On these national-defense loans the cautious Bank of France will advance in limited amounts 80 per cent of the face value, but only where the government loan matures within three months.

The great principle of the Bank of France is to keep liquid. Its assets must always be mobile.

There is only one point at which French finance should be criticized, and as we cannot know all the details of the stress of the military position when Paris was abandoned, her mobilizing of the reserves still in disorganization, and her transportation awry, we may not be in a position to level any just criticism.

But it must be set down in the interest of true report that the French credit was at one time endangered by the way the treasury, or the military authorities, handled the government credit in payment for war-supplies.

Instead of going to the bankers and making its financial arrangements, paying the war-supply contractors, the French government made many contracts under which it paid contractors, and purveyors, with the 6 per cent national-defense notes of the government, running three, six, nine, and twelve months.

As the contractors were making 15 per cent and 20 per cent on their mercantile overturn, they could afford to discount 5 per cent and more in the sale of the government notes, and while the government was passing out these notes at par to the patriotic subscribers, the contractors were negotiating liberal discounts to bankers and others.

Nevertheless, the stupendous fact remains that France, caught in a European war most unaware, with impaired budget and a floating indebtedness, has carried the greatest war of her history for six months without a long-term national loan and by the issue of less than $200,000,000 5 per cent short-term notes for not exceeding one year, and credits for less than $800,000,000 from the Bank of France; has maintained her gold basis unimpaired; and has kept the international exchanges steadily in her favor; and all this without any special financial legislation.

Nor could I find any evidence of a French disposition to sell the American copper shares, railroad bonds, or industrial shares into which the French have been putting some money of late years. But I did learn that short-term American railroad notes may this year be renewed abroad only in part.



CHAPTER VIII

THE BELGIAN SACRIFICE

No Migration from Belgium—Germany's War Tax Levies—Irreconcilable—The Army—No Neutrality over Belgium.

Before Germany launched her thunderbolts of war, Belgium had an industrious, frugal, hard-working, saving population of nearly 8,000,000 people. Of these, 450,000 are now refugees in Holland, where the magnanimous Dutch are providing for them with no outside assistance. Queen Wilhelmina declares, "These are our guests and we will care for them." Nearly 30,000 Belgian troops have also been interned in Holland. It was expected that they might leak out, but the Dutch are stern in their present position of neutrality. They understand their very existence depends upon it. Some of the interned warriors attempted to escape, and six were shot by the Dutch. Nor will they permit contraband articles of war to go through their country. While the Dutch may sell their own supplies as they please, all imports of rubber, copper, or petroleum must be accounted for, and their reexport to Germany is forbidden.

Germany also holds 30,000 Belgian soldiers as prisoners. England took 18,000 severely wounded Belgian soldiers into her hospitals, and 80,000 refugees are being there cared for largely by private enterprise. The losses by the war are difficult of estimation. But at the present time there are 7,000,000 people in Belgium, most of whom must be fed by the outside world.

Belgium is the one nation from which the people have never migrated. Beyond war there is only one power that can move the Belgians from their soil, and that is the influence of the Church.

Representatives of American railroad and industrial interests are in Europe endeavoring to induce emigration from Belgium to the United States, but it is doubtful if these efforts will meet with any success. There are in the United States to-day only two Belgian settlements, one of about 1000 people in Montana and one of about 1500 in western New York. The Belgian loves his land and sits by his home though it be in ruins. The history of the land of the Belgians shows that, as the cockpit of Europe, it was the battle-ground of centuries; yet her people are more immobile than those of any other country in Europe. Earthquakes do not make sunny Italy or golden California less attractive to their inhabitants.

About $20,000,000 (more than 10 per cent of this came from Belgian people) has been raised to feed starving Belgians, and $20,000,000 more should be forthcoming.

The English war office objected at first to the American proposals for food supplies to the little country. It was held to be the duty of the invading Germans to feed the population of the conquered country, as the Germans had appropriated large stores of supplies that were in Belgium, notably at Antwerp.

England finally assented to the proposal, as well she might, for Belgium would starve without food from the outside, irrespective of war losses. In normal times, she imports 240,000 tons of food every month. She also imports most of her raw supplies for manufacturing. Belgium is, therefore, to-day without food, or raw materials for her industries, and probably without outlet had her industries the ability to produce. Although about fifty ships are bringing food to Belgium, they are of small capacity and in the aggregate represent less than one month's supply. In the early part of December about 80,000 tons of food were going through the American committee by permission of Germany and England. The people have been put on one-third rations. Every inhabitant of Belgium is allowed a pint of soup a day and about as much coarse brown bread as would make one American loaf.

The German idea of responsibility and power is that of force. They have ordered the people of Belgium to love them, cooeperate with them, and go about their business. But the Belgians refuse to love the Germans, refuse to cooeperate with them and will not resume their work for the Germans to appropriate the results. The people of Antwerp were invited to come back from Holland and it was proclaimed that there would be no indemnity levied, yet a huge one came down upon the city. The Germans levied a war tax of 50,000,000 francs on Brussels, and Rothschild and Solvay are not permitted to leave the city.

Payment on the tax was agreed to, and then the Germans demanded 500,000,000 francs from the entire province of Brabant, which includes Louvain as well as Brussels. The inhabitants said it was impossible and the demand was reduced to 375,000,000 francs. The inference must be that the latter levy covers a term of years.

The Germans are provoked that the bank money got out of Belgium. The Bank of Belgium sent its gold reserve to the Bank of England, 600,000,000 francs, and Germany demanded that this reserve be transferred from England to a neutral country; but, of course, England refused. There are some banks still doing business in Belgium, but the Belgians reject the German money except when obliged to take it.

The Belgian stores remain closed for the major part, and the Germans threaten that unless the Belgians reopen and proceed with business they will confiscate the stores and sell them to Germans who will do business. The people of Antwerp must be in bed by 9 o'clock. The people of Liege are ordered to retire at 7 P.M. No Belgian is permitted the use of a telephone, the entire system having been appropriated by the military authorities.

The Germans have decreed German time, which is one hour different from that of London, but the Belgian people refuse to set over their watches and clocks. The Belgian railroad system is different from that of the Germans,—left-handed tracks and a different system of signalling. The Belgians refuse to do the bidding of the Germans and operate the railroads. The Germans must move the trains themselves.

The Germans do not hate the Belgians. They simply pity them, that they were so shortsighted as not to accept German gold for right of passage through the country. The German hate is reserved entirely for the English above all people on the surface of the globe. In Belgium 200 marks reward is offered for the capture of any Englishman found in that domain.

The latest response to Bernhardi's book, "England the Vassal of Germany," is Kipling's poem in the King Albert book issued December 16 to augment the Belgian Relief Fund. I clip two verses:—

They traded with the careless earth, And good return it gave; They plotted by their neighbor's hearth The means to make him slave.

