Prices are fixed by mutual agreement among firms or by the central office.”

 “I am not surprised,” said Victor Entaille. “Those damned Boche are capable of every dirty trick in the book! They are a bunch of ‘Robber Barons’!”

 Undersecretary Bacon blanched. “I say, that is certainly not cricket!”

 Lambner disregarded the interruption. “I, along, with a delegation of British industrialists, recently visited six German steel works. Germany has a welfare scheme for its workers. Relations between management and workers appeared friendly. Working conditions are rather good. Strikes are almost unknown. Our delegation admired the splendid discipline maintained in the German works. Generally, we saw no slovenliness, undue haste, noises, and idling about. Most of the larger companies provided worker’s with insurance schemes for accident, sickness and pensions that helped produce a high degree of labor stability. Thus, workers feel secure in their jobs. I fear that the prevailing inferior quality in all our products is leading to a drastic reduction in manufacturer’s profit margin. We can no longer afford to neglect means by which we secure excellence of quality and economy of production. Free trade, though philosophically right for Britain, could mean that profit margins disappear and wages fall sharply. As it is, we British are committing economic suicide,”

“I can’t believe it,” said Leo.

 “Yes, colleagues,” exclaimed Lambner enunciating each syllable, “ec-o-nom-ic suicide! Frankly, I do not see tariff protection as the nation’s salvation, but neither is free trade an unchallengeable dogma. Britain is engaged in a war, an industrial war, to be sure. It is a silent war fraught with immense significance for our nation’s destiny.”

 For some reason, Professor Lambner began to sneeze violently. He held his handkerchief to his mouth for several minutes. As his colleagues looked on in astonishment, the sneezing ceased.

 The Scotsman shook his head. “Please excuse me. Must have been some dust. Do you think the Kaiser Willy is listening to my diatribe?”

 Everyone laughed at the jest.

 “So long as Great Britain retains command of the sea, she is likely to be in a better position than any other country to secure foreign ore. It is not impossible that a great British iron industry could be built up and maintained on foreign shores alone.”

 Undersecretary Bacon rubbed his chin and asked, “Is it possible that Germany will continue to supply us with iron and steel goods at a price below their costs of production?”

 “No!” replied the Scotsman testily as though fed up with a stupid pupil, “When the time is right, German prices will skyrocket and we shall repent our folly too late and when we are at their mercy! Failing successful pressure for government action, the British industry could attempt to reach an agreement with its competitors, but the terms are the trouble; there is no sentiment in international trading, the weakest comes off the worst. Great Britain is the weakest, because we open our doors wide and ruin our home trade. Everyone then has the chance to dump their surplus products in Britain’s home market.”

 Heads turned toward Leo Yamarov who shouted, “It is survival of the fittest! N’est-ce pas?”

 “You may very well be correct, Professor Yamarov,” said Lambner, his speech more slurred. “Consequence of intermittent employment has caused deterioration in the physical condition of our workmen. Workmen begin to loaf and find it hard to get back in the harness at the employer’s beck and call. Large unemployment could lead to the spread of socialism or worse in Britain. By the way, Undersecretary Bacon, have you visited our industrial workers lately?”

 George Bacon replied, “Yes, professor I have. I concluded that the boom in shipbuilding is extraordinary. New luxury ships are hitting the waves on a regular basis. Recently, our Admiralty has placed orders for three battleships. Shipbuilding is working at full capacity. Will this upsurge in production help solve the iron and steel problem?”

 Lambner folded his arms. “Such ups and downs in an industry are common in today’s world. You see, Undersecretary, in spite of the shipbuilding spike, the expansion of British industry in general is small. Several blast furnaces have shut down. A respected iron merchant firm in Glasgow just failed. More are teetering on the economic edge between profit and loss. I recently compared the progress of the British and German industries and concluded that the latter’s progress had been purchased at a price and manner alien to British philosophy. That without the vast system of cartels, its almost military-like production and distribution methods, and the organized fostering of export trade by countries, the German iron and steel industries could hardly have obtained their present status. Germany is going ahead because her manufacturers and merchants organize while Britain is almost blindly standing still because her manufacturers and merchants are not organized. We have no overall national industrial policy.”

 “Well, gentlemen,” said the Undersecretary, “I believe that this is a good time for us to enjoy a good, old English, country lunch. While doing so, you economists can express your succinct conclusions about today’s topics that I should bring back to Downing Street.”

 The secretary of the meeting, Lawrence Courtney left the room while the group stood up for a well-deserved stretch. Upon his return, the woman farmer and two men carried trays of hot food and drink.

 Bacon said a prayer taken from a harvest hymn, “…And keep us in His grace, and guide us when perplexed and save us from all ills in this world and the next. Amen!”

 After a half hour of enjoying their meal and bantering about mundane things, the Undersecretary asked for their economic opinions as far as the Triple Entente and Germany are concerned.

 Professor Lambner wiped his lipped with his napkin and offered to speak first.

 “Of course, my dear John,” said Undersecretary Bacon.

 This time without the benefit of notes, Lambner carefully phrased his remarks. “If Germany continues to grow economically and siphons off our foreign commerce, we will become her commercial serfs. I might also add that down the line, the United States will become the leading economic star. I fear that Britain will slowly, but surely, lose many of its dominions and its economic power to the degree that it will become a second rate industrial nation. Britain must commit herself to a strong defense against German economic pressure. That could include war!”

