No general statistics regarding industrial products are published in Germany. True, such material is carefully collected, but it is placed exclusively at the disposal of the government, to be used in considering the commercial policy of the nation toward foreign countries. It is impossible to give exact statistics, except for the products of mines and foundries; further, for beer, alcohol, and sugar.

For the greater part, the coal and iron deposits of Germany are already in permanent ownership and are being worked. In 1903, a year of depression, the production of coal was 162,500,000 tons, worth $ 275,000,000; i.e., 18 per cent of the world’s output, or just half as much as the production in the United States, and about two thirds as much as the production in Great Britain. The production of iron ore was 21,200,000 tons (United States, 35,500,000); of pig-iron, 10,000,000 tons, or 21½ per cent of the world’s output (United States, 18,300,000; Great Britain, 8,900,000 tons); of steel, 8,800,000 tons (United States, 14,700,000; Great Britain, 8,900,000). The exports of coal and other mineral combustibles exceeded the imports by only 5,000,000 tons (export principally to Belgium and Austria, import chiefly from Great Britain), so that the home-consumption was about 157,000,000 tons. In this respect Germany is in contrast to Great Britain, which exports a large part of her coal production. The exports of iron ore exceeded the imports by about 2,000,000 tons, so that about 23,200,000 tons were reduced in German furnaces. According to conservative estimates, the coal beds of Germany contain 120,000,000,000 tons of minable coal. It is further estimated that the coal beds of Upper Silesia, and especially those of Westphalia and the Rhine country, will outlast those of England by five centuries, taking into account the technical mining capacity of the coal and supposing the same rate of progress in both cases. No other country in Europe has similarly lasting coal deposits, except Bel[40]gium. In all other European countries the coal-fields are considerably less extensive, as, for instance, in France, Russia, and Austria; and they will be more rapidly exhausted than those of Germany. The consumption of coal per head is considerably less than in England, and also less than in Belgium or in the United States, but it is greater than in the other European states. The home-consumption of pig-iron was only 98.1 kilograms per head, as against 235 in the United States and 137 in England. These low figures for Germany are accounted for by the fact that in Germany the railway system is essentially already built; though the production of pig-iron per head in Germany has increased more rapidly in recent years than in the United States. In the depression-year of 1903 the production per head was 173.9 kilograms; so that four-ninths of this amount had to find a foreign [A (7 l)]market. In 1904 imports of iron ore increased; but exports of pig-iron decreased, showing an increase in home-consumption. The ratio of the production of steel to pig-iron in Germany was greatest in 1903, the proportion being 87.3 to 100 (United States, 80.7 to 100; Great Britain, 57.1 to 100). In recent years this proportion has increased more rapidly than in the United States, or in Great Britain.

Thus, as regards coal and the raw materials of the iron industry, Germany does not have to rely upon imports from foreign countries. For the most part, further, Germany consumes such raw materials, instead of exporting them. Only on the coasts and borders is there any exchange with foreign nations. As to the geographical relation of the coal mines and the iron mines to each other, it cannot be said that this is as favorable in every respect as in England or in certain parts of the United States. But since the discovery of the Thomas Martin method of reduction the large percentage of phosphorus contained in many German iron ores rather gives Germany the advantage in this respect, and is even one of the reasons for the rapid development of the iron industry in Germany. Besides, the phosphorus in the slag makes this an excellent fertilizer. Of the other non-precious metals, only copper is principally imported. The imports amount to three fourth of the amount consumed in manufactures, and of this, eleven twelfths come from the [41]United States. Accordingly, the metal industry is an important export industry, especially as regards finished products. Not counting machines, wares, and ships, the exports of semi-manufactured materials in 1903 exceeded the imports by $ 46,750,000; but the exports of manufactured articles exceeded the imports by $ 104,000,000. The trade-balance against Germany on ores and metals, including precious metals, is almost wiped out by the excess in exports of combustibles alone.

In all modern civilized countries the second typical large industry, next to iron manufactures, is the textile industry. In Germany this industry rests upon a basis quite different from that of the iron industry. In the manufacture of cotton Germany takes the third place, with 8,500,000 spindles, being led by Great Britain, with 47,000,000, and by the United States, with 22,000,000 spindles. The exports of textiles amounted to $ 125,000,000, though this was not sufficient to cover the corresponding imports of raw material, which were $ 193,750,000. In 1903 Germany imported 344,000 tons of raw cotton, worth $ 88,750,000; and in 1904, 357,000 tons, worth $ 104,475,000. Between two thirds and three fourths of this came from the United States. The cultivation of flax in Germany has continually decreased, owing to the superiority of the Russian article, which is due to the more favorable conditions of climate in Russia. In 1904 Germany imported 24,000 tons of flax, which is about the average for recent years. Four fifths of this came from Russia. Jute is imported annually to the extent of about 100,000 tons, almost all of it coming from British India; and the annual imports of hemp are from 26,000 to 30,000 tons. As to wool, the excess of imports over exports in 1904 were: raw wool, 138,000 tons; bleached wool, 9,000 tons, [A (7 r)]and combed wool, 13,000 tons. About half of this came from Argentine, and a third from Australia. Even in 1900 the home production had gone down to about 12,000 tons. The annual imports of raw silk are some 5,300 tons. Despite the limited use of silk in Germany, this is an amount that has been exceeded by the United States only in late years.

