While the English declare that they are fighting for their children and their grandchildren, they are not willing to leave to them the full load of the war-cost, and gladly do they a.s.sume all possible burdens in the present time.

The income tax, which began in 1842 at two pence in the pound, has now been doubled from one shilling and three pence to two shillings and six pence in the pound. This is on the average, and takes nearly one eighth of a man's income. There are very great variations in this tax.

The rate I have given is the rate on dividends. Upon wages and salaries the tax is somewhat less.

The income tax is also apportioned over a three years' average. The supertax raises the contribution of the wealthy to one fourth of their incomes, although on the average it is figured to take only an eighth.

It is expected that the income tax may be further increased, possibly doubled, next year. I was not surprised therefore to find American millionaires with houses in London returning to New York and making sure of their American citizenship.

Every penny in the pound in the tax rate produces 2,500,000 pounds sterling, or $12,500,000, nearly one half the national income tax of the United States for 1913. Indeed, the English income tax for the year ending March 31,1915, is estimated to produce 75,000,000 pounds sterling, or about twelve times the income tax of the United States and from less than half the number of people. In other words, the income tax of Great Britain per capita is this year twenty-five times that of the United States.

But still the United States is really in no need either of income tax or of war-machinery. It is too late for the United States to prepare for any contest with the one nation that goes to war over tariffs--Germany.

After this war and a settlement of the Mexican situation, warships will be for sale at fifty cents on the dollar. Germany will have no navy of consequence, and England will reduce her present navy by at least one half, since her expansion of late years has been forced entirely by Germany.

CHAPTER XIII

GERMAN RESOURCES

The Food-Supply--War Expenses--The Copper Supply--The Call for Gold--No Outside Resources--The Human Sacrifice.

Counting Montenegro and Servia as two nations, there are now seven countries at war against Germany, Austria, and Turkey, and two more, possibly three, may join in within a few weeks. If Greece enters the battle-line, it will be ten nations against three. When Roumania and Italy join the Allies, as is now being diplomatically arranged, Germany will be completely surrounded, with Switzerland, Holland, and Denmark in a measure locked in and powerless to give aid or a.s.sistance to the Germans. Indeed, these three smaller countries and Scandinavia are practically locked in now, with the North Sea placed in the war zone, and Italy as well as Denmark and Holland shutting out all contraband goods for reexport to Germany and Austria.

Thus we have the spectacle of two nations of more than 115,000,000 people actually surrounded and besieged. Jointly these two nations in occupation of their entire territory could feed themselves from their own soil. They cannot be starved out, as in a besieged city, for lack of bread, meat, or drink. But the siege at the present time is not against the people of Germany and Austria: it is against the war-machine of Germany. This war-machine can be starved out when cut off from gold, copper, rubber, and oils. If these cannot be cut off, then her men must be cut down.

Germany has raised by war-loan $1,100,000,000. She has spent this and $500,000,000 more besides. The financial strain is shown in her paper and exchanges at discounts outside her own border. Within her own realm she is piling up a gold reserve in her great bank, to sustain her expanded paper issues and her strained credit; but how is she securing the gold?

Calling a mark a shilling, or 25 cents, let us speak for a moment of Germany's finances in marks. After the war of 1870 she planted 125,000,000 marks in gold from the French indemnity in her war-tower at Spandau. In June, 1913, the Reichstag voted to double this to 250,000,000 marks in gold, the addition to be known also as the Spandau tower reserve, but to be placed in the Reichsbank and not counted in the bank reserves. There was also to be coined 125,000,000 marks in silver.

The whole was simply a stirrup-cup to enable Germany quickly to bound into the war-saddle with purchase of horses, food, and the light or perishable munitions of war which must be had at the outset and at a time when war panic first seizes the currency and supplies of a community.

The basis of German finance was 1,200,000,000 marks in specie, mostly gold, in the vaults of the Reichsbank at Berlin--the central bank of issue and bankers' deposits--with its 485 branches.

