In the debate on the notorious Jaw which places the German 
socialists outside the law,”*? Mr. Bismarck declared that salsa 
alone was not enough to crush socialism; what was needed, 
addition, were measures to remedy the undeniable social ills, to 
ensure the regularity of work, to forestall industrial crises and 
what have you. He promised to introduce these “positive” 
measures of social welfare.* For, he said, when one has directed 
the affairs of one’s country for 17 years, as I have done, one is 
entitled to consider oneself a competent judge in matters of 
political economy; which is like someone saying that eating 
potatoes for 17 years is enough to give one a thorough knowledge 
of agronomy. 

In any case, this time Mr. Bismarck was true to his word. He 
has bestowed on Germany two grand “social measures”, and he 
has not finished yet. 

The first was a customs tariff’ which was to ensure that German 
industry was allowed exclusive rights to the domestic market. 

Until 1848 Germany had had no large-scale industry properly 
speaking. Labour dominated. Steam, mechanisation were simply 

the exception. In 1848 and 1849, having incurred a shameful 
defeat in the political sphere because of its cowardice, the German 
bourgeoisie consoled itself by launching eagerly into large-scale 
industry. The face of the country was rapidly transformed. 
Anyone who had not seen Rhenish Prussia, Westphalia, Royal 
Saxony, High Silesia, Berlin and the seaports since 1849 could no 
longer recognise them in 1864. Steam and machines had invaded 
the entire country. Large factories had mostly supplanted the 
small workshops. Steamships gradually replaced sailing vessels, 
first in coastal traffic, then in transatlantic trade. Railways 
multiplied; in the construction yards, in the coal and iron-ore 
mines there was activity the like of which the sluggish Germans 
would hitherto not have believed themselves capable of. Compared 
with the development of large-scale industry in England and even 
in France, all this was small beer; but anyway it was a beginning. 
Moreover, all this had been done without any help from the 
governments, without any grants or export subsidies, and under a 
customs tariff which, compared with the tariffs of other continen- 
tal countries, might be considered very free-trade indeed. 

This industrial movement, let it be said in passing, did not fail 
to have the social consequences which it has had everywhere. The 
German industrial workers had, until then, vegetated in conditions 
reminiscent of the Middle Ages. Generally speaking, they still had 
some chance of gradually becoming petty bourgeois, masters of 
their trade, owners of several hand looms, etc. Now all this 
disappeared. The workers, becoming the employees of the big 
capitalists, started to form a permanent class, a real proletariat. 
But he who says “proletariat” says “socialism”. Furthermore, there 
still remained a trace of the liberties which the workers had won at 
the barricades in 1848. Thanks to these two circumstances German 
socialism, which before 1848 had had to restrict itself to 
underground propaganda and a secret organisation whose mem- 
bers were few, was now able to unfold in the full light of day and 
to penetrate into the masses. Hence 1863 is the year which saw the 
recommencement of socialist agitation by Lassalle.*** 

Then came the war of 1870, the peace of 1871 and the 
milliards.** If France was far from ruining herself by paying 
them, Germany came within a hair’s breadth of its demise by 
receiving them. Recklessly squandered by a government of 
upstarts in an upstart empire, the milliards fell into the hands of 
high finance, which hastened to make them bear fruit on the 
Stock Exchange. Berlin saw the return of the heyday of Crédit 
mobilier.** It was a race to see who could start more public and 

mixed liability companies, banks, building societies and financial 
institutions, railway construction companies, factories of all kinds, 
shipyards, companies speculating in land and buildings, and other 
things whose industrial trappings were no more than an excuse 
for the most bare-faced jobbing. The alleged public needs of 
commerce, communications, consumption, etc., simply served as a 
cloak for the frantic need of the Stock Exchange wolves to make 
these milliards work as long as they had them in their hands. 
Besides, all this was seen in Paris in the glorious days of Péreire 
and Fould; the same jobbers were at work in Berlin, reappearing 
under the names of Bleichroeder and Hansemann. 

What had happened in Paris in 1867, what had happened many 
times in London and New York, happened all over again in 1873 
in Berlin: unbridled speculation terminated in a general collapse. 
Companies went bankrupt in their hundreds; the shares of those 
which survived became unsaleable; the rout was complete all along 
the line. But in order to speculate it had been necessary to create 
the means of production and communication, the factories, 
railways, etc., whose shares had been the object of this speculation. 
At the time of the crash it was found that the public need which 
had served as a pretext had been outstripped by far; that in four 
years more railways, factories, mines, etc., had been created than 
the normal development of industry would have produced in a 
quarter of a century. 