In spite of the very considerable stock-raising in Germany, the leather industry is on about the same basis as textile manufactures. [42]In 1904 the imports of hides and skins were 108,000 tons, worth $ 50,000,000. To a great extent the wood-working industries have to rely upon foreign material, although Germany has considerable timber-lands. The imports of wood and lumber of all kinds in 1904 amounted to $ 30,000,000. In certain industries caoutchouc and gutta-percha are found indispensable and are imported to the extent of $ 20,000,000. Most of the entrails used in putting up sausage, and in other industries, are imported, such imports being 21,000 tons annually, of which 9,000 tons come from the United States. Though tobacco is raised in Germany to a large extent, the tobacco industry has to rely on foreign countries for certain kinds of tobacco. The annual imports of leaf tobacco are some $ 22,500,000. Petroleum is likewise imported for about $ 22,500,000, partly from Russia, partly from the United States. Leaving out of account tobacco and other luxuries, we can see that even if German agriculture could supply the demand for bread and meat, Germany would still be dependent upon imports of raw material to supply the demands for clothing, and, in part, the needs of the household in the way of lighting, utensils, etc.

Given the raw material, the next necessary condition for the existence of the German industries is the possibility of the exploitation of labor, such possibility depending upon social conditions, of course. For a long time the opinion was held, and is still held by some persons, that the important position occupied by German industries in the markets of the world was due to cheap labor, which was identified with low wages. The view that low wages is identical with cheap production has long since been refuted, as regards highly developed industrial countries. In Germany the time when articles made by cheap, poorly paid labor formed the chief part of German exports is already some decades in the past. The standard items of German export which in the last decade have in an increasing degree come to make up the volume of exports are, on the contrary, the products of the most highly paid working-classes to be found in Germany. To be sure, the scale of wages, all the way through, is lower in Germany than in the United States, and in the case of skilled laborers about 50 per cent lower on an average. This [43]is true not only of the amount of money paid, but of the real wage, at least so far as the necessities of life are concerned. Accordingly, the position of the skilled laborer is much more favorable in the United States, certainly in the Northern States. The position of the unskilled laborer in America varies, of course; but in cities like Chicago, and other cities, his position is no better than in Germany. It is sometimes worse; [A (8 l)]and it is very much more unstable. Emigration of German laborers to America has greatly decreased, and today it is very small, and, on the other hand, Germany employs several hundred thousand Italian, Polish, and other foreign laborers. The effect of low wages on the cost of production in Germany is offset by deficiencies in the individual laborer. Through inheritance and training, the German workman has acquired habits of eating and drinking less conducive to health and strength than those of the American workman; and his excessive use of alcohol particularly diminishes his efficiency for intensive and heavy work. Though, to be sure, the training of the German workman, which is not easily duplicated elsewhere, makes him far more careful and economical in his work than the American. On the whole, the relative cheapness of labor has not by any means always stimulated the technical development of German industries. On the contrary, the opposite is true, since cheap labor sets a smaller premium on labor-saving machinery. In 1895 the total horse-power of such machinery in Germany was only 3,427,000, or 33.4 horse-power for every 100 persons engaged in general industries, and 42 horse-power for every 100 persons engaged in industry in the narrow sense of the word. Since then these figures have been greatly increased: f.i. in Prussia, in 1904, the steam-engines had 4,700,000 horse-power (ship-machinery excluded). But they are still too low, and in comparison with England and America this showing is poor. American industries have an advantage over the German in that they do not have to carry the burden of social compulsory insurance, and in that there the possibility of exploiting labor is not so sharply restricted by labor laws as in Germany. When the maximum quota has been reached the annual cost of insurance against sickness, accident, infirmity, and old age will amount to about $ 175,000,000 for the manufacturing industries, agriculture, and domestic service. This expense is met largely by compulsory contributions from the employers and the laborers. The care of widows and orphans has been pro[44]posed. The existing laws for the protection of workmen are very much more effective than are such laws in America. The honesty and pedantry of German officialdom guarantee the execution of all laws in Germany, whether they be good or bad; and, further, there is a unity in labor legislation for the empire which is in sharp contrast to factory legislation in America, where unifomity is made impossible by the legislative powers vested in the individual States. And, too, the German laws are more rigid in their nature than the American laws. The employment of child-labor in Germany, in the manner followed in the Southern States, would be out of the question; no less so the absolute disregard for the life and health of the laborer, which is made possible by law in American factories. On the whole, the German employer has the support of the government organs against the laborer, and his position is further made more comfortable than that of the American manufacturer by the fact that order is strictly maintained; but this does not mean necessarily greater production on the part of the German laborer. On the whole, the work[A (8 r)]day in Germany is 10 hours, in some trades nine hours, and in others even more than 10 hours; but it has been observed that long hours are by no means identical with increased production. The development of labor unions of late has been rapid, and it is expected that shortly as many as 2,000,000 workmen will be organized. All in all, the present physical capacity of the German laborer is not so great as that of the American; and labor laws prevent as high a degree of exploitation of labor in Germany as is possible in America. In opportunities for special technical education Germany has a decided advantage; and, thanks to the development of technical schools and colleges, the standard of education in the industries is higher than in America. The significance of these facts can be observed especially in the chemical industry.

