ments in a temperate zone and led to the colonisation of America and Australia. The attempts of other nations, and especially of France, to confine the expanding trade and industry of Great Britain within narrow limits, or to deprive Great Britain of her colonies and of her trade, led to wars in which Great Britain fought for her future greatness and for her very existence. When trade is at stake,' said the great Lord Chatham, 'it is your last entrenchment; you must defend it or perish.' Germany finds herself at present in a situation similar to that in which Great Britain was in the eighteenth century. She stands at the parting of the ways. She must either become a maritime empire and a world-empire, or she will decline. The position in which she finds herself demands her maritime expansion.

At the time when Great Britain was conquering and colonising the world, Germany was divided into numerous badly-governed independent States, which quarrelled among themselves. The country was wretchedly poor. It subsisted on agriculture. German wheat, timber, hides, &c., were exchanged for British manufactures. In 1844, Lord Palmerston visited Berlin, and from his correspondence we learn that he was struck by the poverty and backwardness of the country, and that he thought that Germany was in the mechanical arts a century behind Great Britain. The overwhelming industrial superiority which England then possessed over Germany may be seen from the fact that in 1846 Great Britain produced 64-2 per cent. of the world's coal, whilst the Prussian and Austrian States combined, with double the number of inhabitants, produced but 8.4 per cent. of the world's coal, and that Great Britain produced eleven times more iron than all the German States. At that time, steam engines were hardly known in Germany. The industrial machines used in Prussia possessed but 21,716 horse-powers in 1846. Since then they have increased 300-fold, and amount now to more than six millions.

The political and economic unification of the independent German States, which took place in 1871, their transformation into a homogeneous empire, and the wise organisation and direction and the vigorous and deliberate development of all the national resources immediately after the Franco-German war, gave to the industries of the young empire an excellent start, and the introduction of Protection in 1879 converted a backward agricultural country into a wealthy industrial, commercial, and maritime State. Bismarck introduced his protective tariff in 1879, with the deliberate and avowed object of transferring part of the industries and the wealth of Great Britain to Germany, and his policy has succeeded only too well. In the present age of steel, the production of steel is perhaps the best index to a nation's manufacturing eminence. In 1880, the year following the introduction of Protection into Germany, Germany produced but 624,418 tons of steel, whilst Great Britain produced 1,341,690

tons of steel. In 1906, Germany produced 11,135,000 tons of steel, whilst Great Britain produced only 6,462,000 tons of steel. In other words, Germany and Great Britain have changed places. Twentyfive years ago, Great Britain produced twice as much steel as did Germany. Now Germany produces twice as much steel as does Great Britain. Other German industries have followed the lead of the steel industry, but space precludes the showing of their progress in detail. The fact that the industrial steam engines of Prussia have increased from 984,000 horse-powers in 1879, the year in which Protection was introduced, to 6,043,567 in 1907 shows better than a lengthy account the marvellous progress of the German manufacturing industries as a whole.

Largely owing to Germany's surprising development as an industrial nation, Great Britain is ceasing to be the workshop of the world, and Germany is rapidly attaining her place. It is true that if we look uncritically, as most Free Traders do, at the combined export and import figures which are swelled by our huge imports of food and our constantly-growing exports of coal and of other raw materials, Great Britain is still the first trading nation in the world. But a closer examination will show that the character of our trade has curiously altered during the last three decades, that Great Britain is becoming, to an increasing extent, a purveyor of raw materials to other nations, whilst Germany is becoming the workshop of the world; that Germany is industrially rising, whilst Great Britain is industrially declining. I would therefore draw attention to the following most instructive and significant figures, which I believe have not previously been printed in this country, and which sum up the most recent industrial development of Germany in two lines.

During the short period of 1897-1906, whilst Great Britain has but haltingly increased her exports of manufactured goods, Germany has exactly doubled her imports of raw materials and her exports of manufactures.

The change in the industrial character of Germany and in the character of her foreign trade is particularly striking if we study the change which has taken place in the nature of the Anglo-German trade. Formerly, Germany sold to Great Britain raw materials and food, and bought from us our manufactured goods. Germany was Great Britain's farm, and Great Britain was Germany's factory. Now Germany exports to Great Britain chiefly manufactures of every kind, and receives in return principally raw materials and food. Yarn apart, which is a raw material to the German industries and is therefore subject to only a slight duty, Great Britain exports to Germany

chiefly coal, gold, silver, leather, furs, fish, caoutchaouc, wool, copper, &c. According to the very reliable German Customs statisticsthe British trade statistics are not reliable-almost exactly ninetenths of the British exports to Germany consist of raw materials and food, whilst only one-tenth of the British exports to Germany are fully-manufactured articles, such as machinery, woollen and cotton cloths, &c. Great Britain has become a hewer of wood and a drawer of water to Germany.

The industrial development of Germany is still progressing with an incredible speed. The fact that the horse-power of industrial steam engines in Prussia has increased from 4,046,036 in 1900 to 6,043,567 in 1907 shows that Germany's manufacturing industries continue even at the present moment to increase their productive power by leaps and bounds, and that they must in the immediate future rely to an increasing extent upon expansive foreign markets for the sale of their productions. Unless the expansion of the German industries be accompanied by a corresponding increase of opportunities for sale abroad, the German industries, and with the German industries the German Empire, will decline and decay. Germany experiences now the same imperative necessity for expansion over sea which Great Britain has experienced in times gone by, and she knows that upon her ability to secure that needed expansion depends her future as a great nation. Her leading statesmen, economists, and merchants have told her so, and when the German Emperor said, 'Germany's future lies upon the water,' he simply gave a convenient formula, easy to remember, to the general thought that the economical requirements of Germany and of her industries make maritime expansion absolutely necessary.

