All this, one would have supposed, is evident. Yet most estimates of a great indemnity from Germany depend on the assumption that she is in a position to conduct in the future a vastly greater trade than ever she has had in the past.
For the purpose of arriving at a figure it is of no great consequence whether payment takes the form of cash (or rather of foreign exchange) or is partly effected in kind (coal, dyes, timber, etc.), as contemplated by the Treaty. In any event, it is only by the export of specific commodities that Germany can pay, and the method of turning the value of these exports to account for Reparation purposes is, comparatively, a matter of detail.
We shall lose ourselves in mere hypothesis unless we return in some degree to first principles, and, whenever we can, to such statistics as there are. It is certain that an annual payment can only be made by Germany over a series of years by diminishing her imports and increasing her exports, thus enlarging the balance in her favor which is available for effecting payments abroad. Germany can pay in the long-run in goods, and in goods only, whether these goods are furnished direct to the Allies, or whether they are sold to neutrals and the neutral credits so arising are then made over to the Allies. The most solid basis for estimating the extent to which this process can be carried is to be found, therefore, in an analysis of her trade returns before the war. Only on the basis of such an analysis, supplemented by some general data as to the aggregate wealth-producing capacity of the country, can a rational guess be made as to the maximum degree to which the exports of Germany could be brought to exceed her imports.
In the year 1913 Germany’s imports amounted to $2,690,000,000, and her exports to $2,525,000,000, exclusive of transit trade and bullion. That is to say, imports exceeded exports by about $165,000,000. On the average of the five years ending 1913, however, her imports exceeded her exports by a substantially larger amount, namely, $370,000,000. It follows, therefore, that more than the whole of Germany’s prewar balance for new foreign investment was derived from the interest on her existing foreign securities, and from the profits of her shipping, foreign banking, etc. As her foreign properties and her mercantile marine are now to be taken from her, and as her foreign banking and other miscellaneous sources of revenue from abroad have been largely destroyed, it appears that, on the prewar basis of exports and imports, Germany, so far from having a surplus wherewith to make a foreign payment, would be not nearly self-supporting. Her first task, therefore, must be to effect a readjustment of consumption and production to cover this deficit. Any further economy she can effect in the use of imported commodities, and any further stimulation of exports will then be available for Reparation.
Two-thirds of Germany’s import and export trade is enumerated under separate headings in the following tables. The considerations applying to the enumerated portions may be assumed to apply more or less to the remaining one-third, which is composed of commodities of minor importance individually.
| German Exports, 1913 | Amount: Million Dollars | Percentage of Total Exports |
|---|---|---|
| Iron goods (including tin plates, etc.) | 330.65 | 13.2 |
| Machinery and parts (including motorcars) | 187.75 | 7.5 |
| Coal, coke, and briquettes | 176.70 | 7.0 |
| Woolen goods (including raw and combed wool and clothing) | 147.00 | 5.9 |
| Cotton goods (including raw cotton, yarn, and thread) | 140.75 | 5.6 |
| 982.85 | 39.2 | |
| Cereals, etc. (including rye, oats, wheat, hops) | 105.90 | 4.1 |