Such are the conditions of labor and production in Germany; and German industries have been developed accordingly. Naturally, the most significant industries of Germany, those upon which the future of the country depends in the world-market, are not those which are devoted to the manufacture of heavy staple products, as is the case in America. In 1903 the excess of imports of raw materials for industrial purposes were $ 405,000,000; and that of exports of manufactured articles amounted to $ 515,000,000. The statistics for exports, however, show that more than one third of the entire [45]exports, viz., $ 437,500,000, was divided among over a hundred different classes of articles, of which the most important class was represented by less than $ 4,500,000, i.e., less than .3 per cent of the total exports, which were $ 1,226,000,000. In general, these are products of a large number of factories making finished articles, in which the cost of the raw material becomes insignificant in comparison with the value added to the articles by carefully trained and conscientious workmen. High-priced manufactured goods preponderate, too, in the large export items. To be mentioned especially: silk, wool, and cotton manufactures, clothing and millinery, machines and fine hardware, books and maps, gold and silverware, and coloring materials, these items together making up $ 275,000,000 in exports. Despite the mineral treasures of Germany, the economic importance of the country depends upon labor; and in the future this will be even more true than it is at present. Those numerous individual classes included in the one third mentioned above vary greatly in importance, owing to changing tariff legislation in foreign countries; but if markets are lost for these articles by protection, they are usually regained in a short time. The latest statistics show that the higher the specific value of the article and the more work there is in it, the quicker the lost market is regained. In such cases the protective tariff only becomes, in the long run, a burden for the consumer in the foreign country. Exports are either to countries with which Germany has commercial treaties, or to such as allow Germany the rights of a most favored nation, or to countries with which Germany has no kind of agreement whatever. Now, statistics show that, disregarding individual differences, exports in these three cases vary with great regularity, going up and down [A (9 l)]according to the ups and downs of the general business situation in the world. Of course, the influence of foreign duties on exports is considerable, especially when a new tariff schedule first goes into operation; and for wares of low specific value the effect of such tariff continues. On the other hand, the influence of foreign tariff legislation on those articles which are really the most important for Germany’s commercial future has been much overestimated.