 For a moment, there was a general discussion of Lambner’s point of view.

 “Victor,” said the Undersecretary, “What are your conclusions?”

 Professor Entaille, passing his hand across his brow, said, “My firm conclusion today, mes amis, is that iron, steel, coal and chemicals are the driving forces in today’s economics. Tomorrow, oil will step into a position of worldwide dominance upon which all other industries will rely. Oil resources lie deep in wells not found in many parts of the British Empire. I foresee the oil wealthy nations such as those of the Middle East and the United States will control the direction of world economics. If France, Great Britain and Russia do not act quickly they will become subservient to the oil Powers. Germany has already made its move by beginning the construction of the Berlin-to-Baghdad railway. Kaiser Wilhelm’s trips to the Near East serve to be friend his nation with Arab countries. To date, France, Britain and Russia have not invested much capital in the project. However, I will say that France is now negotiating with Germany to gain a foothold in the railway. Economically, the Triple Entente that binds our three nations together could put a stranglehold on Germany’s cutthroat competition. If we fail, our three nations face a great depression! We must teach Germany a lesson by whatever means we possess. If it means war, then war it shall be!”

 “Thank you, Victor. Jolly well put!”

 The Undersecretary motioned to Professor Yamarov to share his thoughts with the group.

“Spahsseebah, dear gentlemen! I sincerely feel that Russia is the keystone of success the world over. We have only just begun to investigate our resources in every part of our widespread nation. Our Trans-Siberian railroad will allow us to bring raw materials to the hungry maws of our factories in days as opposed to the months it has taken. We need to seek more and more markets in Asia, Africa and North and South America. The Tsar, although a close relative to Kaiser Wilhelm, fears his Pan-German motives. We know that the Kaiser desires more Lebensraum and looks with a watering mouth eastward and, I suppose, eventually to Russia. If Germany can control markets maintaining its tariffs, Russia must look to France and Britain for protection against economic disaster. I submit that all of these economic issues we have discussed are not new. There is historical evidence that unfair economic practices existed since time immemorial. ‘There is no new thing under the sun!’ The Triple Entente is our strongest defense against German economic aggression.”

 The Undersecretary stood up and thanked each participant. “I am certain that the Prime Minister will appreciate your economic thoughts. I will explain to him that Britain and its allies, France and Russia are engaged in an industrial war, silent and peaceful, fraught with immense significance for our nations’ destinies. He is planning a meeting with industrial leaders within a few days where he will certainly share your conclusions to the group.” Thank you and God bless you all!”

 Before entering their waiting vehicles, several cigar-smoking members chatted while watching the tabby cat eagerly spraying a car tire. The Russian pointed to one windshield and exclaimed, “See, dear friends, a bird has shit on my automobile and the cat has pissed on the wheel! What more could happen to me? Is this perhaps an omen?”

Lawrence Courtney finished typing his notes of the meeting. He placed copies of the sheets into an attaché case. “All right Martin, give me your right arm.”

The courier extended his arm while Courtney chained the attaché case to his wrist.

 “Your train leaves Victoria Station at nine o’clock tonight. You can catch the ferry at

  Dover. It is a two-hour trip to Calais. An intelligence officer will meet you at the pier. He will share the code words with you. You will reply with your established response.”

 “I am ready to leave sir. What is the Intelligence officer’s name?”

“Oberstleutnant Richard Hentsch.”

From Donald Britton Conrad, "In the Service of God and Evil."

# 39

In the Service of Evil

           Economists Meet in England, 1913

Part One

 