Before the war this metal reserve had been brought up to 1,400,000,000 marks. At the outbreak of the war, of course, the Spandau tower reserve in specie must have gone into the bank, and every metal reserve that the government could lay its hands upon likewise went into the bank. Germany then boasted a gold reserve approaching 2,000,000,000 marks. In this month of February the bank gold reserve was put well above 2,000,000,000.

Bank-paper issues meanwhile expanded by the billion.

The great contest in Germany is to maintain this bank metal reserve, and it is the task of Sisyphus and of herculean proportions. Outside of the United States, Germany has probably little, if any, credit to-day. She must pay in gold for what she buys from without, and from without she must get copper and oil. Lubricating oils are troubling her now quite as much as diminishing supplies of gasolene.

To get copper for munitions of war she can produce within her own borders 90,000,000 pounds. Of late years she has been importing from America 300,000,000 pounds per annum, so that electrification has been going on for many years all over Germany, and copper wires in telegraph-postoffice work scintillate in the skyline of the German cities. These can come down and be replaced with iron or aluminum. Of course, the first wires to come down will be the power-transmission wires. They can readily be replaced with aluminum, of which Germany is the parent producer. A very fair telephone service can be maintained with iron wires. Those who are looking for the exhaustion of Germany on a copper basis are reckoning without knowledge of German resources.

For petrol she can subst.i.tute benzol and alcohol, with some inconvenience. Germany is likewise the home and center of industrial alcohol, which it manufactures from surplus products. But when it comes to gold, there is the rub. Germany fixes a price of 20 cents a pound for copper within her own borders, but the government will pay 30 cents a pound to anybody who will deliver it to her from the outside.

Indeed, I have heard of one lot of copper in Sweden for which 40 cents a pound was bid if the parties could ship it out across the Baltic.

I have a friend who was bid $5 a gallon for gasolene if he would land it within Germany, but such bids are not necessarily convincing. They may be made to fool the enemy. There are also stories of great underground storage-tanks of petroleum, owned by the government and concealed in the Black Forest, that have never yet been touched. It is inconceivable that Germany should plunge into a great war without having resources of copper and petroleum. But for all that is bought from without she must pay gold. No financiers know better the value of gold as the underpinning in finance than do the Germans.

Germany was very lavish with her gold at the start, and the French believed that it was an a.s.sistance in her military strategy. At the battle of Charleroi 50,000 German cavalry screened an unsuspected infantry force of 300,000 men and the French had to retreat; but that Maubeuge surrendered 40,000 men, without more fighting, gives rise in the French mind to suspicions of German gold. The anathemas of the French against their commander at Maubeuge make it much safer for him to remain a prisoner in Germany. The French caught one German wearing a French uniform but having upon his person one million francs. Of course, they shot him as a spy, but they were more incensed by the bribes he carried than by his uniform.

Everybody in Germany is called upon to lend a hand in maintaining the supply of gold for the government. The patriotism of the people was first appealed to. Then laws were pa.s.sed. People are "requested" to give up their jewelry, to make a patriotic sacrifice of it for the Fatherland. Cards are printed in the newspapers urging the people for the sake of the Fatherland to bring all their gold into the Reichsbank.

So fine is the search for gold that wedding rings are given from the fingers of the women, and iron rings are subst.i.tuted as badges of patriotism.

While every other nation on earth since 1900 has been acc.u.mulating gold in bank reserve, England alone has stood aloof and acc.u.mulated credit instead of gold. English financiers laugh at gold except as it can be made useful. They prefer to hold interest-bearing promises to pay gold. To-day England holds the keys to the world's gold outside of Germany, and I have a suspicion that she is not averse to American cotton going into Germany if it takes out the gold in return.

Germany is young as a banking, trading, and industrial nation. England insists that both men and gold must be at work. In Germany the gold reserve must be maintained and, with foreign trade cut off, men must be idle. In England both the gold and the men are at work. Labor was never better employed in England than to-day. The English policy in this wartime is to fill every idle hand with productive industry; to work the machinery day and night; and to keep the gold in England so far as is necessary and to keep it circulating in England. The national loss begins when you lose either the golden days of labor, the gold of the sunshine that makes the harvest of the valleys or the gold of finance and commerce.