[46]In view of the nature of German manufactures and the intensive work involved, the method of inner organization of German industry acquires a character which is not altogether favorable for further development along all lines. Corresponding to the trust movement in America, Germany has had the development of the kartell, a trade-union similar to, but different from, the trust. Economically speaking, the kartell is “conservative.” By fixing prices, it attempts to maintain not only undertakings of the highest rate of output. The trust, on the other hand, is economically revolutionary, in that it aims to crowd out less profitable businesses and maintain only those that pay the best profit. The kartell seeks to protect the income of invested capital; the trust seeks to utilize floating capital by organizing production. However, the difference is only relative, and it is well known that within our largest kartell a trust movement on a large scale is now in progress. But the formation of large trusts of the American style is difficult in Germany. The railway lines are owned by the state; and lately the state has begun to retain a monopoly of shipping on proposed new canals. Therefore, in Germany it is impossible to establish a community of interest between industrial monopolies and transportation, as is done in the United States. The state is a large mine-owner and is increasing its possessions; it is the largest employer and a greater consumer than in any other country. At present the state is just about to join the largest of the German syndicates. If, on the one hand, German industry is more dependent on the state, on the other it is less dependent upon the power of the banks and the Stock Exchange than is American industry. Speculation in futures in industrial stocks is prohibited in Germany by law; but this fact is not decisive, as it only increases the power of the large bankers at the expense of the smaller ones. What is really decisive here is the rigorous law regulating the formation of joint-stock companies, which offers, in a way, a guarantee for the solidity of a company and makes impossible the issue of common shares, as is done in America. This has greatly retarded the development of stock companies. The total capitalization of stock Companies of all kinds amounts to only $ 3,600,000,000, which is a small sum, considering the highly developed German industries. This [47]makes it difficult to reorganize ownership in whole branches of industry merely by transactions on the Stock Exchange, though, of course, such a thing is not entirely impossible. The more conservative nature of the kartell gives greater stability to prices, thus making more certain the conditions of the further manufacture of a given material in other industries. But the higher prices of raw materials resulting from the effort to pre[A (9 r)]serve less profitable plants in a given industry decreases the competing power of that industry in the markets of the world. The result has been that large mixed works have come into existence, which produce the raw material and then manufacture it into the finished article, whereby in some kartells a violent conflict has broken out between the “pure” and the “mixed” works. Another result has been the allowing of export-rebates to manufacturing exporters. This last remedy bears the defect of every premium-system: it endangers the elasticity of the industry in adapting itself to the market. The finishing manufacturers, of course, have now formed kartells of their own. In fact, in the several hundred kartells into which industrial Germany is organized almost every industry producing staple articles is included. But the power of these numerous individual kartells in the market is usually less than that of the large trade-unions which produce the raw materials. It is the numerous small specialized industries that are most important for Germany’s commercial position, in which highly skilled labor and personal initiative and special training on the part of the manufacturer himself play the principal rôle. But just these have to bear the expense of kartellizing. It must be added that the large industries for raw materials and staples are in a better position to effect strong coalitions for influencing the press, public opinion, and the government, and this fact gives them predominant power in determining the commercial policy of the empire. In co-operation with the large landed proprietors the ‘Centralverband Deutscher Industrieller,’ into which large manufacturers of raw materials, iron, and textiles are organized, brought about the present system of protective tariff, which is against the interests of all manufacturers, except those producing massive and staple articles. This organization is further allied with the landed interests in the social-political reaction, and in its opposition to labor-unions and labor-protection.

The most recent available figures regarding the number of persons engaged in industrial pursuits are found in the census of spe[48]cial industries for the year 1895. At that time which was 11 years ago and before the recent tremendous advances in industrial progress, the number of persons engaged in the industries was 8,000,000. These figures include mining and building, but exclude transportation. From 1882 to 1895 the number of persons engaged in industry, trade, and transportation increased 40 per cent; those in the industries alone increased 31 per cent; at the same time the increase in population was 14 per cent. Most of this increase has been in the larger factories, the force of those employing over 50 persons being increased by 89 per cent, those employing over 1,000 persons being increased by 110½ per cent. Still, for every 100 industrial workers 46 (60 in 1882) are working in small shops of less than five persons, and of this number 16.7 work alone. Further, out of every 100 such persons 24 (19 in 1882) are working in shops of from six to 50 people, and only 30 (22 in 1882) are in factories employing more than 50 people. Owing to the force of tradition the old and long-established hand-industries persist and are only slowly transformed, in various ways, on modern capi[A (10 l)]talistic lines. One development has been the home industry, which is almost seven centuries old in Europe. It is mostly country people who are engaged in these home-industries; and by reason of training from early childhood they are able to produce valuable wares; but such production is decreasing rapidly and is being superseded by factory products. On the other hand, the modern development in Germany has created the house-work (“Heimarbeit,”) especially in textiles and in clothing, since certain heavy articles can be manufactured cheapest in this way. Such work is done in large cities, in densely populated country districts, and in places where the small wages of the men compel the women to work. Often such work is organized into a complex system, with many middle-persons. Especially noteworthy for this sort of work are: Berlin (clothing and men’s furnishings, women’s wearing apparel, leather goods, jewelry and ornaments, embroideries), Danzig, Cologne, Bielefeld (linen and wash-articles), and other cities. The woodland and mountainous districts of middle and southwest Germany are the principal strongholds of [49]household industry. Here are made wooden articles_[,_] knit-goods, brushes, toys, embroideries; and in the Black Forest clocks are made. Besides the mining and foundry industries, the modern factory system dominates the chemical industry (in 1895 53 per cent of all works had more than 100 employees); machinery manufacturers (likewise 53 per cent); the paper industry (similarly 40 per cent); and also the textile industry, especially spinning (38 per cent with over 100 workmen), though here there has also been a strong development of home-work. There is scarcely a guild-trade of the old régime that has not already a considerable, and an increasing number of large modern factories. In 69 of the various kinds of industries employing at least 10,000 persons, in 1895, the majority of the laborers were in establishments of over 50 workmen; and in only 33 were a majoritiy in establishments having from six to 50 workmen.