| Leather and leather goods | 77.35 | 3.0 |
| Sugar | 66.00 | 2.6 |
| Paper, etc. | 65.50 | 2.6 |
| Furs | 58.75 | 2.2 |
| Electrical goods (installations, machinery, lamps, cables) | 54.40 | 2.2 |
| Silk goods | 50.50 | 2.0 |
| Dyes | 48.80 | 1.9 |
| Copper goods | 32.50 | 1.3 |
| Toys | 25.75 | 1.0 |
| Rubber and rubber goods | 21.35 | 0.9 |
| Books, maps, and music | 18.55 | 0.8 |
| Potash | 15.90 | 0.6 |
| Glass | 15.70 | 0.6 |
| Potassium chloride | 14.55 | 0.6 |
| Pianos, organs, and parts | 13.85 | 0.6 |
| Raw zinc | 13.70 | 0.5 |
| Porcelain | 12.65 | 0.5 |
| 711.70 | 67.2 | |
| Other goods, unenumerated | 829.69 | 32.8 |
| Total | 2,524.15 | 100.0 |
| German Imports, 1913 | Amount: Million Dollars | Percentage of Total Exports |
|---|---|---|
| I. Raw materials:— | ||
| Cotton | 151.75 | 5.6 |
| Hides and skins | 124.30 | 4.6 |
| Wool | 118.35 | 4.4 |
| Copper | 83.75 | 3.1 |
| Coal | 68.30 | 2.5 |
| Timber | 58.00 | 2.2 |
| Iron ore | 56.75 | 2.1 |
| Furs | 46.75 | 1.7 |
| Flax and flaxseed | 46.65 | 1.7 |
| Saltpetre | 42.75 | 1.6 |
| Silk | 39.50 | 1.5 |
| Rubber | 36.50 | 1.4 |
| Jute | 23.50 | 0.9 |
| Petroleum | 17.45 | 0.7 |
| Tin | 14.55 | 0.5 |
| Phosphorus chalk | 11.60 | 0.4 |
| Lubricating oil | 11.45 | 0.4 |
| 951.90 | 35.3 | |
| II. Food, tobacco, etc.:— | ||
| Cereals, etc. (wheat, barley, bran, rice, maize, oats, rye, clover) | 327.55 | 12.2 |
| Oil seeds and cake, etc. (including palm kernels, copra, cocoa beans) | 102.65 | 3.8 |
| Cattle, lamb fat, bladders | 73.10 | 2.8 |
| Coffee | 54.75 | 2.0 |
| Eggs | 48.50 | 1.8 |
| Tobacco | 33.50 | 1.2 |
| Butter | 29.65 | 1.1 |
| Horses | 29.05 | 1.1 |
| Fruit | 18.25 | 0.7 |
| Fish | 14.95 | 0.6 |
| Poultry | 14.00 | 0.6 |
| Wine | 13.35 | 0.5 |
| 759.30 | 28.3 | |
| III. Manufactures:— | ||
| Cotton yarn and thread and cotton goods | 47.05 | 1.8 |
| Woolen yarn and woolen goods | 37.85 | 1.4 |
| Machinery | 20.10 | 0.7 |
| 105.00 | 3.9 | |
| IV. Unenumerated | ||
| 876.40 | 32.5 | |
| Total | 2,692.60 | 100.0 |
These tables show that the most important exports consisted of:—
-
(1) Iron Goods, including tin plates (13.2 percent),
-
(2) Machinery, etc. (7.5 percent),
-
(3) Coal, coke, and briquettes (7 percent),
-
(4) Woolen goods, including raw and combed wool (5.9 percent), and
-
(5) Cotton goods, including cotton yarn and thread and raw cotton (5.6 percent),
these five classes between them accounting for 39.2 percent of the total exports. It will be observed that all these goods are of a kind in which before the war competition between Germany and the United Kingdom was very severe. If, therefore, the volume of such exports to overseas or European destinations is very largely increased the effect upon British export trade must be correspondingly serious. As regards two of the categories, namely, cotton and woolen goods, the increase of an export trade is dependent upon an increase of the import of the raw material, since Germany produces no cotton and practically no wool. These trades are therefore incapable of expansion unless Germany is given facilities for securing these raw materials (which can only be at the expense of the Allies) in excess of the prewar standard of consumption, and even then the effective increase is not the gross value of the exports, but only the difference between the value of the manufactured exports and of the imported raw material. As regards the other three categories, namely, machinery, iron goods, and coal, Germany’s capacity to increase her exports will have been taken from her by the cessions of territory in Poland, Upper Silesia, and Alsace-Lorraine. As has been pointed out already, these districts accounted for nearly one-third of Germany’s production of coal. But