To a great industrial and trading nation, a great merchant marine is a necessity, and a great merchant marine requires adequate harbours. During the period of industrial Protection, the German shipping industry, which enjoys the advantages of both Free Trade and Protection, as I have explained at length in a recently-published book, has also vigorously grown. The German merchant steam tonnage has increased from less than 200,000 tons in 1879 to more than 2,000,000 tons in 1907. However, the growth of the German merchant marine would undoubtedly have been far more vigorous and rapid did Germany possess a sufficiency of commercial harbours. German merchants and shipowners constantly complain about the lack of good harbours.

The vast increase in the productive power of Germany has led to an equally rapid increase of the national wealth, and therefore to an unprecedented increase of her population. On an average the German population increases by 900,000 per annum, and these vast numbers easily find employment in the rapidly-expanding manufacturing industries. Therefore, there is no unemployed question in Germany. No complaints about over-populations are heard,

and whilst between 200,000 and 300,000 people emigrate yearly from Great Britain through lack of work, about 100,000 Poles, Russians, Austrians, &c., flock yearly into Germany because her industries suffer chronically from lack of labour.

The foregoing facts and figures should suffice to show that, although her rural industries are highly prosperous, Germany has become an industrial State whose population relies principally on the manufacturing industries for its support. They also show that her manufacturing industries are forced to rely to an ever-increasing extent upon foreign markets, and especially upon markets over sea, for the sale of their wares. Indeed about three-quarters of Germany's foreign trade is over-sea trade, and the proportion of Germany's over-sea trade to her land trade is constantly growing, in consequence of the protective tariffs with which her neighbours in Europe try to shut out Germany's manufactures. Therefore Germany's most important market for the sale of her manufactures is not that of Austria-Hungary, or of Russia, or of France, her immediate neighbours. Her best customer is the British Empire, which absorbs about 25 per cent. of Germany's exports, more than is taken by Austria-Hungary, Russia, and France combined.

The chief characteristic of Germany's foreign trade is its precariousness. The precariousness of the hold of Germany on her most important market, the British market, is well known to the German statesmen and to most German business-men, who dread the possibility of Great Britain introducing Protection and arranging with her Colonies for the preferential treatment of her manufactures. How rapidly Germany's exports to Great Britain, and especially to her principal Colonies, have grown is apparent from the following figures, which are taken from the German official statistics :

It will be observed that the figures relating to Canada show between 1902 and 1906 a very heavy decline in the German exports. A comparison of this decline with the other figures, which indicate a constant and vigorous growth of the German exports to Great Britain and her Colonies, shows how much damage a preferential tariff may inflict upon Germany's industrial exports. Germany stands in danger of seeing by far her most valuable markets, the markets of the British Empire, closed to many of her wares. However, this is by no means the only danger which threatens Germany. If Great Britain should introduce Protection, she will, following Germany's

example, conclude preferential treaties of commerce with her best foreign customers (the Colonies would, of course, be placed upon the most favoured footing) and thus Germany will lose many of the advantages which she now enjoys in neutral markets owing to the advantageous commercial treaties which she has concluded, but which she will hardly be able to renew in competition with the British Empire. A study of the Japanese Customs returns, for instance, reveals the fact that Germany is ousting Great Britain in the Japanese market. An Anglo-Japanese commercial treaty, giving Great Britain and her Colonies preference over Germany in Japan, which undoubtedly can be concluded in view of Japan's great interest in the India trade, would practically exclude certain German manufactures from that country.

The German tariff policy which Bismarck inaugurated in 1879 led to the transference of much English trade to Germany. The tables may be turned upon Germany. The introduction of Protection into Great Britain and of preferential arrangements throughout the Empire would lead to the transference of much valuable German trade to Great Britain.

Germany is threatened not only with the narrowing of the outlets for her manufactured products, but also with the danger of seeing her supply of raw products for industrial purposes diminish.

Owing to her Colonies and dependencies, the value of which has not yet been sufficiently realised by most Englishmen, Great Britain controls the supply of many industrial raw products. Inter-imperial preference for sale would, no doubt, be followed by inter-imperial preference for purchase, especially in the case of articles of relative scarcity. Great Britain would, for instance, probably receive the preference for the purchase of Empire-grown cotton and wool. Hence some of the most important German industries would find themselves hampered by the British Empire, both in buying their raw products and in disposing of their manufactured articles, and the result would, no doubt, be the wholesale transference of many industries and of much industrial capital from Germany to Great Britain and to the British Dominions over sea, a transference which at the same time would greatly benefit the British nations and greatly weaken Germany.

Germany, whose natural resources, such as coal, coastline, harbours, easy access to the sea, &c., compare most unfavourably with those possessed by Great Britain, owes her marvellous success chiefly to the fact that she was the first nation to exchange the policy of laisserfaire, the policy of Governmental indifference and neglect, for a far-seeing and businesslike policy of national industrial organisation and development. Owing to the inferiority of her natural resources, and especially to her lack of harbours and to the vast distances (from 200 miles to 400 miles) which separate her industrial centres from the sea, Germany's industrial position is exceedingly unsafe. Germany's

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