  Along the gray wooden fence, several Guernsey cows stood contemplating the arrival of a half-dozen touring cars. Thinking the noisy vehicles brought them fresh hay the animals began to bellow.
Disappointed, when the automobiles disappeared behind a nearby fieldstone farmhouse, the cows silently continued their grass nibbling. A couple of frisky calves ran in the damp meadow jumping and clicking their heels.
  The thatched-roofed farmhouse was the main style found in Devonshire. In fact, it was for this reason that the men in dark suits felt most inconspicuous to prying eyes. A middle-aged woman clad in simple farm dress greeted them at the front door. Without ceremony, she led them into a large dining room the floors of which consisted of heavily oiled pine planks. The woman pointed to wall hooks on which the visitors deposited their hats and overcoats.
  Finding a variety of chair styles, the men seated themselves around an oblong table covered with green cloth and began quietly chatting amongst themselves in English and French. One person’s speech occasionally included distinct Russian idioms.
  Near the stone hearth lay a curled up, yellow tabby that seemed unperturbed by the strangers. One of the visitors leaned over the sleeping form and cooed, “Hello little kitty.” Receiving no reaction, the man returned to his comrades.
  A thin, golden sunbeam played upon a crystal bowl at the center of the table. The hostess who waited in an alcove went to the window and pulled down a ragged shade blocking outside light and possible spying eyes.
  After a few moments, a tall, smooth shaven, dark haired, rather suave gentleman entered and everyone stood up. He walked past each person and shook their hands while offering to each a few bon mots.
  “Good morning, honored professors of economics. Thank you for being here. I am George Bacon, Undersecretary for Commerce. My regular secretary has a severe case of influenza and is bedridden. The doctors fear he has taken a turn for the worse. I am concerned about him. My assistant this morning is Lawrence Courtney who will take notes of our proceedings. He speaks German, French, Russian and a half dozen other languages. Mr. Courtney has graciously volunteered to join us at my last minute request.”
  “The Prime Minister selected you gentlemen to attend today’s meeting because he believes you to be the most knowledgeable economists in England and Europe. I feel certain that each of you knows your colleagues here today. Just the same, for the record, today we have Professor John Lambner of the University of Edinburgh, Professor Victor Entaille of the Sorbonne in Paris, and Professor Leo Yamarov of Lumonosov University in Moscow.”
The guests stood up and patted each other on the back.
  With a slight Scottish intonation, Lambner said, “Good morning, everyone!”  “Bon jour!” laughed his French counterpart. Bowing deeply, the Russian exclaimed,  “Dobrahyeee ootrah!”
  “Now then, gentlemen, please be seated. The Prime Minister has requested your presence at this conference in Devonshire, and particularly in this out-of-the-way hamlet of Sticklepath, because of the top-secret nature of our conversations. The main topic of concern to us is what positive or negative effects do recent German economic successes have upon the relations among Great Britain, France and Russia? You are to feel free to express the results of your research as professionals and to answer any questions my government has to offer.
  “I jest a bit, but I trust that today’s discussion of the so-called ‘Dismal Science’ will lead us to conclusions that, for each of our country’s economic outlook, is not gloomy in the least. However, I warn you again that this meeting and its results are top secret. Are there any questions?”
  No one responded.
  “This session will begin in a few minutes. In the meantime, tea, coffee and biscuits will be available on the buffet at the end of the room. Cigars, cigarettes are within reach on this table. If you need to visit the lieu d’aisance, or as we Brits call it, the loo, one does not have to raise one’s hand to ask for permission. Simply rise and leave the room.”
  Everyone laughed.
  At that point, the dining room door opened and two uniformed guards proceeded to set the table with cups and saucers that had seen their best days. Two soldiers placed assorted sweet buns and two urns containing hot coffee and tea upon the buffet. Finished, they quickly left the meeting room.
  Rubbing his hands, the Undersecretary said, “I truly appreciate your kindness in leaving your very busy academic lives to spend a few hours with me. Right up front, I will tell you that my office requires the latest thoughts on economics. We need the input of England, France and Russia, as a team, so to speak, if we are to plan to meet our commercial strategies for the next decade.”
  “First off, Professor John Lambner will give us his outlook on current economics from the British point of view.”
  After lighting a cigar, Lambner reorganized several sheets of notepaper that lay before him. His large girth and puffed rosy cheeks gave him the appearance of a caricature of  “John Bull.” He announced that his study of European economics led him to one premise.
  “It is that each nation should be free to consolidate and build up its economic prosperity.”
  He blew several smoke rings while gathering his thoughts. “That is to say,” he continued, “the right of each nation to secure its fullest economic development compatible with the wealth of its soil and its industrial capacity. Yes, colleagues, this is a natural right.”
  “Let me begin today by stating that the aggregate of British overseas investment leads the world and is currently over ten billion pounds sterling. However, only four percent of  British investment is in Europe. The remaining ninety-six percent is where it cannot suffer from war. However, gentlemen, therein lies our ‘Achilles’ heel’ that will I soon
make clear to you.” Looking at each person, the Scotsman went on. “No nation, in pursuing its economic development, can progress without constantly expanding its relations with other nations. A good example of this is the United States who makes the prime goal of its foreign policy to create good relations with nations great and small.
  “Today, the world faces a growing system of nations protecting their domestic production by taxing imported goods. We know that when cheap goods are imported,  local manufacturers often cannot compete with them and cut back on their work force or go out of business.”
  “I am mainly concerned that today’s tariffs on imported goods, though beneficial to some, tend to inflame most nations. Tariffs are viewed by so-called ‘free-traders’ as commerce between nations upon a footing of mere tolerance that eventually turns to complete intolerance. Tariffs cause general instability and insecurity. Britain is a prime example of free trade. My fear is that tariffs against British goods could lead to
widespread British hostility and, God forbid, war!”
  Waving his hand, petite Professor Entaille agreed with the speaker’s point by reminding the group of the problems caused by tariffs throughout history. “How many small nations suffer the lack of economic growth because of the strangle hold bully nations have over them?”