The geographical distribution of German industries is uneven, and this has been increased by the decay of home-manufactures among the country people, mentioned above. This has made the contrast sharper between the agrarian districts on the one side, and the great industrial centres on the other. To the first belong the greater part of Prussia east of the Elbe, considerable parts of Bavaria, and numerous smaller agricultural areas. To the second belong the kingdom of Saxony, the lower Rhine-Westphalia country, the Saar district, the upper Rhine-Main plain, northern Bavaria, parts of Württemberg, and all the large cities. It is in these industrial centres that there has been the greatest increase in population; but, since the old system of voting-districts remains unchanged, these populous centres gain no additional representation, and their increased democratic population does not mean any increase in political influence. Thus we have the opposition between the industrial and the strongly organized agrarian interests, between a progressive economy and a reactionary policy. The tariff-schedule of the conservative parties is the only thing that can endanger Germany’s commercial power. Foreign duties, let them be ever so high, injure [A (10 r)]least of all those lines of merchandise which will in the future determine the position of Germany in the markets of the [50]world. Any increase in the purchasing power of a foreign nation would even help exchange of wares with Germany, as is proved by the commercial-political significance of the most highly developed industrial countries. A successful attack against Germany on the sea could not hurt German industries any more than could high foreign duties. A small group of English interests have been dreaming of such a method of disposing of their inconvenient competitor, and they have kept up a tremendous campaign through the press in order to mould public sentiment; but in case of a war, even if they were victorious, they would be disappointed by the outcome. Since the offensive economic strength of Germany does not depend upon ships, but upon things which can neither be confiscated nor destroyed by gunnery, shortly after the war the same conditions would prevail as before – except that England, against the wishes of all German friends of English culture, and in the interest of a few selfish promoters, would have made for herself an irreconcilable enemy. The risk, too, would be much greater for England than for Germany, since the receipts of Germany depend much less upon exports and maritime trade than do those of England. The increase of the strength of Germany in the world-market is only a relatively slight concomitant of the rise of German industries. From the figures showing the increase in Germany’s productive power a constant and strong decrease in the relative importance of exports has even been deduced; but this is not quite correct, since the growth of the large industries depends in part upon the suppression of smaller industrial forms. But it must be admitted that the bulk of the increase in trade certainly does rest upon the development of the domestic market. Now, it is just the strength of the domestic market that is endangered by the uselessly increased duties on agricultural products. Such duties only swell the revenue of the producer without increasing production, and compel the masses to spend a greater part of their income for provisions. Similarly, excessive duties on staple products of the heavy industries diverts production from those highly specialized individual articles, which form the economic strength of Germany, and hasten unnecessarily the exhaustion of mines. In creating artificial profits for the produc[51]er they hurt initiative and adaptability to the market; and, in strengthening the position of the ultra-conservative or feudal class, they accentuate social antitheses. The result has been a rapid growth of the social-democratic movement, which has led the government to endanger the productivity of German labor by trying in all sorts of artificial ways to prop up the “middle dass,” i.e. the handicraftsmen. Protection, if increased abnormally, will breed a feudalistic spirit such as that which dominates France, and thus weaken the intellectual impetus of industrial development. We reject such a political programme, therefore, because it would threaten the unique character of German culture and power, and because it contradicts the daring spirit of the Germanic peoples, but not because Germany must at all hazards export [A (11 l)]goods to foreign countries. Such is not the case. Germany would probably be able to meet increasing needs for raw materials with her even more rapidly increasing commercial revenues. It is to be hoped that, when the present existing commercial treaties have expired, the political situation, both within and without Germany, will be more favorable for a moderate form of protection. Those branches of German industry that decide the commercial importance of Germany in the world-market no longer need any protection, though of course absolute free trade with protective neighbors would not be welcomed in Germany. All that German industry needs is the “open door.”

Bibliography. – Blondel, ‘L’essor industriel et commercial du peuple allemand’ (1900); Eberstadt, ‘Der deutsche Kapitalmarkt’ (1901); Falke,‘Geschichte des deutschen Kunstgewerbes’ (1893); Lair, ‘L’impérialisme allemand’ (1902); ‘Export. Organ des Centralvereins für Handelsgeographie und Förderung deutscher Interessen im Auslande’; ‘Statistisches Jahrbuch des Deutschen Reichs.’