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by the Boers faithful to the British Empire; then, quite lately, of Kamerun. Finally, we are already fighting with the odds in our favor on the great lakes of Deutsch Ost-Afrika. The last blow is about to be delivered to the German possessions in Africa. Those of Oceania of little value, moreover-are either already conquered (Samoa, Carolines, New Guinea) or will not offer any serious resistance. And there is, in all that, a great dream which has vanished-one of the greatest dreams of Pan-Germanism.

III. The Blockade and German Commerce

One of the effects none the least important of the blockade is the wiping out of the German maritime commerce. We know that the merchant fleet of Germany was the object of the most attentive care of the Emperor William. Whilst that in 1890 amounted to scarcely 656,000 tons, that number had increased in 1914 to 3,072,000 for the vessels alone of more than 100 tons; in 25 years it had more than quadrupled. Now, since the war, by the fact alone that the Allies are masters of the sea, this enormous capital is non-productive. A great number of unarmed steamers have been captured; many othersnearly 600-have been obliged to take refuge in neutral ports, where they will remain interned until the end of the war; the remainder encumber the ports of Hamburg, Bremen, Emden. The maintenance of this inactive fleet is extremely onerous. By the avowal of the German economists, the large firms, as well as the secondary companies, are ruined for a long time, crushed as they are by expenses which the profits of the traffic no longer cover. With them tumble a crowd of banks, of associations, loan institutions connected in a more or less immediate manner with the industries of commercial armament.

By the same stroke, the foreign commerce is paralyzed. In 1913 the amount of the exportations of Germany was estimated at 10 milliards of marks. Since the war, Germany has prudently abstained from publishing any

statistics. But we know that, of the 10 milliards of exportations in 1913, 2,400,000,000 were for destination to countries across the sea; 1,438,000,000 for destination to Great Britain. If to these figures is added the amount of the merchandise exported to France, Russia, Portugal, Italy and Belgium-perhaps 2,665,000,000 in all-we see that the foreign commerce of Germany has had to fall from .10 to 3 milliards about; that is to say that it has dropped two-thirds. Again, it must be added that an important part of German exportation for destination to Austria-Hungary concerns raw material of foreign origin which simply passed in transitu through Germany. We can thereby measure the enormous importance of the markets which German commerce thus loses. And the longer the war lasts, the more chances there are that this loss shall become definitive, for her former customers are getting the habit of supplying themselves elsewhere.

But the figure of the importations has not lessened in the same proportion. It has been calculated that, during the first year of the war, Germany in all likelihood imported from 7 to 8 milliards of francs in merchandise of all kinds (in place of 13 milliards and a half in 1913). In order to face this foreign deficit of at least 5 milliards, without exporting too much gold, Germany has realized 1,200 to 1,500 millions of francs of foreign securities, utilized the old credits which she had at her disposal in neutral countries or made arrangements for payment in gold at short settlement. But these resources are near being exhausted and the Empire, in order to pay for the contraband merchandise which it receives, will have to strip itself of its last reserve of gold.

Thus the loss, more and more accentuated, which the mark undergoes in exchange is explained. On the 16th February, in Amsterdam, the 100 marks were quoted at 42.6 florins in place of 61 or 62, the normal rate. At Zurich the mark is worth 0 fr. 96 in place of 1 fr. 25, which is a drop of 24 per cent. The Swiss banks refuse, moreover, to accept more than 5,000 marks in bills.

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Copyright Underwood and Underwood THE SHELL OF A STANDARD SHIP UNDER CONSTRUCTION IN ALLIED LANDS.

IV. Diverse Consequences of the Blockade

This diminution of importations deprives Germany of industrial resources which are indispensable to the maintenance of her economic life. This commercial fleet, destroyed or paralyzed since the beginning of the war, was the essential element of the importer, of the manufacturer, of the mills and works, bringing to them raw material and material partly finished: minerals, metals, cotton threads, wools, textiles of every kind, leather, raw hides, tallow, coal, petroleum, essences, rubber. In every case the cost of rare materials of this nature which still succeed in entering Germany is necessarily increased. It is clear that, under these conditions, certain industries are hard hit. For want of leather, shoemaking is almost stopped. Since the month of September, 1915, the cotton factories have been in operation only a few days each week. There are very few metallurgical works which are in a condition to operate, because they do not have the raw material which is indispensable to them.

This reduction of the industrial production, in conjunction with the insufficiency of the arrivals from foreign countries, has had the effect of raising the cost of living very sensibly. For a long time, it is true, the possible effects of this increase in price were exaggerated. Germany was represented as on the eve of succumbing to famine. We have given up this illusion. But it should not be necessary to fall into the opposite exaggeration. It is certain that the prices continue to increase, and in proportions which disturb the German government. By comparing a week of February, 1916, with the exactly corresponding week of February, 1915, we see, from one year to another, for the different kinds of meat, increases of 81, 97, 96, 100, 90, 95 per cent; of 67 per cent for eggs, of 95 per cent for lard. It is known how much butter and all the fats have increased in price. The bread ration which had been raised to 225 grams has been reduced to 200 grams in January last. In order to remedy the situation,

maximum prices were fixed; but the products thus tariffed disappear from the markets.