  His colleague, Professor Yamarov, staring at his fingernails, nodded in agreement but also suggested that the group needed concrete examples to support Lambner’s hypothesis.
  “Of course, my dear professor,” the Scotsman replied. “You recall that about ten years ago Austria pursued a merciless tariff war against Servia. The Serbs sought relief  by concluding a commercial convention with Bulgaria to develop new channels for her foreign trade. It was the first time little Servia had resisted Austria’s long held commercial stranglehold on her.
  “Just a couple of years ago, in an abrupt counterstroke, Austria annexed the Slavic nation of Bosnia and Herzegovina. If we look at a map of Europe, we find that Austria brazenly bars Servia from gaining free access to a harbor on the Adriatic Sea.”
  “The tariff is ruinous to Servian trade which enrages the Serbs. In short, it put a stop to Servia’s dreams of expansion. From then on, the Serbs have made plans for their special brand of revanche against Austria. This is no secret.”
  The Frenchman and the Russian lit up cigars and were soon competing with each other by blowing smoke rings. 
  In spite of the interruption, Professor Lambner continued his discussion. “This mess really started at the Congress of Berlin in 1878, when Great Britain, France, Russia, Austria and Prussia agreed to the creation of the Balkan Kingdoms of Servia, Rumania, and Bulgaria. Since then, because of long standing hatred among these three groups of people, Europe has seen a number of wars in the Balkans The hateful specter of tariffs stood behind those disasters. Now the Balkan nations are constantly at each other’s  throats and may one day involve major Powers in a world war!”
  “Oui!” Professor Entaille agreed, pounding the desk. “There is nothing but trouble there! It is just one big cat fight!”
  Russian Professor Yamarov agreed. “Yes, the Congress’ action was publicized as a commercial decision, but behind it all was the military imprint of the European Powers."
  “Austria-Hungary,” explained Professor Entaille, “immediately forced commercial agreements on Bosnia and Herzegovina. It all went well until, guess what?”
  “I believe you suggest in your diplomatic Gallic way,” said Professor Lambner, “that Russia butted in when she sent agitators screaming ‘One Servia Now!’”
  “Ahem,” Yamarov coughed to gain attention. “Perhaps that is true.” he said in undisguised anger, “However, Let us remember that Russia resents Austria’s dastardly attempt to control the Slavic people in the Balkans. It is common knowledge that the dual-monarchy is in its last stages of decay. Not for noble reasons, Germany supports Austria’s aggression. No, the Kaiser needs allies to meet a potential threat by Russia to its eastern borders.”
  “What brings you to that conclusion?” said George Bacon.
  Yamarov used his napkin to dry his bitter tears. “We were tricked at Bjorko by a devious Kaiser Wilhelm who sought an alliance with Russia in hopes that it would deter France from its goal of revanche for the loss of Alsace-Lorraine to Germany in 1871. Nothing in the Bjorko treaty benefited Russia.”
  Again, Leo halted to control his emotion. “While Russia was involved in a struggle with Japan in 1905, Russia and German signed a commercial treaty that reduced a few duties on imports between the two nations. Russia now claims, and I certainly agree, that she got the short end of the stick and began to demand terms that are more favorable. Although Kaiser Wilhelm wasn’t about to budge on the changes, Germany feared
Russia’s improved army would soon enable Moscow to demand better terms. Until now Germany has played a waiting game.”
  Yamarov pounded the table before him in order to emphasize each point he made.  “The fact is,” he said, “The treaty was the price paid by us Russians for German neutrality in the war. The treaty, filled with a myriad of tariffs, drains Mother Russia of  millions of rubles every year. I claim it enormously enriches Germany’s people. The commercial treaty has led to an increase in poverty among our peasants.”
  “I hear that that several highly placed individuals,” said Entaille, “in the Russian government vow to make Germany suffer for her callous behavior. These agitators claim that the principle of give and take is not fairly applied. One chap, with whom I spoke, put it quite strongly that the treaty had reduced Russia to the role of Germany’s tributary!
  Yes or no, Leo?”
  The men stared at the Russian, whose body shifted back and forth, as he became more agitated. “The Russian press, inspired by the War Ministry, has begun to brag about the headway that the war department has made in reorganizing its imperial defenses. They
bluster that Russia will show the world that Muscovites are more formidable than the Germans think. The Russian Duma has voted large sums for the army and navy. It is a very dangerous time for all peaceful-thinking men. To the outsider, the Russian Bear may seem to plod slowly, but its plodding has created a revolution in commercial growth never before seen in Europe!”
  Professor Yamarov chuckled, “I don’t want to brag, gentlemen, but in spite of our war with Japan in 1905, Russian industrial production made a miraculous advance. Our large operating reserves of oil, especially in the Baku fields, produced five hundred million gallons last year. Pig iron has increased ten times. Coal output increased thirty percent. French investments and loans have helped Russia build new steel mills and open new oil fields! Viva la France!” Undersecretary Bacon asked the Russian, “How much has France invested in your country?”
  Professor Yamarov replied effusively, “This is an amazing tale! French capital investment in Russia amounted to ten billion francs. This compared to France’s total thirty billion francs invested elsewhere. France is Russia best partner! N’est-ce pas?
“Our Minister of Finance, Sergei Witte, brilliantly uses French investments for a program to expand Russian railways and in the past decade has expanded our railroad mileage by thirty percent.”
  Professor Lambner said, “Then, I am at a loss to explain why any country with a high level of economic success would risk war. The odds are that war could cost more than it is worth.”
  “Thank you, Leo,” said the Undersecretary, “for your acute analysis.” He then turned to the French economist.
  “Now, Professor Entaille, will you please tell us about the French economic activities that affect and are affected by Germany?
  “I will be delighted to do so, monsieur l’ Undersecretary!”
  The professor inclined his head and placed his hands together, fingertip to fingertip.
  “The French believe that a nation to become economically great must continually engage in a race for markets and spheres of influence. Thus, France built up a colonial empire whose growth the Germans envy.
  "Credit must be given to our French leaders. Since the debacle of 1871, when Germany defeated us and grabbed our beloved Alsace-Lorraine, France’s economic recovery is miraculous. She hoarded her sources and was soon able to make loans to Russia. Our abundant financial aid led to an alliance with Russia. Gentlemen, we have financed Russian railways, Russian roads, and Russian armaments to what purpose?”