After the railways, to which we shall return below, speculation 
had been chiefly directed at the iron and steel industry. The mills 
had multiplied rapidly; more than one plant had been set up that 
put Creuzot in the shade. Unfortunately, on the day of the crisis it 
turned out that there were no consumers for this gigantic 
production. The large manufacturing companies found themselves 
on the verge of bankruptcy. As the good German patriots they 
were, their directors sought help from the government: protective 
tariffs that would secure for them the exploitation of the domestic 
market against competition from English iron. But if one 
demanded protective tariffs for iron, one could not deny other 
industries, even agriculture, the same protection. So noisy 
agitation for tariff protection was organised throughout Germany, 
agitation which allowed Mr. Bismarck to introduce a customs tariff 
which was supposed to fulfil this purpose. This tariff, which 
became law in the summer of 1879, is now in force.**’ 

But German industry, such as it was, had always lived in the 
fresh air of free competition. Arriving last on the scene, after 
England and France, it had been obliged to confine itself to filling 

the small gaps left for it by its predecessors; to providing, on a 
large scale, articles that were too paltry for the English, too tawdry 
for the French; to manufacturing on a small scale products that 
were always changing, cheap goods at a low price. Let it not be 
thought that this is merely an assertion of our own: these are the 
very words of the official assessment of German products as set 
out in Philadelphia (1876) by the official commissioner of the 
German Government, Mr. Reuleaux, a man with a European 
scientific reputation.* 

An industry of this kind can only assert itself in neutral markets 
if there is free trade at home. If one expects German textiles, 
processed metals and machinery to withstand foreign competition 
abroad, then all the raw materials necessary for their production, 
cotton, linen or silk thread, pig iron or metal wire, must be 
available at the same low price at which their foreign competitors 
buy them. So you have the choice of two things. If you wish to 
continue exporting textiles and the products of the metal industry, 
then free trade is necessary, at the risk of seeing these industries 
use materials taken from abroad. If, on the other hand, you wish 
to protect spinning and the production of crude metals in 
Germany with customs tariffs—then you will soon have ruled out 
the possibility of exporting the products of which thread and 
crude metal are the raw materials. 

By protecting spinning and metallurgy with his notorious tariff, 
Mr. Bismarck destroyed the last chance which German textiles, 
processed metals, needles and machinery had until then of finding 
an outlet abroad. But the Germany whose agriculture produced a 
surplus for export in the first half of the century cannot now do 
without a supplement of foreign agricultural products. If Mr. Bis- 
marck forbids his industry to produce for export, with what will 
he pay for these imports and many others which all the tariffs in 
the world will not prevent him from needing. 

To solve this question called for nothing less than the genius of 
Mr. Bismarck combined with that of his Stock Exchange friends 
and advisers. This is how it is done: 

Let us take iron. The period of speculation and feverish 
production has bestowed on Germany two firms (the Dortmund 
Union and Laurahiitte), each of which has the capacity to 
produce, on its own, enough on average to satisfy the country’s 
entire consumption. Then there is the gigantic Krupp concern in 
Essen, another similar one in Bochum, and then an infinite 

number of smaller ones. As a result, domestic iron consumption is 
covered three or four times over, at least. One might say that this 
is a situation necessitating most urgently unlimited free trade, 
which is alone capable of securing an outlet for this enormous 
excess production. One might say so—but this is not the opinion 
of those involved. Since there are at most a dozen companies that 
matter and which dominate the others, one forms what the 
Americans call a rnc: an association to maintain prices at home 
and regulate exports. 

As soon as there is a bid for rails or other products of their 
factories, the Committee designates by turns the member who 1s to 
undertake the work, and fixes the price at which he is to do so. 
The other associates submit tenders at a higher price, similarly 
agreed in advance. As a result, all competition ceases; there is an 
absolute monopoly. The same thing goes for exports. To ensure 
the implementation of this plan, each member of the rnc deposits 
with the Committee a blank bill for 125,000 francs, to be put into 
circulation and presented for payment as soon as the signatory has 
broken the agreement. In this way the price of the monopoly 
extorted from the German consumers will permit the factories to 
sell abroad their excess production at prices that even the English 
refuse—and the German philistine (who anyway deserves it) pays 
the piper. This is how German exports are becoming possible 
again, thanks to the same protective tariffs which in the eyes of 
the common people appear to be destroying it. 

Do you want examples? Last year an Italian railway company, 
which we could name, needed 30,000 or 40,000 tons (of 1,000 kg) 
of rails. After long negotiations an English factory took 10,000; 
the rest of the order went to the Dortmund Union, which offered 
delivery at a price that was turned down in England. An English 
competitor, asked why he could not offer better terms than the 
German concern, replied: “Who on earth can compete with a 
bankrupt?” 

In Scotland a railway bridge was to be constructed across an arm 
of the sea near Edinburgh. 10,000 tons of Bessemer steel were 
needed for this bridge. Who accepted the lowest price, who 
defeated all competitors, and on the native soil of the great iron 
industry, England? A German, protected by Bismarck in more 
ways than one, Mr. Krupp of Essen, the “Cannon King”. 

So much for iron. It goes without saying that this fine system 
can only delay the inevitable bankruptcy of these big conspiring 
companies for a few years. Meanwhile, as the other industries 
imitate them, they will ruin not the foreign competition but their 

own country. It is almost like living in a country of madmen; yet 
all the facts recounted above have been taken from bourgeois 
free-trade newspapers in Germany herself. Organising the demoli- 
tion of German industry on the pretext of protecting it—are they 
wrong, then, those German socialists who have been repeating for 
years that Mr. Bismarck is working for socialism, as if he were in 
their pay?