public leading and private energy and enterprise. A witness before the Steamship Subsidies Committee remarked: :

'It is most striking to an Englishman to observe the methodical ways of everybody in Germany with regard to this question of trade. They are convinced that in trade is to be found their future, and they are laying themselves out for it like thoroughly good business men. The Government, from the Kaiser downwards, is helping them to do it in every way possible.'

The President of the British Chamber of Commerce in Turkey, comparing, in a letter to the Times,' the working of the German and British Consular services, said:

"The German system reminds me of an army, specially disciplined, marching with scientific precision, commanded by responsible and experienced chiefs, who know perfectly what they have to do, and the consequences to themselves if they do not do it; whereas the British system reminds me of a horde of irresponsible volunteers, without discipline or efficient chiefs, each one doing what seemeth best in his own eyes.'

This comparison, though it may be made with some exaggeration, cannot be dismissed as the grumbling of a discontented merchant, for it is confirmed by evidence from many quarters and extending to many fields of rival endeavour.

Three dates may be taken as marking important developements in German commercial policy. In 1878 Bismarck declared his adhesion to a policy of Protection, and passed in the following year the new Customs Tariff. In 1879 the Prussian Government commenced the nationalisation of railway lines. In 1885 the first shipping subsidies were given. All these lines of policy are based upon the same fundamental idea, and are interwoven in practice. Rightly or wrongly, the Germans believe that a nation should develope itself as a whole, with the conscious intention of being at once an agricultural, manufacturing, and maritime country, and that if in the pursuit of this aim there should be a loss to the consumer or taxpayer, such loss is to be regarded, like military and naval expenditure, as the temporary cost of a policy essential to permanent national strength and welfare. Our own ancestors had the same idea. By corn laws and navigation laws they directed capital into industries which were, in their opinion, essential to the national interest.

The railways were nationalised by Prussia and other States of the empire at an enormous cost, much exceeding that of the South African war, but it appears that they

VOL. CXCVI. NO. CCCCII.

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return 6 per cent. net profits on the capital. Veritas' says truly that the relationship of railway policy to the general ' economic policy of any government is a vital one to the 'welfare of the people.' Nationalisation of railways places in the hands of a government the most powerful of instruments, because the whole network of lines be economically and systematically used to promote the prosperity of the nation as a whole.

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In a memorandum of 1882 the Prussian Government expressly stated that preferential tariffs were granted on the State railways in order (1) to assist agriculture and industry by cheap rates for transporting raw or subsidiary material; (2) to assist German manufacturers in competition with foreign importers at home; (3) to assist German in competition with foreign ports; (4) to assist German railways and waterways in competition with those of foreign nations. These principles have been thoroughly carried into subsequent practice. Mr. Gastrell, in his valuable report made to the Foreign Office in 1898, said :—

'In Germany the change to State lines was not only brought about by political, and especially by strategic reasons, but also by the firm conviction that such a system was absolutely needed in order to give full scope to the aspirations of a new commercial and industrial German Empire.' 'A monopoly of the magnitude of the German State railways, extending over 23,384 miles of lines, has an immense power over the destinies of the country from many points of view. And when one considers also the State ownership of 8,647 miles of canals and other inland waterways, the power that can be effectually wielded for the common good of the nation can be to some extent realised.'

Agricultural and industrial undertakings are assisted in Germany by low charges for the transport of materials. Exports by German shipping lines to countries where it is hoped that German trade may be established and rivals ousted are encouraged by special rates given from the interior of Germany. An inland manufacturer can send his goods to Africa or Asia over the German State railways, by subsidised German steamers, and sometimes over railways elsewhere with which special arrangements have been made.* He can send them at low through rates, which he

For instance, previously to the South African war there was an arrangement with the Delagoa Bay and Netherlands Railways, under which the through rates from the interior of Germany went on to Pretoria and Johannesburg.

can ascertain at his nearest railway station. The national force is in every way behind him to enable him to undersell his foreign rivals. Railways belonging to the State, steamship companies subsidised and controlled by the State, diplomatic agents abroad, are all employed for this purpose. Sir William Ward, the Consul-General at Hamburg, told the Select Committee on Steamship Subsidies that the use of the State railways in order to develope the sea-borne trade of Germany was one of the chief occupations of the German Railway Department. These rates are being continually 'changed and reduced and so on; they are continually 'trying to do what they can in the interests of agriculture ' and commerce.'