  Professor Yamarov clapped his hands and laughed, “Dah! It is probably to gain Russia’s friendship and to put her more deeply into debt!”
  “Yes, that is true,” chuckled Professor Entaille. “France has loaned her more than ten billion francs. It was a great risk, but in the end is worth it. At the same time, France does not want to lose her savings invested in Russia. To be honest, gentlemen, we fear the Tsar, who with a single stroke of the pen, can cancel Russia’s indebtedness. Both countries are fully affiliated financially.”
  Pointing to his map of Europe, Entaille explained, “Frances’s colonial policy is one solely of competition, not of war. She owes her success to the efforts of her merchants who stress diplomacy in dealing with local businesses.”
  The professor paused to gather his thoughts. “For France, it is more than revanche. France needs ores from Lorraine. We are short of native coking coal and that is a severe handicap to the French iron and steel industry. A number of the largest French steel  works were lost to Germany along with large deposits of our iron ore. Ainsi, mes amis, France is obliged to import much German coke at controlled prices. If we don’t act now, we will become the economic slaves of Kaiser Wilhelm! Thus, step one is a close understanding among France, Britain and Russia to stifle German monopolies.”
  “Yet, Gentlemen, in spite of our loss of the Lorraine iron fields France increased its production of pig iron and steel. We French know what we are doing!"
  The Frenchman poured himself a glass of whisky and rested his case. The other members followed suit.
  Undersecretary Bacon nodded his head in approval. He asked, “What about Great Britain and Germany?”
  Professor Lambner, rubbing his eyes, said, “I believe that an accumulation of unfortunate events and commercial envy has brought Britain and Germany to loggerheads. We all remember when Germany was a conglomerate of small states, not one which economically threatened Great Britain. We would be happy if the map again reflected the three hundred or so tiny states that once made up Germany.”
  “Besides, a sentimental yearning for national unity, two factors operated together to mold the many petty German states into a united nation. The spectacular part played by the Prussian army and the work of very clever capitalists, did the trick. Railways now unite the states together with bonds of steel. The Zollverein, a very powerful tariff league, was most instrumental in preparing the way for political union by 1871.”
  “I often think how similar the history of the German unification is with that of the United States. Since their unifications, both have become economic powerhouses. After the defeat of France in 1871, and after the unification of the German Empire, the influence of two elements—the landed aristocracy and the wealthy businesses—were manifested in their demands for a protective tariff. The former demanded a high tariff on imported foodstuffs; the latter wanted a tariff to keep foreign manufactures from entering into competition with German articles in the home market.”
  The tabby cat arose from its resting place by the fireplace and stretched himself. He calmly sauntered over to the door and meowed softly. Yamarov stood up and walked over to the door to let the small figure depart. The cat rubbed the Russian’s leg and then quickly disappeared.
  Lambner quipped, “That cat most likely grew tired of our pontifications!   
  “At any rate, German genius for applying natural science to industry coupled with German thoroughness keeps business popping. Mills and mines multiplied wealth. Huge ocean steamships carry German wares to the four corners of the earth.
  “In order to continue the trend, German manufacturers required a broader foreign market. By the turn of the century most of German trade was overseas
  "German economists argue that the well being of Germany requires the sea be kept open to German merchant marine. Much of its population is dependent for their livelihood and work upon unrestricted imports and exports by water. Freedom of the sea and vigorous competition in the world’s markets are questions of life and death for Germany, as it is for Britain. To the surprise of everyone, in twenty-five years the German merchant marine is beginning to overtake British shipping. German businessmen recognize that the more ships that Germany possesses, the greater chance they have of shipping goods everywhere in the world!”
  “So what? You may ask?” said Lambner pointing at Secretary Bacon. “To protect its merchant marine there is a crying need for a large German navy! Is this not one of my Prime Minister’s major questions about Germany? The Kaiser and Admiral Tirpitz seek to double the fleet size. It is a navy that Great Britain is beginning to fear and seeks to offset it by building bigger and better battleships. Have you gentlemen seen any of  Britain’s new battleships called ‘Dreadnoughts’? I am told that they have firepower enough to sink any enemy warship in existence!”
  Professor Yamarov interjected, “Yes, it is for we Russians just the same! We, too, need markets and we, too, need a large navy to support our enterprises.”
  Professor Lambner said, “I recently spoke to a few British industrialists who agreed that we better wakeup and emulate German enterprise and industry in manufacturing or we might be outstripped in the commerce race.” 
  “The German iron industry, because of its improved methods, has obtained a great part of England’s trade. Today, German machinery is more efficient than that of the English. I believe we British have to retool. It will be expensive, but our future depends upon it. England abandoned the field of electricity and ceded it to America and Germany. German dyestuffs prevail. German proprietary medicines are number one in the world market. Just look at the Bayer industries. They monopolize everything from aspirin to hair gloss!”
  “Now, my fellow economists, how does a nation prosper? The answer, of course, is by trade, trade, and more trade. Certainly not by sitting on our derrieres and bragging about how the sun never sets on the British Empire! Trade in Great Britain in the last thirty-five years has risen steadily. Whoopee! However, German trade is five times what it was in 1870. This figure, gentlemen, is very serious one for a commercial nation like England!”
  `“Therefore, Britain faces the alternative of either getting better and more efficient habits of work from its employees, new and improved machinery, and better education, or, I say this in all sincerity, fighting the Germans militarily!”
  Professor Entaille said, “No! No! My dear colleague! God forbid it! War would bankrupt the British Isles. Come to think of it, France and Russia as well!”
  “I agree wholeheartedly with you, Professor Entaille,” said the Scotsman. “There is no such thing as a little war. We face a world war! We might get lucky and stop the Germans in their tracks with the united armies of France, Russia, Italy, Great Britain and,  if needed, the United States. Or, dear colleagues, we could also see the end of life in Europe, as we know it. Its a throw of the dice, I say! In my humble opinion, we Britons do not fear German militarism at this time, but only German trade and commerce. I am not a general, so I cannot comment on things of war."