When the Germans fought the French in 1870, 60 per cent of her people lived on the land. Now, forty-four years later, she is fighting the whole world, but only 30 per cent of her people live by the fruit of the soil.

That is the simple answer as to why Germany, a country besieged, cannot win against the world.

Germany has no sea-expansive ability, no foreign credit, no international reserves to carry out an offensive warfare. Her only possibility of success lay in a sudden and decisive march over the rich territory of France, the possession of Paris, and a huge indemnity tax levy as in 1871. The rest might have been easy. Hence the supreme military necessity for a quick drive through Belgium, the only open road to Paris. The size of the crime in Belgium has shown the supreme financial necessity. There was no military necessity for the outrage against the free Belgian people--only the economic necessity.

There is nothing left for Germany but a defensive warfare, a warfare now conducted upon foreign soil just over her own borders--the burden upon the enemy, the supply base near at hand.

Germany must reduce and conserve her sh.e.l.l-fire. The Krupp works have no ability to turn out daily the number of sh.e.l.ls that Germany was exploding, and the United States in its own a.r.s.enals could not in a year make a week's supply of sh.e.l.ls at the rate at which they were being exploded from Switzerland to the English Channel.

Greater than progress in the arts of peace is progress in the art of war. We have read in the American papers of a most wonderful new French sh.e.l.l that in bursting paralyzes and destroys life so instantly that all the living things within so many yards are, in a flash, set rigid in position as though manufactured for Jarley's Wax Works, the officer standing in position with uplifted arm, yet dead, the soldier by the window with a cigar in his fingers, a smile on his face, stone dead.

I was informed that the effectiveness of this sh.e.l.l was not due to its poisonous gases but to the fact that, instead of being filled with bullets, it was charged with a wonderful new explosive.

For the development of the science of war twelve months in the line of battle is worth in new inventions ten years of peaceful military study.

A three years' warfare for which the English are planning is likely to put Germany's thirty years of "peaceful" war preparation quite in the shade, so far as practical results are concerned.

I hear of new and more powerful mortars and cannon, wonderful new rifles, now being manufactured by the million from secret plans, and new guns to bring down Zeppelins, that it is not useful to discuss here.

In the first six months of this war, the German casualties must be well up toward 2,000,000. A million of the injured may go back to the firing line.

But in killed, seriously wounded, missing, and prisoners, Germany must be losing at the rate of 2,000,000 men a year, and the forces of destruction against her will increase rather than diminish. That she can lose at this rate for three years and have anything left worth consideration as a military power is beyond reason.

Nevertheless, when I spoke with a very prominent American, now in a responsible position abroad, he said: "The Germans have food and supplies, and they have an idea; and the only way to overcome that idea is by their destruction. The South had no resources for a three-year or four-year war, but it had an inst.i.tution, an idea, and a determination. If you will recall it, at the close of the war there were practically no men left in the South. This war will be over when the fighting men of Germany have been killed off."

I have so much respect for the business, mathematical, and scientific mind of Germany, that I cannot believe she will prefer the destruction of the German people, individually or collectively, to the destruction of the German war-machine which set on this war.

I make the following estimate of the casualties--killed, wounded, missing, and prisoners--of the warring powers, omitting Turkey and j.a.pan, up to February 1, 1915:--

German........ 1,800,000 French........ 1,200,000 Russian....... 1,600,000 Austrian...... 1,300,000 Belgian....... 200,000 Servian....... 150,000 Montenegrin... 20,000 English....... 110,000 Total....... 6,280,000

Not in a hundred years, or since the Napoleonic wars of 1793 to 1815, has there been any war approaching these casualties now reaching in six months to six millions.

A remarkable statistical fact concerning the war, which I ran across in London, was a computation that the deaths in the navy were substantially equal to those in the army, from the beginning of the war up into November. Of casualties in the army, only about 10 per cent are deaths. There are few wounded to be returned home from a naval disaster. When the English army had suffered about 60,000 casualties, making about 6000 men killed, at the same time from the naval service 6000 boys in blue had gone down to watery graves.

CHAPTER XIV