When all was readied to their hand They loosed their hidden sword And utterly laid waste a land Their oath was pledged to guard.

After the German Kaiser sounded the battle sentiment of Europe by sending the warship "Panther" to Agadir three years ago in violation of the treaty of Algeciras, it was intimated by the French and the English that Belgian neutrality might be in danger; also that the Lord and the Allies helped those who help themselves.

Therefore, a bill was introduced in Belgium's Capital providing for the raising of an army of 600,000 men where before were 46,000 and a war footing of 147,000. The leader of the Catholic party opposed the programme, declaring that Belgian neutrality was guaranteed by Germany, France, and England. A compromise was effected by which an army of less than half this number was authorized.

When on Sunday evening, August 2d, at 7 P.M., the German ultimatum was handed to Belgium, she was given twelve hours or until morning to declare whether or not the country would be surrendered to the free passage of the German war battalions. Belgium had then an army of 200,000 men; 60,000 volunteers sprang to arms, and that 260,000 was the maximum Belgian army that attempted to withstand the millions of Germany's armed forces. Even these were not effectively placed. The 30,000 men at the frontier were not sufficient to permit of any effective sorties to protect the approaches to the Liege fortifications. It was a forlorn hope from a military standpoint, but for three weeks the Belgians with shrinking forces held in check the war power of Germany. Every week help was expected from the Allies, but no help came, for no country in Europe outside of Germany and Austria had any expectation of war.

Down to the ground and their graves fought the plucky little Belgians, until they numbered, not 260,000, but nearer 60,000. After every able-bodied man in Belgium was demanded by King Albert, the ranks of the Belgians began to swell, and, with able-bodied refugees returned from England, there are now about 120,000 men in the ten divisions of the Belgian army.

But England carries, as she ought, the financial burden. She feeds, clothes, and equips the Belgians and furnishes the money-supply. The Germans still strive, not so much against the Allies as against the English in Belgium. Here the fighting is fiercest, casualties are greatest, and here the reinforcements on both sides are the greatest per mile of line.

Meanwhile the more than a million Germans in Belgium have trenched across the whole country, rebuilt the forts at Namur, Liege, Antwerp, and other places, and are digging themselves into the ground doggedly and determinedly, and with as great precision and more science than the Allies. The German trenches are rather better made and the machinery for trenching has been, of course, better prepared by the Germans.

The great surprise of the war was the demonstration in Belgium that forts costing millions, in defense of cities, are absolutely useless against the big German shells. The defense at Liege was prolonged because the Germans could not at first find the exact location of the central defense. Finally a German approached bearing a large white flag of truce. Belgian orders were given to receive him. The German, under his flag of truce, signalled the desired information and then fell. Soon after, fell the fort. The Germans had found the desired range, and shot. At Antwerp a single shell was able to put an entire fortress out of business.

It is the Landwehr and the older men that have been called by Germany to do duty in Belgium, while the younger troops are sent back and forth between the eastern and western frontier defences.

An American who has lately been all through Belgium, representing both commercial interests and charity work, tells me;—

"I left America absolutely neutral. I was not a student of the war or of the cause of the war. What I saw in Belgium convinced me that the Allies must win and will win. I am no longer neutral. What I saw in Belgium of the wanton destruction of villages, towns, and cities has prejudiced me as no argument could have done. The Allies' losses will begin when they take the offensive against the German works which are now being constructed. Soon England will have 600,000 more men on the Continent and there will be more doing.

"The losses of the Germans have been two or three times the losses of the Allies in the Belgian trenches, because the Germans have been the attacking parties. If the Allies become the attacking parties they will have to sustain the heavy losses. But I cannot see it otherwise than that the Allies must win. The crime against Belgium is the greatest crime since Calvary, and it has set the whole world against Germany.

"It is not only a crime, but it was a military error, for to-day Germany has 600 miles of front to defend, 300 east and 300 west, and her losses have been enormous. At Liege 7000 Germans went down in a single day's fighting. One man I met assisted to bury 500 Germans in front of a single trench.

"I do not believe Brussels is mined; but if ever the Germans got into Paris they would destroy the whole city before they left.

"I shudder to think what the Germans will suffer at the hands of the Belgians when once the rout of the Germans has been begun by the Allies. The Belgians are unreconciled, and if they ever get weapons in their hands—well, I will not predict, I will just tell you one fact: I traveled the length and breadth of the land, saw the women and the children sitting by their ruined hearthstones, but I never saw a tear on the cheek of a Belgian."



CHAPTER IX

RUSSIA AND THE RUSSIANS

Russian Reforms—A United Russia—Russian Armaments—The Greatest Future—Two Water Outlets—The Slav Invasion Bugaboo.

Russia also is likely to bring forth some notable men who have not previously been heard of before the world. General Evanoff is the idol of the Russian army. He is the strategist who plans the movements against Austria and Germany in the East, who surrounds Przemysl and says, "Now, we can take it when we please, but we will not sacrifice Russian troops to take it now; Cracow is more important. Lodz is not important from a military standpoint. We will surround it later."

Evanoff orders his men to keep out of the valleys and engage the Germans in the open plain, where their own numbers will count in action; for in the valleys the German big guns have the advantage.

Russia has been at work steadily since the Japanese war reforming her army within and without. More than one third of her officers were dismissed after that war. The Russian officials now say that the Japanese war was to Russia most providential. It showed the lines of Russian weakness, inefficiency, and graft, which could flourish at a distance from St. Petersburg but became exposed when war put the Russian organization to the test. Steadily every year Russia has been systematically and thoroughly routing out graft and inefficiency. When Russia starts to do a thing she does it thoroughly.

It was because Russia was rebuilding, reorganizing, and was indulging in criticism and putting its mind on the weak spots, that Russian confidential papers stolen in the interest of Germany misled both Berlin and Vienna as to the possibility of Russia going to war to defend Servia in the year 1914.

War has united Russia as never before. The Czar now moves about unattended, and the country is a unit behind him and the war and unitedly against the Germans. From Warsaw to Siberia the German agents and merchants have been arrested and impounded. Nobody in Germany can yet realize how this war has destroyed her commercial relations and commercial organizations throughout the world. Everywhere German people are subjects of suspicion. You will even hear in all seriousness that the Kaiser had an army of 150,000 reservists in the United States with a partial equipment of arms ready to attack Canada; and I have been told by supply agencies that these arms are now offered for sale, as the uselessness of any German movement on the American continent is apparent.

How far Germany is unable to measure the spirit of the English-speaking people is shown by the fact that she cannot understand why the United States does not take this opportunity to possess Canada.

I heard of a retired German-American of wealth, residing in Germany, who was actually invited to go to America to stir up a raid on Canada. Of course he obediently returned to the United States, and then he sat down to wonder how he could effectively report back the foolishness of such an idea without offense to Berlin.