From Donald Britton Conrad, "In the Service of God and Evil."



# 38

                         MADE IN GERMANY

 NOTE: This 1896 letter is fluent in the speech of that time period. The writer wants to point out how important Germany has become to the world economy.

 

You will find that the material, of some of your own clothes, was probably woven in Germany.
Still more probable are German importations of all sorts.
Some of the magnificent mantles and jackets that maids wear on their Sundays out are German-made and German sold.

Toys, the dolls, and the fairy books which your children maltreat in the nursery are made in Germany.
The material of your favorite (patriotic) newspaper are prepared in Germany.

The fateful mark will greet you at every turn, from the piano in
your drawing-room to the mug on your kitchen dresser, emblazoned
though it be, with the legend: "A Present from London".
Descend to your domestic depths,  and you shall find your very
drain-pipes German made.
You pick out of the fire place grate the paper wrappings from a
book consignment, and they also are " Made in Germany."
You stuff them into the fire, and reflect that the poker in your
hand was forged in Germany.
As you rise from your hearthrug you knock over an ornament
on your mantle-piece; picking up the pieces you read, on the bit
that formed the base, " Manufactured in Germany."

And you jot your dismal reflections down with a pencil that
was made in Germany.
At midnight your wife comes home from an opera which was
made in Germany, has been here enacted by singers, conductor
and players made in Germany, with the aid of instruments and
sheets of music made in Germany.
You go to bed, and glare wrathfully at a text on the wall; it is
illuminated with an English village church, and it was
"Printed in Germany."

If you are imaginative and dyspeptic, you drop off to sleep only
to dream that St. Peter (with a duly stamped halo round his head
and a bunch of keys from the Rhineland) has refused you admission
into Paradise, because you bear not the Mark of the Beast upon your
forehead, and are not of German make.
But you console yourself with the thought that it was only a Bierhaus
Paradise any way ; and you are awakened in the morning by the
sonorous brass of a German band.

Is this picture exaggerated ?
Bear with me, while I tabulate a few figures from the Official
Returns of Her Majesty's Custom House, where, at any rate,
fancy and exaggeration have no play.

In 1895 Germany sent us linen manufactures to the value of
£91,257 ; cotton manufactures to the value of £536,471 ;
embroidery and needlework to the value of £11,309;
leather gloves to the value of £27,934 (six times the amount
imported six years earlier) ; and woolen manufactures to the
value of £1,016,694.

Despite the exceeding cheapness of toys, the value of
German-made playthings for English nurseries amounted,
in 1895, to £459,944.
In the same year Germany sent us books to the value of £37,218,
and paper to the value of £586,835. For musical instruments we
paid her as much as £563,018; for china and earthenware £216,876;
for prints, engravings, and photographs, £111,825.

This recital of the moneys which in one year have come out of
John Bull's pocket for the purchase of his German-made house-
hold goods is, I submit disproof enough of any charge of
alarmism.
For these articles, it must be remembered, are not like oranges and
guano.
They are not products which we must either import or lack :
 — they all belong to the category of English manufactures, the
most important of them, indeed, being articles in the preparation of
which Great Britain is held pre-eminent.
The total value of manufactured goods imported into the United
Kingdom by Germany rose from £16,629,987 in 1883 to £21,632,614
in 1893 : an increase of 30.08 percent.

A few figures more.
I said that a little while since Germany was a large importer of manufactures needed for her own consumption.
Take as a first example, the iron and steel industries.
In 1878 the make of pig-iron in Germany was 2,147,000 tons;
in 1895 it was 5,788,000 tons.
Germany made in 1878: 492,512 tons of steel; in 1894
3,617,000 tons.

Her import and export statistics tell the same tale.
In 1880 her iron exports only totaled 1,301,000
tons; in 1894; they stood at 2,008,000 tons. (In the same
period England's exports of iron had decreased.)
In the matter of cottons Germany exported 14,666,100 kilos in 1883.
In 1893: 33,350,800 kilos; an increase of more than
127 per cent. (England's increase in the same period was only
about 21 per cent.)
Shipping returns are a pretty sure test of commercial prosperity:
it is therefore significant that in 1893 the total tonnage of the
sea-going ships which touched at Hamburg for the first time left
Liverpool behind, and in 1894 Hamburg cut her record of the year
before.