British railway companies, competing against each other, and bound by their nature to consider in the first place the financial, immediate interests of their shareholders, cannot be used in the same way for national purposes, in pursuit of what the Government may consider to be a far-sighted policy. They are not influenced by the preference of one industry as more important than another to national welfare; they give no preferential rates to goods conveyed by British steamship lines over goods conveyed by German lines; they cannot negotiate through diplomatic representatives for combined arrangements with State railways in other lands. If special companies are poor, in consequence of over-capitalisation and bad administration, they are unable to renew their rolling-stock, or to improve their ways and stations, or to reduce their rates and fares. Some of the arguments used by the Royal Commission to recommend the transfer of the London Docks to a port authority might possibly be applied to justify the nationalisation of British, and certainly of Irish, railways. But this is a wide subject, on which there are, of course, many other considerations that must be taken into account. In the hands of a wise, energetic, able, and zealous government nationalised railways may, perhaps, be used to great advantage. But then governments are not always wise, energetic, able, and zealous, and the concentration of all railways in the hands of a short-sighted, slothful, or popularity-hunting administration might be a social misfortune.

The subsidies given by the German Imperial Government to promote the running of German steamship lines are applied in a well thought out and effective manner. Here as elsewhere the German Government aims at obtaining, and does obtain, the largest possible results for the least

possible expenditure. No subsidies, except payments for carriage of mails, are granted for lines to America, because the natural volume of traffic makes such a course unnecessary. But subsidies are granted for services to Australia, East Asia, and Africa, where trade has to be built up, or conquered from other nations. The total German subsidies, 347,000l. in 1900, do not much exceed the payment, 330,000l., made by our own Government to the Peninsular and Oriental Company for postal services. Practically this payment is a subsidy, without which the company could not hold its ground, but the weakness of a purely postal subsidy is shown by the following circumstances. Until 1880 the Peninsular and Oriental Company received a payment from Government for carrying mails beyond Shanghai to Japan. But when it became possible to send mails more quickly to Japan viâ America this payment ceased. The company continued to run a regular service to Japan down to the year 1898, when a subsidised German service from Hamburg to Yokohama was established. The Peninsular and Oriental then retired from this competition, and now maintains no regular service beyond Shanghai. In the opinion of competent observers this change is in a general way detrimental to British and favourable to German trade interests in the Far East. In the year 1899 the North German Lloyd bought the fleets of two minor British companies in the Eastern seas, to serve as feeders to their main line. It is understood that on this occasion increased subsidies were promised, and that pressure was put from headquarters upon all interests to assist in the purchase." Another German victory was in the trade to Zanzibar. From 1889 to 1892 the British India Company ran a regular service to Zanzibar, receiving 16,000l. a year for carrying mails. In 1890 the German East African Company started a regular service to Zanzibar, receiving a subsidy of 45,000l. yearly. The British India Company applied for a larger subsidy, were refused it, and abandoned the regular service, which they were carrying on at a loss. Even with the aid of their subsidy the German Company carried on the trade with difficulty, but the venture seems likely to repay the cost in the end. A consular report observes that the "good influence that this line has had in developing German trade is shown in the figures of general export to the

On this subject see Edinburgh Review for July last (No. 401).
This subsidy was increased in 1900 to 67,500l.

countries lying on the east coast of Africa.' In another quarter the Hamburg-American Company bought the Atlas line, and was at once able to raise the number of its monthly sailings between Hamburg and the West Indies. These events, the replacement here and there of a British line by a German one, where trade is small, possibly unremunerative, may not be of much immediate importance in relation to the total volume of trade, but may have a considerable effect hereafter. It is the accumulation of small causes, under a fixed policy, that builds up great results.

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The German subsidies are not given merely upon condition that mails should be carried at fixed dates and at a certain speed. The German Government stated in a memorandum that the subsidies they grant are not merely for the postal service, but are also looked upon ' value paid for important interests of the German export industry, the requirements of the navy, and of a colonial 'policy, &c.' Strict conditions are attached. The crews of the subsidised ships must be Germans, naval reserve men, or otherwise under obligation to serve in the Imperial navy; the steamers must be constructed and fitted and, when possible, repaired in German yards, and made, so far as possible, of German materials; the coal must, in German, Belgian, or Dutch ports, be derived from German sources; the plans of the steamers have to be submitted to the Government for approval. No agreement can be made with foreign governments without sanction, German goods are to take precedence in being forwarded over foreign goods shipped at the same time. In short, there is a whole code intended to promote German interests by means of these ships. One important and, as events have shown, far-seeing provision in these contracts forbids the sale or hire of ships to foreign countries, or any disposal of the line, without the permission of the Imperial Chancellor. It must be observed that if on one side assistance is given to German manufacturers by preferential through rates for their export goods over the State railways, on the other an indirect subsidy is given to the German shipping companies by the monopoly of such goods given to their vessels. The German system also subsidises the shipbuilding industry, and may, indeed, be said to have founded it. Before 1885 all large ships for German lines were ordered in England. Now they are all built in Germany, and the yards of Kiel and Stettin turn out some of the finest and fastest ships in the world.

Britannia's 'rule of the waves' in the commercial sense,