Russia has been perfecting her military organization for ten years. The expansion was to come in the next two years. At the opening of the war she had only 2,500,000 available troops. For two years she has been building factories to manufacture ammunition and arms, and these are now being rushed to completion. People who have offered her contracts for arms and munitions have been told that Russian factories shortly to be completed will make their weapons more quickly than they can now be ordered and received from other countries.

With arms and equipment Russia can draw 17,000,000 men to her German-Austrian frontier just as readily as Germany can draw 7,000,000 men to both her frontiers. In both calculations only one in ten of the population is counted upon for service.

The story is told of a Russian who was asked in London why he did not return for military duty. He replied, "Oh, I belong to the 14th million, and it will be some time before the 18th million is called out."

Russia has the greatest future of any country in Europe. She has the largest unturned arable soil of any country in the world. Russia in Europe is a great agricultural plain. To the east are her rich oil-fields steadily expanding north in the Ural Mountains, and east lies Siberia, endowed by nature as one of the richest countries in the world, an area in which you could deposit the United States. From the Siberian railroad other railroads are now projected; mineral wealth is being uncovered; and English and French capital and American engineers will in the future work wonders with the country.

What Russia has long sought is an outlet to the ocean. This war is likely to give her benefits which she could never have asked and could only have fought for. Germany, defeated, will lose the control or monopoly of the Kiel Canal, and possibly the country around it which she took from Denmark. The Kiel Canal under international control will extend the Baltic Sea of the Russians and the Scandinavians most directly to the North Sea and the English Channel.

To the south Russia will have something to say in Asia Minor and much to say concerning Constantinople. Certainly her influence in the Balkan States and on the Bosphorus will be as great as she could desire. As long as the Turks remained loyal to England, Great Britain was bound to maintain their integrity and hold upon Constantinople and the Bosphorus. With the passing of the Turk Constantinople is in the hands of the Allies when they are victorious. Its final disposition is not yet clear, but the English people can see compensation in Egypt, Asia Minor, and Persia for any necessary Russian control of Byzantium.

While seeking one direct outlet by waterway, Russia may get two with the suicide of Germany and the destruction of her latest ally, the Mohammedan Turk.

Russia is beginning to be better understood throughout the British Empire and the world. The fear of an invasion of Western Europe by the Slav races is a bugaboo set afloat by Germany, who also propagates the bugaboo of a Japanese invasion of North America.

Russia is not a competing nation. She needs the capital and the brains of the outside world for her development, and in time she will offer the greatest field for world cooeperation.

Japan wants to cooeperate with Russia, and, indeed, with all European civilization. After the fall of Kiao-Chau she sent arms to Russia, and she stands ready to throw legions into the European field in defense of her English ally. Influential people in England are strongly urging the military authorities to permit the little Japs to join in.

Russia will keep faith with the Poles and the Jews and set up an autonomous Poland. But there is a strong resentment in Russia to-day because the Polish Jews misled the Russian army in the marshy grounds of East Prussia in the early campaigns of the war.

Russian military plans had to be changed and the field of war set farther south. Here Russia hopes to drive the five million people of Silesia back toward Berlin. This will awaken the Junkers of East Prussia and bring home to the people of Germany what the Prussian military machine really invites when it attempts a world-conquest.

Russia lacks military railroads and scientific means of communication. But just as America was surprised ten years ago to find the Japs, as the ally of England, giving, as the English predicted, "a good account of themselves," so the Russians as the allies of Great Britain may be found giving a very good account of themselves in this war. Russia is certainly unconquerable from either the Austrian or the German standpoint, and the smashing of Austria between Russia, Roumania, Servia, and Italy may be the real military campaign of this most Audacious War.

American engineers and diplomats familiar with Russia declare that, properly led, the Russian soldier is the greatest fighter in the world; and he is getting that leadership now.

The Russians expect the war will be over before next autumn, but Kitchener does not plan to end it then. He means to do this job thoroughly, and his plans are most comprehensive.



CHAPTER X

THE ENGLISH POSITION

A Quiet London—The Call to Arms—No Mourning—The Zeppelin Scare—German Spies—The German Landing—Kultur War Indemnities.

It is worth a winter trip across the Atlantic to stand with a London audience and hear it respond to the call, "Are we downhearted?" with a thunderous "NO!"

It is then you first realize that the British Empire is at war; and what that war means; and that that Empire has piped to its defense a free people inhabiting one fifth of the territory of the globe.

The British Empire has war upon its hands a major part of the time. It may be in the Soudan; it may be in South Africa. From some quarter of the globe war is almost always before the Empire. But a war summoning the whole British Empire to arms on land and sea,—that has not been dreamed of for a hundred years.

You expect to find in London an armed camp, the flags flying, the drums beating, the troops marching; an excited people discussing causes and effects of the military and naval programmes; military encampments with white tents over the plains. But you find nothing of the sort. If you attempt to motor in the country and figure on reaching a certain place in two hours, you may find it takes you four, as you are very likely to run into troops, companies, regiments, and armies in training, but mostly without arms and only partially uniformed. They are trudging the highways and the lanes of England from 5.30 A.M. until dusk,—rain or shine. Here is Kitchener's army being put into condition, with no fuss, feathers, or trumpet beats. The army is "rolling up" and "hardening up." But not on the tented campus. It is quartered in the towns and villages all over England, and board and lodging is regularly paid by the government.

There are no noticeable drum beats over England; no displays of bunting. Monuments, public buildings, and conspicuous corners, and, most conspicuous of all, the glass fronts of the taxi-cabs, bear signs calling the men of England to arms:—

"Fall in—Join the Army at once."

"Your King and Country need you. England expects that every man this day will do his duty."

"Enlist for the duration of the War."

"Enlist for three years."

"You are needed to fight for Honor and the Country's defense."

"No price can be too high when Honor and Freedom are at stake."

"Who dies if England lives?"

"He gives twice who gives quickly—join at once."

"'More men and still more until the enemy is crushed.'—Lord Kitchener."

And many more of the same tenor. Beyond these you will see little evidence in the London streets of an empire at war. Hotels are largely empty; managers very polite; restaurants must close at 10. P.M.; no after-theater supper at the hotels unless you are a guest. Men in khaki uniforms are more conspicuous; and bandaged heads, slung arms, and legs assisted by crutches are more noticeable than formerly.

The searchlights flash above the city; the street lights are shaded overhead in foolish fancy as a protection from aeroplanes or dirigibles. Curtains are closely drawn by police orders, in the houses and railway trains.

Yet one of the airmen who had been over London at night told me that the city was just as conspicuous as though it were wide open in illumination. Indeed, there is a general call among the Londoners for the police to let up and permit electric signs, lighted windows, and more light in the streets. But the only answer that came early in December was orders to turn down the lights further!

