of Great Britain. Until the last third of the nineteenth century, the German States were mainly agricultural, manufacturing being a minor activity. Within a period of thirty to forty years there was a complete transformation in the economic life of Germany which resulted in placing that country among the three leading commercial nations of the world. This change properly cannot be attributed to any single cause but is due to a combination of factors 1 of which only one will be mentioned here. This is the thoroughly practical and systematic manner in which production was organized and foreign trade conducted. The German system of foreign trade extension, as we find it in operation in pre-war times, was in striking contrast to that of the British. Just as individualism characterized the British pre-war system of foreign trade development, so paternalism characterized the German system. There was probably no country in the world, however, in which coöperation between the business interests and the government was more thoroughly and effectively worked out than in the system of trade organization of Germany in the pre-war era.

The Imperial Consultative Board. As an illustration of this coöperation, reference will now be made to the Imperial Consultative Board for the Elaboration of Commercial Measures. This commission was created shortly before the opening of the twentieth century in order that there might be established a connecting link between the Imperial Government on the one hand and various business organizations, both semi-official and public, on the other. It was arranged that the thirty-two members comprising the board should be appointed as follows: one half directly by the Chancellor, the remainder also by that official but upon the nomination of certain outstanding

1

1 For a fuller discussion of the causes of the pre-war industrial and commercial expansion of Germany, the reader is referred to pp. 410-413 of Gregory, Keller, and Bishop's Physical and Commercial Geography (Ginn & Company), and to the footnote references on these pages.

business men's associations. The Imperial Consultative Board soon demonstrated its value and importance to the nation by rendering a variety of services, such as, for example, in its investigations to shed light upon tariff questions; in its contributions in the making of commercial treaties; and in the amassing and systematizing of data on industry and trade. Though the board's relations with the government were merely advisory, it has had a great influence in determining the commercial policy of the nation.

Other features of the system of trade promotion. Another factor which proved to be effective in bringing Germany into the front rank industrially and commercially and which kept her there until the World War was the various classes of experts maintained by the government at certain consulates. These and the consular staff kept the government informed upon business matters, throughout the whole commercial world wherever consulates were maintained, in which German merchants might be interested. Such information as was forwarded to the government from these and other sources was carefully analyzed and sorted by a special department of the Imperial Ministry of the Interior. Effective means were at hand for getting the various items of information, or conclusions based thereon, into the hands of those business men who would be benefited the most by such information. Again, the handling of the problem of railway rates, though perhaps open to criticism from our standpoint, was designed to encourage the export trade. Such railway lines as were owned by the German States made a considerable reduction in freight rates from interior points to the seaboard on goods designed for the export trade. Furthermore, the banking system of the country, because of the numerous branches located in overseas countries, was able to render important services to German merchants engaged in the export trade. An important feature of the service rendered was the furnishing free of charge of exact and detailed information concerning trade

conditions in those foreign districts where their branches were located. Another factor which has attracted a great deal of attention in this country and which is believed to have been an important influence in the expansion of German pre-war trade was the extensive system of "kartells," combinations formed by certain types of business units agreeing to delegate to the kartell the control of certain features of their business. In these and in numerous other ways there was complete and efficient coöperation between all of the various interests involved in the development of Germany's foreign trade.

Developments during and after the war. Soon after the outbreak of the war, the immense foreign trade of Germany was reduced to insignificant proportions, consequently there was relatively little opportunity for the great trade-promoting machinery of the country to function. There has been more or less speculation in this country regarding the exact postwar condition of Germany's economic strength and organization, and any statement which one might venture on this point without a careful first-hand investigation would be mere speculation. It may be well, however, in passing, to give the opinions of one or two observers on this question. Rather more than two years after the signing of the armistice a British government official who had been studying the industrial and commercial situation in Germany is reported to have said: "Germany is still a perfect industrial machine, running at low speed, it is true, but undamaged as yet in its vital parts, and would respond readily to any stimulus." This statement has been confirmed by a student of international affairs in this country who has been abroad to study foreign trade organizations in England and on the continent. Whether that particular part of the industrial machinery which is

2

1 This statement is quoted in an article by P. Harvey Middleton of the International Trade Department, Guaranty Trust Company of New York, on "German Plans to Extend Foreign Trade," published by the Guaranty Trust Company under date of January 31, 1921.

P. Harvey Middleton, in article just referred to.

designed to promote and prosecute the foreign-trading interests of the country has been fully maintained, and whether it is capable of functioning equally as well under post-war conditions as it did before 1914, are questions which can be answered by an outside observer only in the light of a wider experience in international commerce by Germany than she has had since the fall of 1918. At any rate, in order to be prepared for the task of undertaking to recover the markets that were lost during the war, and, presumably, to increase, if possible, her foreign commerce to still larger proportions, Germany found it necessary, during the war and afterwards, to make some changes or adjustments in her foreign trade organization. Of these, mention now will be made.

Efforts have been made to establish a ministry which would deal specifically with matters pertaining to foreign trade rather than have such matters handled, as they were in pre-war times, either through the Foreign Affairs Office or the Ministry of the Interior. The result of this agitation has been the formation of a department known as the Imperial Economic Office.

The jurisdiction of this department in matters of commerce embraces questions of commercial policy and commercial treaties, war economic measures including retaliation, economic aspects of tariff and taxation, insurance, corporations, banks, stock exchanges, exhibitions, and matters concerning conditions of production at home and abroad, general statistics, as well as statistics of trade with foreign countries.1

Another post-war activity designed to promote the foreign trade of Germany was the formation, soon after the armistice, of an organization known as the Reichsverband der Deutschen Industrie, by the consolidation of two great industrial associations representing several thousand business units or associations thereof. Among the important activities of the

1 From an article by Professor H. R. Tosdal on "Foreign Trade Organization in Europe Since the War," published in The Annals of the American Academy of Political and Social Science, March 1921.

Reichsverband are those which are concerned with taxation, with general economic policy, and with meeting those provisions of the peace treaty which pertain to economic affairs. There is close coöperation between this powerful organization and the Imperial Economic Office, and with other governmental departments interested in the promotion of foreign trade.

In conclusion, it may be stated that many of the associations embracing those interested in the same industry or trade which were formed before the outbreak of the war are still in existence with approximately the same aims and purposes as they formerly had; and that in Germany, as well as in both England and France, many new associations of the same general type have been formed. Moreover, there has been little change in the organization for selling goods in foreign countries as illustrated by the kartell, although it would seem that further consolidations of selling organizations have been effected.

FRANCE

The pre-war situation in foreign commerce. Before the outbreak of the war, France occupied fourth place among the nations of the world in foreign trade, being surpassed only by Great Britain, the United States, and Germany. In striking contrast to the situation in Great Britain, as outlined in earlier pages of this chapter, foreign trade in France has been a matter of secondary importance. This is because the resources and industries of France are such as to make her very nearly self-sufficient. The economic isolation of France would therefore be a matter of relatively little concern to her as compared with the direful consequences which would accrue to Great Britain in the event of her isolation. France ranks high among the nations in manufacturing but she has never specialized, as have many other nations, in the production of standardized goods on a large scale. In the past her manufactures have been