Certainly, we must not imagine that this misery, however great it be, is sufficient to force Germany to make the avowal of her defeat. But it is not less evident that a people which is suffering to this degree cannot keep its power of resistance intact. And this uneasiness cannot but increase following the steps which the Allies have decided to take to render the maritime blockade of Germany still more efficacious.

V. The Blockade and Austria

Austria is suffering still more than the great Empire to which she is attached, from the economic usury to which the Allies are submitting their adversaries. Although momentarily she has been able to draw from the Balkan peninsula some food supplies which Germany has very bitterly disputed with her, she is in a still more critical situation than her powerful ally. The cost of food for a working family of Budapest, for example, has increased, since August, 1914, by 250 per cent. In Vienna it is almost 220 to 230 per cent. The increase in price of clothing, linen and footwear runs from 50 to 150 per cent. Very little oats and forage for the horses; little petroleum, in spite of the retaking of Galicia; still less rubber. The arrivals from Bremen, which was (Trieste being hermetically blocked) the principal market for provisioning Austria, no longer reach Vienna, and a number of essential industries-woolen and cotton factories, for example-are maintained only by drawing on their reserves of capital and imposing idleness of three days each week on their workers. Finally, in importation, the value of the raw materials necessary to industry has shrunk 78 per cent from 1914 to 1915, whilst in the matter of exportation the value of the finished products fell by 60 per cent and that of partly finished products 24 per

cent.

Foreign exchange is still worse than German exchange. In Switzerland the "crown" (1 fr.

.05 about) lost 42 per cent in the first week of January, 1916. In Holland the loss is still much more accentuated (49 per cent in the same period); in Scandinavia and the United. States the crown is, as it were, no longer quoted. It is impossible, moreover, to know what the gold reserve of the Austro-Hungarian Imperial Bank may be: the publication of balance sheets has been prohibited from the beginning. This reserve in any case is not greater than 100 millions of crowns. In return, there is in circulation thirteen milliards of bank notes. These facts alone justify the profound mistrust of the foreign markets. Austria-Hungary is virtually in a state of bankruptcy.

Conclusion

Germany has often boasted of having territorial pledges from us which would permit her, when the hour for peace struck, to dictate her will to the Allies. Does she not occupy a notable portion of Russian territory and some French Departments?

But she forgets that, at present and without prejudging anything of what the future will produce, the Allies, on their side, have heavy mortgages against her.

First there are the colonies which we have taken from her. In Africa alone, according to the official estimates of the German government, the conquests which we have thus made comprise not less than 1,712,300 square kilometres (87,200 for Togoland, 790,000 for Kamerun, 835,100 for South-West Africa). That is almost exactly the total surface of Germany, of Austria-Hungary and of France.

Then there is the sea, which, yesterday, Germany crowded with her fleets, war fleets and merchant ships, and from which, to-day, she is completely chased; there is, consequently, the embargo put on her foreign commerce, on the enormous marine which was its instrument, on the industries which supported it, as well as on those which its mission was to maintain. And this sequestration of German commerce will last as long as it pleases England to make it last. Whatever may be the military events of the continental war, as long as the English navy keeps its superiority it will be able, by its strength alone, to prohibit Germany's access to the sea and to reduce her to live on her own resources.

Thus the Allies are holding pledges, which are considerable: the German colonies, the foreign commerce of Germany and all the industries which depend upon it.

Industrial China

In China there are 6,435 miles of railway open to traffic; 2,349 miles are foreign owned and controlled; 3,680 are state owned, and 406 miles are owned by private companies. 1,629 miles of road are under construction, and loans are negotiated for, but work is not yet commenced on 7,425 more miles.

There are 25,000 factories that employ 400,000 men and 150,000 women. These factories are nearly all on the seaboard and do not inIclude some hundreds of thousands little home workshops that produce most of the materials for home consumption. There are thirty factories where aerated water is bottled; there are fifteen firms in the production of egg albumen for export; 19 breweries, 12 canning plants, 15 cement and brick and tile factories,

10 clothing mills, 112 clothing spinning and weaving mills, 9 distilleries, 39 dock yards, 21 electric light and power plants, 57 flour mills, 24 glass and porcelain works, 42 vegetable oil mills, 18 paper mills, 56 printing and lithographing plants, 20 saw mills, 28 silk filatures, 12 smelting works, 70 soap and candle works, 10 tea factories and 28 tobacco factories.

MORAL!

"Dont' send the office boy or an unpopular salesman you want to get away from the home office to represent your firm in China, for the Chinese business men he happens to come in contact with may be graduates of American or European Universities with 'Ph.D.' degrees."

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