In Paris they turned on the lights, illuminated the streets, closed up the museums and galleries, buried their art and sent the Venus de Milo on a walk to some storage vault along with the banks' reserve gold. London's museums and picture galleries are wide open, and the endeavor to protect the streets from Germans peering down from above looks childish. The great strategy of the Germans consists of talking across the Channel about their plans for raiding England. I suspect that the English military authorities do not object. It encourages enlistment. When enlistment gets dull, the Germans stimulate it with some shells thrown on the English coast.

There are only two or three new plays in London this season; the great war-plays and dramas, and indeed the literature of this war, have yet to be written. Nearly all the new presentations for which London is so famous were set back on the shelf when the business of war started. Most of the theater programs are revivals of old favorites, and a few of the theaters are still closed. All that are open begin promptly at 8 P.M. Five hundred English actors have gone to the front.

You have to make the circuit to find the heart of England at war, but you find it—horse, foot, and dragoons; men, women, and children. "Are we downhearted?" answered by a thunderous "No!" Then again silence, and turning down of the lights, and the steady work! work! work!

"Have you a bed here?" said Kitchener when he entered the War Office. "Never heard of such a thing here," was the response.

"Get one," said Kitchener; "I have no time for clubs and hotels."

Not only Kitchener but the whole staff camped down in the office, working days, nights, and Sundays, until Lady —— turned over her house nearby to Kitchener and his staff.

"Where is ——?" I asked of his next-door neighbor. The response was, "Oh, he is at the War Office, and gets a Sunday home with his family about once in six weeks." That family was not fifteen miles from London.

When a citizen has been suddenly notified that where he could formerly get a train for home every fifteen minutes, the railroad has been taken for military service, and he must get his supper in town, there is not the slightest word of complaint. He only wishes he could contribute more to the Empire.

I spoke with Lord K., of B—— & Co., concerning the loss of his eldest son, as I had known Lord K. for many years. The manner, the gesture, the speech, in response, were all one, and brief; just an indication of sacrifice that had to be made for the Empire; and that sacrifice had only just begun; deaths in the family just honorable incidents in the life of the Empire.

You see crutches and broken heads in London, but you will see no mourning.

"Yes," said Lord C. to me, "the average income tax in England is now doubled until it is one eighth, or about 12 1/2 per cent, but my friends in the banking world have to pay an increasing supertax. I know many who must now give one quarter of their income to the government. They not only do it gladly, but expect it will be a half next year, and they will contribute that just as gladly."

From the top to the bottom in the Empire, all that is asked at the present time is a protected food and clothing supply, and everything else can go into "the cauldron of war."

"Did you ever see anything like it?" said an American banker in London to me. "Are n't these people wonderful? Did you ever see such resolution, such steady work, such sacrifices, such unity of empire?"

It was indeed worth a winter's trip across the ocean to see it.

Although the newspapers complained of the censorship, there was only one general complaint from the people in the British press. They wanted to know what the regulations were, or were to be, concerning self-defense when the Germans arrive in the country. Should a citizen without uniform take up arms against the invaders? Had he a right individually to shoot a German invader? Was the old rule that an Englishman's home is his castle, and that he has the right to defend it, now superseded by any rules of international warfare?

Some independent people of note were declaiming in the public prints that any German invader of England was a thief and a robber and that any weapons might be used to attack the invaders; and that there was no rule of warfare that could prevent an Englishman defending his home by any weapons against any foreign invaders.

Nevertheless the spirit of the people was, even under invasion, to respect law and order and rules of warfare, and be guided by the government as to all forms of individual or collective defenses. They simply wanted the rules promulgated.

The English are reconciled to Zeppelin raids from Germany, and rather expect them. But there is yet no unanimity in preparation or action. The Rothschilds have put four feet of sand on the roof of their building, but the amount of their gold in store must be incomparably less than that in the Bank of England, where no precautions are visible.

Trenches by the beaches and barricades by the highways are noticeable along the entire south and east coasts of England, but they are without stores or equipment. You run across these trenches in the moonlight as you journey about the country and for the moment you wonder for what purpose somebody dug those long ditches by the shore, and what the trench or irrigation scheme is. Your answer comes when you run straight into a timber barricade across the highway nearby. Then you look down the coast and see flashing searchlights, note the lights of steamers passing up and down the coast, and reflect that there is no universal law in war. The Channel steamers are carrying lights in the war area, but the North Atlantic steamers still cross the ocean without showing even port or starboard lights. The street cars moving in the English coast cities must, of course, be lighted and the streets must have some illuminant; but the railroad carriages, hotels, and private houses must draw their curtains. Yet railroad terminals and piers must have their lights, and harbors must have their searchlights. General service lights must be ablaze, but individual glimmers must be curtained. It reminds one of Cowper, the English poet, who, in the same kennel, cut a big hole for his big dog and a little hole for the pup.

The most talked-of war subject in England is the German spy system. It is estimated there were between 30,000 and 40,000 German spies, and many times this number of German reservists, in England at the outbreak of the war. For years England has laughed over German theoretical discussions of how best to invade England, and German studies of English coast lines and country resources.

I heard years ago of a young Englishman who disputed in Berlin the war-office plans of his father's estate. He declared that he thought he ought to know the land where he was born and brought up as a boy, and that there were only two springs of water thereon, instead of three. The German general staff said their maps of England were correct and were not based on English authority. The young man found on his return to England that the German maps were correct and that his father's estate had three springs whence men and horses could be watered, although his family had never noted the existence of a third.

Two years ago some friends of mine were playing tennis in an English village and inquired the occupation of two young Germans, who seemed to be good tennis-players, but without family relations or settled business.

The response of the hostess was: "Oh, they are just two German spies of good education and charming manner looking over the country here, and we find them very useful in making up our tennis tournaments." It was looked upon as just a part of the German map-making plans, and England was an open book for anybody to map. Baedeker published the guide-books of the world: why should n't the Germans make all the maps of the world,—especially if German map-making were cheaper than English map-making?

A banker friend of mine found two young Germans in his village, with no other occupation than motoring the country over and making notes and sketches of cross-roads, railroad junction-points, important buildings, bridges, etc. He thought the authorities ought to know what was going on, but received a polite invitation from the local police to mind his own business. When once he lost his way on a motor-car trip, and ran across these fellows, he was very glad to get the right directions for the shortest way home. They knew more about the roads of that country than did the people who were born there.

About 20,000 German spies and reservists are in detention camps on the west coast, and on the islands. Even the German prisoners are kept away from the east coast, where it is expected the Germans may eventually struggle for their landing.

I have not the slightest confidence in any invasion of England by Germany, but I do not understand why German Zeppelins do not move in the darkness over the British Isles and drop a few bombs about the country at important places. It may be that the German Emperor is right in his calculation that such action would do very little damage, and would strengthen tremendously the enlistments and war-expansion plans of the English.

When West Hartlepool, Whitby, and Scarborough were bombarded by the German warships on the morning of December 16, the English excitement concerning it was only a small part of what an American would have expected. Not far from this bombarded coast is a summer resort town, where for many years a legend has existed that when in some future age England decayed and Germany came in, this would be the first landing-point.