E.E. Williams "Made in Germany." 1896

#37

The Rapid Growth of Germany, 1872-1914

The growth of pig iron output was dramatic.
Britain went from 1.3 million tons in 1840 to 6.7 million in 1870 and 10.4 in 1913.
The US started behind, but grew faster, with .32 million tons in 1870, 1,74 million in 1870, and 31.5 in 1913.
Germany went from .19 million tons in 1850 to 1.56 in 1871 and 19.3 in 1913.
France, Belgium, Austria-Hungary, and Russia, combined, went from 2.2 million tons in 1870 to 14.1 million tons in 1913, on the eve of the World War. 

Industrial Revolution

 

 

Before 1850 Germany lagged behind the leaders in industrial development, Britain, France and Belgium.

By midcentury, however, the German states were catching up, and by 1900 Germany was a world leader in industrialization, along with Britain and the United States.

In 1800, Germany's social structure was poorly suited to any kind of social or industrial development.
Domination by France during the era of the French Revolution (1790s to 1815), produced important institutional reforms, including the abolition of feudal restrictions on the sale of large landed estates, the reduction of the power of the guilds in the cities, and the introduction of a new, more efficient commercial law.

Nevertheless, traditionalism remained strong in most of Germany.
 Until midcentury, the guilds, the landed aristocracy, the churches, and the government bureaucracies had so many rules and restrictions that entrepreneurship was held in low esteem, and given little opportunity to develop.
From the 1830s and 1840s, Prussia, Saxony, and other states reorganized agriculture, introducing sugar beets, turnips, and potatoes, yielding a higher level of food production that enabled a surplus rural population to move to industrial areas.
The beginnings of the industrial revolution in Germany came in the textile industry, and was facilitated by eliminating tariff barriers through the Zollverein, starting in 1834.
The takeoff stage of economic development came with the railroad revolution in the 1840s, which opened up new markets for local products, created a pool of middle manager, increased the demand for engineers, architects and skilled machinists and stimulated investments in coal and iron.

The political decisions about the economy of Prussia (and after 1871 all Germany) were largely controlled by a coalition of "rye and iron", that is the Junker landowners of the east and the heavy industry of the west.

 

 

Regions

 

 

 

The north German states were for the most part richer in natural resources than the southern states.
They had vast agricultural tracts from Schleswig-Holstein in the west through Prussia in the east.
They also had coal and iron in the Ruhr Valley.

Through the practice of primogeniture, widely followed in northern Germany, large estates and fortunes grew.
So did close relations between their owners and local as well as national governments.

The south German states were relatively poor in natural resources and those Germans therefore engaged more often in small economic enterprises.
They also had no primogeniture rule but subdivided the land among several offspring, leading those offspring to remain in their native towns but not fully able to support themselves from their small parcels of land.
The south German states, therefore, fostered cottage industries, crafts, and a more independent and self-reliant spirit less closely linked to the government.

Coal

 

 

 

Historical coalfields of Western Germany, Belgium, The Netherlands and Northern France

The first important mines appeared in the 1750s, in the valleys of the rivers Ruhr, Inde and Wurm where coal seams outcropped and horizontal mining was possible.
In 1782 the Krupp family began operations near Essen.
After 1815 entrepreneurs in the Ruhr Area, which then became part of Prussia took advantage of the tariff zone (Zollverein) to open new mines and associated iron smelters.

New railroads were built by British engineers around 1850.
 Numerous small industrial centres sprang up, focused on ironworks, using local coal.
The iron and steel works typically bought mines, and erected coking ovens to supply their own requirements in coke and gas.
 These integrated coal-iron firms ("Huettenzechen") became numerous after 1854; after 1900 they became mixed firms called "Konzern.
"
The average output of a mine in 1850 was about 8,500 short tons; its employment about 64.
By 1900, the average mine's output had risen to 280,000 and the employment to about 1,400.
Total Ruhr coal output rose from 2.0 million short tons in 1850 to 22 in 1880, 60 in 1900, and 114 in 1913, on the verge of war.
In 1932 output was down to 73 million short tons, growing to 130 in 1940. Output peaked in 1957 (at 123 million), declining to 78 million short tons in 1974.
End of 2010 five coal mines were producing in Germany.

The miners in the Ruhr region were divided by ethnicity (with Germans and Poles) and religion (Protestants and Catholics).
Mobility in and out of the mining camps to nearby industrial areas was high. The miners split into several unions, with an affiliation to a political party. As a result the socialist union (affiliated with the Social Democratic Party) competed with Catholic and Communist unions until 1933, when the Nazis took over all of them.
After 1945 the socialists came to the fore.

 

 

Banks and Cartels

 

 

 

German banks played central roles in financing German industry.
Different banks formed cartels in different industries.
Cartel contracts were accepted as legal and binding by German courts although they were held to be illegal in Britain and the United States.

The process of cartelization began slowly, but the cartel movement took hold after 1873 in the economic depression that followed the post unification speculative bubble.
It began in heavy industry and spread throughout other industries.
 By 1900 there were 275 cartels in operation; by 1908, over 500.
By some estimates, different cartel arrangements may have numbered in the thousands at different times, but many German companies stayed outside the cartels because they did not welcome the restrictions that membership imposed.

The government played a powerful role in the industrialization of the German Empire founded by Otto von Bismarck in 1871 during a period known as the Second Industrial Revolution.
It supported not only heavy industry but also crafts and trades because it wanted to maintain prosperity in all parts of the empire.
Even where the national government did not act, the highly autonomous regional and local governments supported their own industries.
Each state tried to be as self-sufficient as possible.

