for Germany and discord among other nations. In 1875, disappointed at the rapid recovery of France after her disasters, and fearing or professing to fear her desire for revenge, he proposed to attack her again. Russia, whom he sounded on the subject, gave him to understand that she should stand by France, and he desisted. In 1887, to frighten France away from a rapprochement to England, he threatened her with war over the Schnaebele incident. Otherwise his policy was that which he thus sketched in his 'Thoughts and Memories':

"We ought to do all we can do to weaken the bad feeling which has been called forth through our growth to the position of a really great Power, by the honourable and peaceful use of our influence, and so convince the world that a German hegemony in Europe is more useful and less partisan, and also less harmful to the freedom of others, than would be the hegemony of France, Russia, or England."

And so, while confining his foreign policy to sowing dissension among other powers and creating the Triple Alliance with Austria and Italy, he bent his efforts to domestic concerns, with the aim of increasing Germany's wealth and commercial prosperity.

In the years immediately following the Franco-German war there was much to occupy the attention of the Chancellor. Three years passed before the German army was entirely withdrawn from France. That

army had to be reorganised; Alsace - Lorraine had to be brought into line with the rest

of the Empire; Imperial institutions had to be framed and established. And it is not till 1876 that we find Bismarck turning his whole-hearted attention to the fostering of German industries. The form which his matured opinion took was that two things were necessary Improved Transport and Fiscal Reform. We will deal first with the question of transport. If the products of German industry were to compete favourably with those of other nations, means of transport must be made cheap and easy. In her rivers and canals Germany possessed the nucleus of a good system of water transport, and their improvement was taken in hand; but as the river and canal system attained its highest development after Bismarok's dismissal, and has an important bearing upon Germany's sea policy, we shall defer treating of this subject till it comes in its place later on.

Until the seventies German railways had been built for the most part by private enterprise, but occasionally private companies had been assisted by the State, and still more rarely the State had itself built strategic lines. But there was no comprehensive railway organisation, no uniformity of rates, no combination for the benefit of passenger traffic or goods traffic. In 1876 1876 Bismarck said

"Germany is divided into sixtyendowed with all territorial and three railway territories, which are feudal rights and privileges, including the right of making war; and

the railway boards avail themselves of these privileges, and even make war against each other, for the sake of power and as a kind of game. In my opinion the railways are intended rather to serve the requirements of trade than to earn a profit for their owners."

He summed up the evils of the existing system, showing how it caused unnecessarily high working expenses, involving high charges to the public, chaos of freight charges (1400 different tariffs constantly changing), and impediments to the direct travel over the country of passengers and goods, and how in consequence it damaged trade and industry. He began by proposing to regulate the tariffs by Imperial law; and again laid stress upon the abuses of the present system. He said that a higher freight rate should be charged to imported goods than to those of home production.

In October 1879 the Minister of Railways brought in a bill for the taking over by the State of the lines owned by private companies, urging that the national interest must take precedence of railway interests, and that the railways must be made truly national for the defence of the country, and for the development of its prosperity.

There is nothing more remarkable in Bismarck's career than this. He hated Socialism; he combated Socialism for all he was worth. But he put theories rudely on one side; he saw that this measure was suited to the needs of his country at the time, and he acted upon his one and only

principle, "Salus publica." In the next few years Prussia bought up all the private lines. Between 1879 and 1905 Prussian State ownership increased from about 4000 miles to 20,000 miles, and private ownership fell approximately to zero.

The other German States followed suit, and before long German railways were a State monopoly. In the ten years from 1886 they increased in growth no less than 66 per cent under the hands of the State, British railways having in the same period increased less than 30 per cent; the rolling stock was more than doubled in the same time, passenger and freight traffic more than quadrupled, and the profits earned in the year 1905 were 7 per cent on the total capital of all the railways of Prussia. The total capital has, moreover, been written down till it stood in 1906 at less than at the time of the purchase. The Prussian State Railways were acquired at acquired at a cost of 475 millions sterling. Of this 150 millions have been written off, so that they now stand at a value of only 325 millions-less than a third, according to the State Department estimate, of their real intrinsic value.

But Bismarck did not purchase the railways as a profitable investment or a speculation. He bought them to help commerce and industry. And this is what has come about. Freight charges are uniform throughout the country, so much per ton per kilometre for each class of goods. The classes are few and simple, and

it is said to be as easy to calculate the cost of freight for a consignment to any part of Germany as it is to calculate the cost of postage of a letter or a book. Foreign raw material for the use of German manufacturers is carried cheaply, but foreign manufactured goods are made to pay a higher rate than native goods. The charges for both goods and passengers (third and fourth class) are extremely low.

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Now we come to Fiscal Policy. The traditional policy of the Zollverein had been Protection. After the Zollverein a period of modified Free Trade ensued. To this, in a letter to the Minister of Finance, Bismarck attributed "the deterioration in the economic position" of Germany, of Germany, and "the shrinkage in the prosperity of the population," which caused him anxiety in the early seventies. In 1875 he wrote: Nothing but reprisals against their products will avail against those States which increase their duties to the harm of German exports." The following year he called for proposals from the Minister of Finance, and expressed his opinion against concluding commercial treaties which would limit freedom of action with regard to tariffs. A year later he wrote: "German industries ought to be effectively protected against the injuries at present being inflicted on them.' In 1878 he called a conference to consider a revision of fiscal policy, and in that and the following year issued several State papers, advocat

ing Tariff Reform not merely for the purpose of producing revenue, but for the protection of German industries. And in 1879 he introduced his protective policy in Parliament in a speech in which he said, "In my opinion we are slowly bleeding to death owing to insufficient Protection," and made this remarkable statement

"I see that those countries which possess Protection are prospering, and that those countries which possess Free Trade are decaying. Mighty England, that powerful athlete, stepped out into the open market after she had strengthened her sinews, and said, 'Who will fight me? I am prepared to meet everybody.' But England herself is slowly returning to Protection, and in some years she will take it up, in order to

save for herself at least the home market."

Here is another paragraph in this speech

"We have opened wide the doors of our State to the imports of foreign countries, and we have become the dumping-ground for the over-production of all those countries. Germany being swamped by the surplus production of foreign nations, prices have been depressed, and the development of all our industries and our entire economic position have suffered in consequence. If the danger of Protection were as great as we are told by enthusiastic Free Traders, France would have been impoverished long ago, for she has had Protection should have been ruined long ago.” since the days of Colbert, and she

For Germany read England; for France and Colbert read Germany and Bismarck, and there is not a word that might not with truth be spoken by an English statesman at the present hour.