An Englishman two or three years ago took it upon himself to find out how far this legend might have its base in any near invasion. He looked up the record and found that all the leading summer hotels and strategic points were in the hands of Germans. Then one day he quickly addressed his German waiter in his native tongue, demanding to know where his post was in that town in the event of hostilities. Promptly the German replied, "Down at the schoolhouse!" Further investigation showed that every reservist had his allotted place before and after the landing, and his place in the civic organization to follow. The Germans had also compiled lists of the people of property in that vicinity and exactly the character and amount of resources that could be commandeered from them.

If the Germans were free to map England, why should they not be free to map all its resources, individually as well as collectively?

I know a building in the heart of the London financial district that carries on its roof a Zeppelin-destroyer gun. A few days before I was last in this building a fine-looking fellow in khaki uniform entered in haste and asked the janitor to show him to the roof that he might quickly inspect that gun and see that everything was in order, as raids might be expected at any moment. Of course, he was taken to the roof, and his inspection quickly completed. Ten minutes later the London police were there to inquire for a man in khaki uniform.

The English officer said, "Very singular, we are ten minutes behind that fellow everywhere. He is the cleverest of all the German spies, and we are not able to catch him!"

If that spy had been caught in his English uniform inspecting English defenses, would not everything have been kept quiet in the endeavor to pick up the lines of his foreign communications?

In writing home from England, even to my family, toward the close of 1914, I thought it just as well to be brief and not too definite with any information. I had seen some of the censorship regulations and envelopes resealed with a paper bearing heavy black letters, "Opened by censor," with the number of the censor, showing that there are more than one hundred people engaged in this work; and also directions from the censorship that "responses to this inquiry must be submitted," etc., etc.

Nobody could believe until this war broke out and there descended upon peaceful Belgium not only armies and demands for their shelter, maintenance and food, and drink, but also huge demands for financial indemnification—war tax levies upon cities, towns, and provinces, with individuals held as hostages for their payment—that German war plans meant the looting, not only of nations and states, but of individual fortunes and properties.

It now seems that the march to Paris through Belgium and the imposition of a huge redemption tax upon Paris and France were but the preliminaries to larger demands upon London and England.

Indeed, judged by the demands upon Belgium, the German plans contemplated the transfer of the wealth of France and the British Empire to Germany; and such enslavement of these peoples as would make Germany rich, powerful and triumphant for many generations, if not forever, over the whole habitable globe. The German minister at Washington sounded a true German note when he asked who should question the right of Germany to take Canada and the British possessions in North America. Were they not at war, and if Germany were able, should she not possess them?

It had been understood before this war that countries were invaded under ideas of national defense. But possession of countries for the absorption of their wealth and the enslavement of their people, to work thereafter for the victors, was believed a barbarism from which this world had long ago emerged in the struggle for the freedom of the individual.



CHAPTER XI

ENGLISH WAR FORCES

The Men at the Front—The Recruiting—English Losses—Horses and Ships—War Supplies—Barring the Germans.

I really admire the English censorship and the manner in which it can withhold information from the English people, and I see the usefulness of much of the withholdings. You are some days in England before you realize that there are now no weather reports—not even for Channel crossings. Nobody really cared for them in London. Everybody there knew what the weather was, and nobody could tell what it was to be. If reports were printed, they would fool only the German Zeppelins; but cable reports might be quite another thing. So you can't cable your family: "Weather fine, come over."

Of course Germany should not be allowed to know the English forces, their exact number and distribution. I was told over and over again in good newspaper quarters in London that the English had only 100,000 men at the front, and did not propose to have any more until Kitchener led his army of a million men or more to the Continent next spring.

I, of course, said nothing, but I knew a great deal better, both from War-Office sources and from contact with the English officers in France.

It would not be right, although information was not given me in confidence, to attempt to name the exact number and position of troops Kitchener had on the Continent toward the close of December. But I may tell what anybody was free to pick up on French soil. I asked an English officer of good rank how many men the English had at the front and he responded promptly 220,000 at the front, and 50,000 on the lines of communication. He was right for that date in early December, but later more troops were sent over. Indeed, they were quietly going and coming all the time across the Channel, and, notwithstanding losses, the number at the front was being steadily augmented. There were also troops in training on French soil, and 550,000 in condition for shipment from England.

Kitchener is one of the greatest reserve-supply men in the world. He is a natural-born banker; he keeps his eye on his reserves fully as much as on his activities, and perhaps more so.

When he called for 100,000 troops the British public became weary and demanded to know how long before he would get them. This gave an impression throughout the world that English recruiting was very slow; but when forced to show down his hand, Kitchener had to admit that under the call for 100,000 men he had accepted many more and was still accepting.

Then they raised the call to a million, and in December Kitchener had more than 1,000,000 men under that call, but I was particular to ascertain that he had not made a call for a second million. It was all under the call for 1,000,000 men to arm.

But I did learn from authoritative sources that a house-to-house canvass, and millions of circulars sent out, had received responses that showed the War Office where the number of recruits, or men in training, could be quickly put above 2,000,000 the moment there was need or room for them.

When England sent her first expeditionary force of 100,000 men to the Continent there was no public report of how steadily it was augmented. The official announcement was simply that the line should not be diminished and that all losses should be made good.

An American acquaintance of mine, whom I found in France fighting in the uniform of the English, had made the declaration from his quick perception of the situation at the outset that if before January 1 the English should have sent over only another 100,000 men, they would have only 100,000 left there at the end of the year.

I found his estimate of losses correct. The English casualties at the end of 1914 were over 100,000,—killed, wounded, prisoners, and missing,—or fully the number of the first Expeditionary Force.

Yet every week and every month the forces of the English grew larger and never smaller. The filling in of the gaps and the augmentation of the English forces and their maintenance, munitions, and supplies was but the smaller part of the work of the War Office.

The great problem was to compass the situation as a worldwide war and summon and put into an effective fighting machine the resources of the Empire.

"Not alone the men but the machinery," said Kitchener, "must win this war."

England had to put into operation machinery, financial and diplomatic, machinery of men, guns, and transportation, belting the whole world and bringing the whole forward as a complete organization, yielding here and pressing forward there, but always firmly pressing to the one desired end—the crushing, crumpling and destroying of the war machinery of Germany. At the beginning England could not turn out 10,000 rifles a week; and a rifle can shoot well for only about 1000 rounds. Yet in December a single contractor in England was turning out 40,000 a week, and every possible contractor there and elsewhere had his hands full.

Kitchener must compass every detail from the rifle to the supply base; from the seasoned wood for that rifle right down to the number of troops he must have on the Continent when it comes to a settlement; for, says Kitchener, "You cannot draw unless you hold cards."