Despite the several ups and downs of prosperity and depression that marked the first decades of the German Empire, the ultimate wealth of the empire proved immense.
German aristocrats, landowners, bankers, and producers created what might be termed the first German economic miracle, the turn-of-the-century surge in German industry and commerce during which bankers, industrialists, mercantilists, the military, and the monarchy joined forces.

Class and the Welfare State

 

 

 

 

Germany's middle class, based in the cities, grew exponentially, but it never gained the political power it had in France, Britain or the United States.

The Association of German Women's Organizations (BDF) was established in 1894 to encompass the proliferating women's organizations that had sprung up since the 1860s.
From the beginning the BDF was a bourgeois organization, its members working toward equality with men in such areas as education, financial opportunities, and political life.
Working-class women were not welcome; they were organized by the Socialists.

Bismarck built on a tradition of welfare programs in Prussia and Saxony that began as early as in the 1840s.
In the 1880s he introduced old age pensions, accident insurance, medical care and unemployment insurance that formed the basis of the modern European welfare state.
His paternalistic programs won the support of German industry because its goals were to win the support of the working classes for the Empire and reduce the outflow of immigrants to America, where wages were higher, but welfare did not exist.

Bismarck further won the support of both industry and skilled workers by his high tariff policies, which protected profits and wages from American competition, although they alienated the liberal intellectuals who wanted free trade.

 

 

 

Railways

 

Political disunity of three dozen states and a pervasive conservatism made it difficult to build railways in the 1830s.
However, by the 1840s, trunk lines did link the major cities; each German state was responsible for the lines within its own borders.

Economist Friedrich List summed up the advantages to be derived from the development of the railway system in 1841:

• as a means of national defense, it facilitates the concentration, distribution and direction of the army.
• It is a means to the improvement of the culture of the nation…. It brings talent, knowledge and skill of every kind readily to market.
• It secures the community against dearth and famine, and against excessive fluctuation in the prices of the necessaries of life.
• It promotes the spirit of the nation, as it has a tendency to destroy the Philistine spirit arising from isolation and provincial prejudice and vanity. It binds nations by ligaments, and promotes an interchange of food and of commodities, thus making it feel to be a unit. The iron rails become a nerve system, which, on the one hand, strengthens public opinion, and, on the other hand, strengthens the power of the state for police and governmental purposes.

Lacking a technological base at first, the Germans imported their engineering and hardware from Britain, but quickly learned the skills needed to operate and expand the railways.
In many cities, the new railway shops were the centres of technological awareness and training, so that by 1850, Germany was self-sufficient in meeting the demands of railroad construction, and the railways were a major impetus for the growth of the new steel industry.
Observers found that even as late as 1890, their engineering was inferior to Britain’s.

However, German unification in 1870 stimulated consolidation, nationalization into state-owned companies, and further rapid growth.

 Unlike the situation in France, the goal was support of industrialization, and so heavy lines crisscrossed the Ruhr and other industrial districts, and provided good connections to the major ports of Hamburg and Bremen.

By 1880, Germany had 9,400 locomotives pulling 43,000 passengers and 30,000 tons of freight, and pulled ahead of France.

Agriculture

Perkins (1981) argues that more important than Bismarck's new tariff on imported grain was the introduction of the sugar beet as a primary crop. Farmers quickly abandoned traditional, inefficient practices for modern new methods, including use of new fertilizers and new tools.
The knowledge and tools gained from the intensive farming of sugar and other root crops made Germany the most efficient agricultural producer in Europe by 1914.
Even so farms were small in size, and women did much of the field work. An unintended consequence was the increased dependence on migratory, especially foreign, labor.

 

 

 

Chemicals

The BASF-chemical factories in Ludwigshafen, Germany, 1881

The economy continued to industrialize and urbanize, with heavy industry (coal and steel especially) becoming important in the Ruhr, and manufacturing growing in the cities, the Ruhr, and Silesia.

Based on its leadership in chemical research in the universities and industrial laboratories, Germany became dominant in the world's chemical industry in the late 19th century.

Big businesses such as BASF and Bayer led the way in their production and distribution of artificial dyes and pharmaceuticals during the Wilhelmine era, leading to the German monopolisation of the global chemicals market at 90 percent of the entire share of international volumes of trade in chemical products by 1914.

 

Steel

 

 

Germany became Europe's leading steel-producing nations in the late 19th century, thanks in large part to the protection from American and British competition afforded by tariffs and cartels.
The leading firm was "Friedrich Krupp AG Hoesch-Krupp" run by the Krupp family The "German Steel Federation" was established in 1874.

 

 

20th century

The merger of four major firms into the Vereinigte Stahlwerke (United Steel Works) in 1926 was modeled on the U.S. Steel corporation in the U.S. The goal was to move beyond the limitations of the old cartel system by incorporating advances simultaneously inside a single corporation.
The new company emphasized rationalization of management structures and modernization of the technology; it employed a multi-divisional structure and used return on investment as its measure of success.

By 1913 American and German exports dominated the world steel market, as Britain slipped to third place.

In machinery, iron and steel and other industries, German firms avoided cut-throat competition and instead relied on trade associations.

Germany was a world leader because of its prevailing "corporatist mentality", its strong bureaucratic tradition, and the encouragement of the government.
These associations regulated competition and allowed small firms to function in the shadow of much larger companies.

Thanks to wiki!