The Great Illusion

the year 1878 far more money was in circulation in France than in Germany.22 Hans Blum, indeed, directly ascribed the series of crises between the years 1873 and 1880 to the indemnity: “A burst of prosperity and then ruin for thousands.”23 Throughout the year 1875 the bank rate in Paris was uniformly 3 percent. In Berlin (Preussische Bank, which preceded the Reichs Bank) it varied from 4 to 6 percent. A similar difference is reflected by the fact that, between the years 1872 and 1877, the deposits in the State savings banks in Germany actually fell by roughly 20 percent, while in the same period the French deposits increased about 20 percent.

Two tendencies plainly show the condition of Germany during the decade which followed the war: the enormous growth of Socialism⁠—relatively much greater than any which we have ever since seen⁠—and the immense stimulus given to emigration.

Perhaps no thesis is commoner with the defender of war than this: that, though one may not be able in a narrow economic sense to justify an enterprise like that of 1870, the moral stimulus which victory gave to the German people is accepted as being of incalculable benefit to the race and the nation. Its alleged effect in bringing about a national solidarity, in stimulating patriotic sentiment and national pride, in the wiping out of internal differences and Heaven knows what, are claims I have dealt with at greater length elsewhere, and I wish only to note here that all this highfalutin does not stand the test of facts. The two phenomena just mentioned⁠—the extraordinary progress of Socialism and the enormous stimulus given to emigration during the years which immediately followed the war⁠—give the lie to all the claims in question. In 1872⁠–⁠73, the very years in which the moral stimulus of victory and the economic stimulus of the indemnity should have kept at home every able-bodied German, emigration was, relatively to the population, greater than it has ever been before or since, the figures for 1872 being 154,000 and for 1873 134,000.24 And at no period since the fifties was the internal political struggle so bitter⁠—it was a period of repression, of prescription on the one side and class-hatred on the other⁠—“the golden age of the drill-sergeant,” some German has called it.

It will be replied that, after the first decade, Germany’s trade has shown an expansion which has not been shown by that of France. Those who are hypnotized by this, quietly ignore altogether one great fact or which has affected both France and Germany, not only since the war, but during the whole of the nineteenth century, and that factor is that the population of France, from causes in no way connected with the Franco-Prussian War, since the tendency was a pronounced one for fifty years before, is practically quite stationary; while the population of Germany, also for reasons in no way connected with the war, since the tendency was also pronounced half a century previously, has shown an abounding expansion. Since 1875 the population of Germany has increased by twenty million souls. That of France has not increased at all. Is it astonishing that the labor of twenty million souls makes some stir in the industrial world? Is it not evident that the necessity of earning a livelihood for this increasing population gives to German industry an expansion outside the limits of her territory which cannot be looked for in the case of a nation whose social energies are not faced with any such problem? There is this, moreover, to be borne in mind: Germany has secured her foreign trade on what are, in the terms of the relative comfort of her people, hard conditions. In other words, she has secured that trade by cutting profits, in the way that a business fighting desperately for life will cut profits, in order to secure orders, and by making sacrifices that the comfortable business man will not make. Notwithstanding the fact that France has made no sensational splash in foreign trade since the war, the standard of comfort among her people has been rising steadily, and is without doubt generally higher today than is that of the German people. This higher standard of comfort is reflected in her financial situation. It is Germany, the victor, which is today in the position of a suppliant in regard to France, and it is revealing no diplomatic secrets to say that, for many years now, Germany has been employing all the wiles of her diplomacy to obtain the official recognition of German securities on the French Bourses. France financially has, in a very real sense, the whip hand.

That is not all. Those who point triumphantly to German industrial expansion, as a proof of the benefits of war and conquest, ignore certain facts which cannot be ignored if that argument is to have any value, and they are these:

1. Such progress is not peculiar to Germany; it is shown in an equal or greater degree (I am speaking now of the general wealth and social progress of the average individual citizen) by States that have had no victorious war⁠—the Scandinavian States, the Netherlands, Switzerland.

2. Even if it were special to Germany, which it is not, we should be entitled to ask whether certain developments of German political evolution, which preceded the war, and which one may fairly claim have a more direct and understandable bearing upon industrial progress, are not a much more appreciable factor in that progress than the war itself⁠—I refer particularly, of course, to the immense change involved in the fiscal union of the German States, which was completed before the Franco-German War of 1870 had been declared; to say nothing of such other factors as the invention of the Thomas-Gilchrist process which enabled the phosphoric iron ores of Germany, previously useless, to be utilized.

3. The very serious social difficulties (which have, of course, their economic aspect) that do confront the German people⁠—the intense class friction, the