The broad sweep of the English preparations may be indicated by this: that when war broke out England not only commandeered horses in every city, village, and highway of England, taking them from carriages and from under the saddle, but started buying them over the seas. Of English shipping she gathered into her war-fold such a number of boats as I do not dare to repeat. She gathered in under the admiralty flag so many steamships from the mercantile marine that those which were found most expensive to operate were soon turned back into the channels of trade. With the many hundred steamers that she commandeered she set about transporting everything needed, including horses, from over the ocean.

The French bought their horses by the thousand in Texas and contracted at good prices for their shipment to Bordeaux. Steamship rates became almost prohibitive, and the horses arrived from their long journey in poor condition. England inspected the horses in America, paid for them, and then put them in charge of her own men on her own ships, and landed them by the shortest routes in England and on the Continent, in prime condition.

Although Germany had been buying liberally of horses in Ireland as early as March, when the long arm of Great Britain reached out there was no failure in her mounts for the cannon and cavalry divisions. For good horses at home and abroad she did not hesitate to pay as high as $350.

Americans should not forget that this war has brought about the greatest contraction in ocean tonnage that has ever been seen. I estimate that about one fourth of the world's oversea tonnage has been commandeered, interned, or put out of service. Before the war the Germans had nearly one eighth of the world's mercantile tonnage. That is now interned, destroyed, or tied up, outside the trade on the Baltic. As much more has been taken by the Allies from the mercantile to the war marine. It must also be figured that the Baltic and other seas hold locked-in ships, and the bottom of the sea likewise holds some more.

Considering the sudden demand upon the world's mercantile tonnage and its sudden curtailment, it is surprising that ocean commerce has not been more interfered with or made to pay even higher rates than the abnormal ones now existing.

Of war-tonnage, besides three superdreadnoughts purchased and four finished before the end of 1914, the British have under construction to be finished in 1915 ten battleships of from 25,500 to 27,500 tons, armed with 15-inch guns. The French have finished four of 23,000 tons, with 13 1/2-inch guns, and are finishing three more. The Russians are at work upon six of 23,000 tons, with 12-inch guns. The Japanese are building one superdreadnought of 30,000 tons, with 14-inch guns, and three battle-cruisers of 27,500 tons and 27-knot speed, with 14-inch guns.

Churchill, it will be remembered, figured that England could lose one battleship each month and still maintain her full strength. While the building of war-tonnage seems to be well in hand, there is no corresponding replacement of mercantile tonnage.

I have the highest authority for the statement that the world possesses no machinery at the present time to manufacture war-material at the rate at which the nations of Europe have been using it during the first hundred days of the war.

At one time the German armies were exploding 120,000 shells a day in France and Belgium. The response from the French alone was 80,000 shells a day, and General Joffre made a request that his supply be put up to 100,000 per day. This is for shells of all sizes, and the estimate to me was of an average cost of two pounds, or ten dollars, per shell. Some of the big German shells cost as high as $500 each. In some kinds of shrapnel, holding 300 bullets, there are more than thirty pieces of mechanism.

Within forty-eight hours after England declared war she had engaged the total output of an American manufacturer, whose machinery was an important part of the shell-making business. An American factory in Connecticut received orders for $25,000,000 worth of cartridges which would mean, at five cents a cartridge, 500,000,000 rounds of ammunition. I know of a single order to America from England for 10,000,000 horseshoes.

Through a single agency in America more than $150,000,000 worth of war-supplies was placed several weeks ago. I do not know whether this included a single order, of which I have knowledge, for 3,000,000 American rifles, delivered over three years at $30 a rifle, or $90,000,000. The company receiving this order had to work so quickly to install new machinery that old buildings were dynamited to clear the land.

Such orders to America are bound to tell upon our exports, and, combined with the advance in food-stuffs, the loss in cotton values by the outbreak of the war is offset more than twice over.

America must feel the effect of these orders when the goods go forward in increasing quantities. They are paid for as promptly as shipped. Many an American factory has been put on three eight-hour shifts for the day's work on these orders.

A Southern manufacturer received an order for 5000 dozen pairs of socks to be shipped weekly for six months. The price was under $1.00 per dozen, with ten per cent of wool in them. He complained that he was making only twenty cents per dozen profit, while if he had not been so anxious for the order, he might just as well have got a price that would have shown more than twice this profit.

In boots and shoes, England, instead of giving orders to this country, has been buying leather in America, and filling all her own factories. It is the policy of England to fill every workshop in her tight little island before she permits business to overflow.

To-day there are no unemployed in Great Britain, except in the cotton districts dependent upon German trade. Wage advances and overtime are the rule rather than the exception. The one country that the warring world must turn to for supplies is the United States, and that in increasing measure. Orders for $300,000,000 of war goods already received must be duplicated several times.

Every American automobile manufacturer able to deliver motor-trucks in lots of one hundred, has received his orders for shipments to the Allies.

Germany has now no base from which to get many important supplies. In a long contest the Allies will supply motor-cars, shells, guns, and ammunition to a far greater extent than Germany can manufacture them. Factories for this work are expanding in both Russia and America. The English do not speak against the Germans as a people. They believe them seriously misled by Prussian militarism, which they declare must be crushed absolutely.

Where formerly England was an open door to Germans and suspicions against German spies were laughed at, the bars are now sharply up. Most of the golfing clubs have voted to suspend the activities of members with German antecedents.

At the clubs in Pall Mall, notices have been posted requesting members not to introduce during the war Germans or those of German descent.

Membership on the Stock Exchange is not continuous as in this country, and at the March elections in 1915 there will be a dropping out of German names.



CHAPTER XII

ENGLISH WAR FINANCE

Protecting Trade and the Trader—How German Banks Paid—The English Loan—England's Wealth—The Income Tax—More Taxes.

A giant Atlas bearing the civilized world on its financial shoulders has arisen between the North and the Irish seas. That is the picture that stands at the opening of 1915, where before Germany had endeavored to stamp the label "Perfidious and degraded nation of shopkeepers."

Only the pencil of a Dore could sketch this giant and put him in figures of proper relief as, aroused from his pastime of trade and the acquisition of shillings, he summons with one hand the resources of the empire and with the other passes them out to needy warring nations, taking care all the while that the necessary dealing of exchange and commerce have the least possible disturbance.

Kitchener says the war may last for two years, but he is making preparations for three years, and must do this job so thoroughly that no repetition will be required.

If it is war for three years, then this mighty financial Atlas of England is preparing to write its name on promises to pay more gold than all the money-gold on the surface of the earth today. And England won't hesitate to do it if necessary—not for one moment.

How can she advance money to Russia, Belgium, France, and other countries at war or just going into the war, and ask no foreign assistance, no overseas help,—except to be let alone,—expand her home trade and wages, pay with a lavish hand, and still pile up real gold both at home and over the ocean?

The first answer is because she does expand trade; because she does pay and pay promptly; and because she does protect her own trade.

The United States does not protect its trade or its citizens anywhere in the world to-day. It shivers in war-time, and borrows of everybody else when it has a panic of its own.

There is only one way to make trade, and that is to pay and protect. England, through centuries of fighting to protect both trade and the trader, has learned the way to the highest freedom in both trade and finance.

Therefore, before this most Audacious War was set afoot England had a very small stock of coin gold but a very large stock of gold credit-bills.

For years England has held in her cash box from $1,800,000,000 to $2,500,000,000 of the commercial credits of the world. With goods and trade-honor behind these promises to pay gold, she had no need of the metal but only of command of the seas, that her gold might come in when needed. When the war broke out, $600,000,000 of these gold promises to pay were of German and Austrian origin. The big London bankers who had their names on the back of such acceptances could not in honor underwrite any more commercial bills. They knew their capital was involved in collection of those already out.

But Britain said the commerce of England must go on as well as the war. The people who held these acceptances were promptly invited to turn them into the Bank of England, which held the guaranty of Great Britain behind it, and receive the money therefor; the discount rate after maturity to have 2 per cent added thereto, 1 per cent to go to the Bank for expenses and 1 per cent to the government for reserve fund to cover any losses. Of such bills $600,000,000 were promptly discounted.

I hear that two banks, the London City & Midland with its $525,000,000 of deposits, and Lloyds' Bank, both refused to rediscount. They believed the investments in commercial paper they had made were perfectly good, and that they were as well able as the Bank to wait for payment until one year after the war if necessary.

But to date more than half of these rediscounted bills have been paid.

It may be of financial interest to narrate how payments could be accomplished when by the King's orders there could not be any "dealings with the enemy" and payment to either side was forbidden by both. Yet the Dresdner Bank and other big German and Austrian banks have to date met fully one half their London obligations.

They were enabled to do this because their London branches were independent institutions whose independence was recognized by the British government. The London branches were thus liquidated, collecting in and meeting their obligations at maturity, so far as possible.

Liquidation in acceptances is one of the keys to the success of the English loan. While England had the ability before the war to discount $2,500,000,000 of acceptances, and with the present expanded base of the Bank would, without war, have the ability to discount $3,000,000,000, or three times our national debt, there is now no large business offering. The discount credits can therefore be measurably turned to the war-loan account. One of the biggest acceptance houses in London told me that the post-moratorium bills, or the new acceptances made after the moratorium, could not amount to more than 80,000,000 pounds, or $400,000,000.

With the liquidation on account of pre-moratorium bills and the absence of new business I should estimate that the London money market was able to take care of the 350,000,000 pounds loan put forth in November by the government without much regard to the investing community.

With expanding trade and confidence, English investment interests can absorb the major part of this huge loan before next summer, when another loan of about equal size must be put forth, according to present calculations. This second loan will probably be for three or four hundred millions pounds sterling, bear 4 per cent, and issue at par. The November loan was issued at 95 per cent and it was announced in Parliament that the Bank of England would loan the issue price at one per cent under the Bank rate.

That the loan was fully subscribed is not contradicted by the small fraction of discount soon quoted on the full-paid loan. One could fully pay the loan, taking the discounts on undue maturities and sell at a fraction under 95 and still make a profit.

I believe the estimate of an annual English surplus for investment of $2,000,000,000 per annum is far too low. This figure is upon the basis that only about 20 per cent of the river of interest, dividends, and profits flowing annually to British pocket-books is available for reinvestment.

In the present war stress and with economy practised to-day more by the capitalist classes than the laboring classes, the amount of money for reinvestment should be far greater than this.

English finance will cut its cloth according to the pattern. If there is only $2,000,000,000 per annum of surplus earnings to put into the war, that money will be spent; and if England has 50 or 100 per cent more, that money likewise will be spent, but spent so judiciously that the largest possible sum from it is kept in channels of English trade. The British Empire will work and finance the fight thus within a circle, and right on its own base.

The surprising thing is that it can be called upon to extend financial help to its allies. But everybody except Germany was caught absolutely unprepared. The war was early on French soil, tying up the resources of some of the richest provinces of France. Russia had so little thought of war that, as I have previously explained, she had deposited from her great gold reserve so that it had been loaned out on time and therefore was not available for the start of the war. Hence we have the spectacle of Russia gathering up 8,000,000 pounds sterling in gold and sending it to the Bank of England and, on this basis, borrowing of the Bank 20,000,000 pounds sterling.

Of course, this is good banking and good business and a good alliance. The Allies are bunching their war orders and credits, and England is entitled to hold the bag since she is carrying the financial burden.

England's war finance is not wholly measured in her expenses or loans to other countries. In a single issue of a London paper you can count daily reports of more than a dozen charitable funds connected with the war-work. These funds range all the way from "Aid to the Mine-Sweepers," "Gloves for the Soldiers," and the "Servian Relief and Montenegrin Red Cross Funds" up to the "Prince of Wales's Fund."

This last was over $20,000,000 before Christmas. The suddenness of this war may be illustrated by this fact: A friend of mine, who is managing director of a big English concern, has assumed the responsibility for seven years past of keeping in England one year's supply of everything that his company was likely to require from the Continent. This was at a cost to his company of many thousands of dollars. With dogged determination he stuck to the same policy for 1914, although in January of that year it was clear to him that Germany could not afford to go to war. While he was happy over his judgment, he admitted in conversation with me in December, 1914, that in January, 1914, the outlook was less indicative of a general European war than it had been for many years.

Thirty per cent of the workmen of his factory had gone to the war and his company was providing 250,000 pounds sterling a year to maintain the wages of the workmen at war up to the same amount as they would receive if they had stayed at home. He said that in one of his offices, of 80 men eligible for the work, 78 had enlisted, and, what was wonderful, the women were glad to take up the heavy work abandoned by the men,—something they would have refused to do in all ordinary times. On the whole, the output of this concern and its efficiency were materially increased, not diminished, by the war.

It is figured that troops at the front mean an expenditure of one pound per man per day, and that English troops in training mean an expenditure of not less than ten shillings per man per day.

The war expenses of Great Britain must thus be above one million pounds per day and steadily increasing. Indeed, the best economic estimate I have of the cost of the war to England is 500,000,000 pounds the first year.

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 assume 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 assistance 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 substitute 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 assistance 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 passed. 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 substituted as badges of patriotism.

While every other nation on earth since 1900 has been accumulating gold in bank reserve, England alone has stood aloof and accumulated 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 shell-fire. The Krupp works have no ability to turn out daily the number of shells that Germany was exploding, and the United States in its own arsenals could not in a year make a week's supply of shells 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 shell 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 shell 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 institution, 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 Japan, 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

IS IT THE PEOPLE'S WAR?

German Socialism—German Unity—A Reverse Political System—Business Men without Political Influence—A Voice from the People—The German War Lord.

In America there is no greater conflict of opinion than over the question of the relations of the German people to the present war. There are those who declare most emphatically that when the German people once understand this war there will be revolution in Germany, uprising of the socialists, and the sure overthrow of the Hohenzollern dynasty.

Such opinions are not well based, and their authors do not understand the German temperament, the principles of German government, German organization, or German Socialism.

Socialism in Germany is neither of the destructive order of that in Russia, nor of the wild varieties found in America; nor has it even the order of the Socialism of England. Twenty years ago the Socialism of Germany might be recorded as against the invasion of Belgium, and the bonds of Socialism existing between Belgium, France, and Germany might have interfered with the war programme.

But Socialism in Germany has passed the stage of labor-agitation. Indeed, it has been transformed in the reign of the present Kaiser from agitation against capitalism within the empire to agitation for the expansion of Germany in the territory of its neighbors throughout the world, that German labor may, through German arms, enter into and possess the land without. German Socialism is thus allied with German militarism, and it has also become the respectable party of opposition in the Reichstag. The middle classes of Germany of late years have voted for Socialistic candidates whenever they disagreed with the government. It is the party of protest and of opposition. It is a party of the empire, not of any world socialistic movement.

Germany is thoroughly knit together in support of its government and its Kaiser. The German people do not seek a constitutional government like England, or a republican form of government like France or the United States. They believe their situation and safety in the middle of Europe call for a more autocratic form of government, and one not too quickly responsive to popular sentiment.

Germany was made by Bismarck and the armies of Von Moltke supporting the Hohenzollern dynasty. This made Prussia the center of Germany industrially, financially, and as a military power, and at the heart and seat of power, in both industry and finance, sits the same dynasty. The Emperor is the center of industry, finance, and military power,—three degrees of empire, each distinct in itself, but each intertwined with the others, but so intertwined that the word of power, command and influence comes down from the military seat of power through finance and into industry. Industry does not speak back through the powers of finance to the military center. The flow of the German dispensation of power or of governmental organization runs downward from the Kaiser. No power goes up from the people or industry or finance to the war lord at the center.

The Germans know no other system of government. Outside of Prussia, in the more than thirty states of Germany, there was the local reign. Now over all is the reign of the Kaiser. The present generation has seen a united Germany become great among the nations of the earth. The English-speaking people cannot appreciate the feudalism and the fealty of the German people to their war lord. They say, "Are not the German people great thinkers; do they not know that the power of government is from the governed?" It is inconceivable to them that the Germans should have a reverse system.

My last word from Germany was with an American lady who has been more than one hundred days nursing the wounded from the battle-line, and she, singular as it may appear, assisted on both sides of that battle-line. She assisted to dress the wounds of French soldiers where the lacerations of shrapnel had broken one entire side of a human system, face, eye, ear, jaw, arm, leg; yet that soldier lived. She dressed wounds where more than twenty bullets pierced a single human frame. Yet that soldier will go back to the front. French boys in their 'teens had died in her arms at the hospital,—the hospital where thousands of wounded pass through every month,—and she had taken back to the parents in Paris the dying message. She had been in the German and the French trenches on the line of battle. She had crossed the lines and been under arrest. She had seen the horrible picture of freight-loads of German corpses on German railroads,—corpses unhelmeted, with uncovered faces, but in boots and uniform, tied like cordwood in bunches of three and standing upright on their way to the lime-kilns. She had nursed the wounded German soldier in his delirium, crying in German, which she well understood, over the horrors which still pursued him as he remembered the face of the wife and saw the agony of the children as he stood in line and by direction of his superior officer shot the husband dead. He moaned in his delirium over the picture. The faces of the wife and children haunted him, but he cried out that his superior officer had ordered him to do it; and she said, "No, these people are not responsible; the dogs of war have driven them as sheep into the slaughter-pens. They are beaten, but fight for the Fatherland. It is their duty and they obey."

And how has it all come about? Simply thus: The Saxon was a Saxon, the Bavarian was a Bavarian; each suddenly found himself a German and part of a world-power. Bismarck and Von Moltke had a policy for the Hohenzollerns; it was a united Germany, and they left it a defensive Germany.

There was not in the brain of Bismarck or of Von Moltke, or of the Emperor under whom they prosecuted the wars against Austria, Denmark, and France, any idea of Germany as the Conqueror of the world.

"Never be at enmity with the Russian Bear," was the saying at the time of Bismarck and before. "Always contrive that yours shall be a defensive war; let the other party attack," was the declaration of Bismarck.

The policy of Bismarck was: "If you have an enemy, make friends with all the other powers, so that your enemy be isolated diplomatically and politically."

The present Kaiser has reversed every one of the great policies of Bismarck and of his ancestors that made a united and great Germany.

There is not a language in the world to-day outside the Teutonic that speaks the praise of Germany. Defensive German alliances are broken because the present Kaiser insisted that offensive and defensive are one and the same. In offensive action the Triple Alliance breaks; while the Triple Entente becomes, for defense, nine nations instead of three.

The German people are not responsible for this situation. Their form of government has not yet permitted full, free, and effective expression of opinion; nor does the German seek full political expression. He loves his fireside and his family, and prefers his home ease and philosophy. He has confidence in his Kaiser and his government; and his whole training for a generation has been to make him an obedient part of a military power.

It is gratifying to find that not the German people, but the German Kaiser, is responsible for this war; and it is also gratifying to find that there are doubts as to his full mental responsibility.

I have had closer associations with the German people than with the French, and have liked them better as a people: they are so industrious, efficient, and ambitious in the world's work. I know the German country better than the country of France or England. I think I understand something of the over-self-sufficiency of the English, and I have no prejudice against the Germans, or even their form of government, which may be better adapted to their needs than a broader democracy. But of the German modern war-philosophy the world outside can hold but one opinion. It might have been supported as a purely tentative or speculative philosophy, but it could have been promoted in practice only by a crazy ruler. I was not therefore surprised to find circulated in Paris an article by an American physician which I had permitted to be published in America at the outbreak of the war, showing the mental weaknesses and hereditary taints of Germany's war lord.

I recall him from memory of bygone years, and as I saw him in Berlin when his grandfather was still on the throne—a young man of about twenty, returning from the races and dashing through the Tiergarten holding the reins of six coal-black horses.

I said to myself: "That young man will cut a dash yet." And I still see, in higher light than before, those six coal-black horses—the horses of death.

Recently I read pages of his writings, speeches, and declarations, and there is not for the world an uplifting or new thought within them all. What appears to be new is the echo of an age that was supposed to be long past—when might was rule and valor was religion.

"There is but one will, and that is mine," said the Kaiser, addressing his soldiers; but it has been the keynote to his diplomacy wherever it has appeared, either in pushing a commercial treaty on Russia in her hour of distress, forcing Italy into the Triple Alliance, or dictating the terms of the Austrian ultimatum to Servia, so that it would be impossible of fulfilment.