October 16, 1914.

THE COLLIERY GUARDIAN.

827

the Trades Union Congress and the Miners’ Federa-
tion of Great Britain to the request for a special
congress on inadequate provision for the families
of soldiers and sailors and the need for a State
scheme dealing with unemployment. They have
decided, failing assent of these bodies, to call
on the Miners’ Federation Council to summon a
national conference of unions.

Further regulations have been issued by the
Government to prevent trading with the enemy.

The decrease of unemployment in trades com-
pulsorily insured continues.

When we examine the methods by
The German which Germany has gained access to
Credit our markets, it will be found that the
System. extended credit system has played
no small part. Easy terms of pay-
ment appeal very strongly to a certain class of
customer, and although the seller must necessarily
greatly aggravate his risks by deferring the realisa-
tion of his profits, at times a system of this kind
enables him to secure a foothold in a market in
which he could not hope permanently to establish
himself by other means. Deferred payment may
carry with it obligations no less onerous than the
familiar “ menage ” system of door-to-door trading.
The security for payment may actually be the
business and goodwill of the customer, which in
consequence may become “tied” to the German
house; mutual orders may also be the basis of such
arrangements; and we have only to instance the
system under which by-product coke ovens have
been established at British collieries to show the
elasticity of these methods. In this case the colliery
gets its coke ovens free of first cost, the coke oven
company arranging to collect a rent, so to speak, in
the shape of by-products, over a term of years, after
which the entire undertaking becomes the undivided
property of the colliery. German machinery has
been introduced into mines and factories under
somewhat similar conditions, payment being taken
in the shape of a share of the resultant profits from
the particular appliance. It is safe to say that
many buyers would have shrunk from the risk
attendant upon the trial of new inventions had it not
been for the existence of some arrangement of this
nature.

In its least objectionable form, therefore, the
extended credit system may be regarded as feasible.
On the other hand, British manufacturers, who by
the stress of competition have been driven to give
equal facilities to their customers, have been rather
badly hit; and, speaking generally, the policy does
not commend itself because, fundamentally, there
can be no question that it is unsound.

The circumstances that have enabled German
manufacturers to adopt these measures have no
parallel in this country. Since the war broke out
and British men of business were spurred to
efforts to detach Germany’s foreign trade and to
substitute home-made articles for those which we
have been in the habit of buying from our enemies,
many complaints have been heard as to the difficulty
experienced in obtaining capital for the financing of
new works and processes. Especially have the joint
stock banks been criticised for their so-called lack of
patriotism in refusing to put up money for such a
purpose.

We hold no brief for the banks, and there is
undoubtedly an urgent necessity that traders should
be helped in this national labour, but a close study
of German methods of finance will fail to generate
any great desire to imitate them. Indeed, we have
no hesitation in declaring that, if this war is due to
one cause more than another, it is to their breakdown .

The principal feature of German industry is its
dependence upon credit. The wealth of Germany is
comparatively recent, and even now it is incapable of
keeping pace with the growth of the population and
the “ unquenchable desire for work,” which is
characteristic of the people. Industrial undertakings
at the outset were established largely by the support
of the private banks, and there has always been a
close association between the large enterprises and
the financial houses. In many cases the banks

touted for business like “bucket shops,” to which
they bore a close resemblance. In 1903 the gigantic
combination represented by the Coal Syndicate was
mainly responsible for important combinations in the
German banking world, as it was felt that consider-
able capital would be required effectively to carry
out the schemes of this and other large syndicates.
Some years later the great electrical combines caused
a further segregation of banking interests. This
concentration in the banking world, however, for the
time being, rendered the question of industrial credit
in Germany very much more difficult, especially to
the borrowers of smaller standing. The tendency
was, therefore, still more towards the amalgamation
of business interests. Syndicates and kartels, it was
found, had a better chance of commanding capital
than the small private manufacturer; but many of
these joint-stock banks, as a corollary of the very
considerable interest which had thus been obtained
in the industries of the country, established numerous
branch offices in Berlin and elsewhere, known as
“ depositenkassen ” and “ wechselstuben,” whose
main duty was to push the shares in certain concerns
in which the head office possibly held a substantial
interest.

It may be that our own banks, who have refused
to finance their own clients, have indirectly and
unconsciously been financing their clients’ competitors.
That is a possibility. The British manufacturer,
however, who thinks his bank should advance loans
on the strength of a full order book, is up against a
convention. The banks, as at present constituted,
could only make such advances from the balances to
the credit of their depositors, and may reasonably
ask for a gilt-edged security in exchange. The
German credit bank, on the other hand, does not as
a rule make advances from the funds on deposit, but
from funds specially established for that purpose.
At times, however, these credit banks have speculated
recklessly with the money of their depositors.

The defect of the German system is, that while it
has greatly facilitated the growth of German industry
and commerce, by diverting all the available capital
into these channels, it has necessitated a constantly
recurring turnover of wealth and prevented the
savings of the people from being invested in the
sound securities which form the basis of wealth in
countries like Great Britain and France. The
tendency has been ever towards development of the
foreign trade, at all costs and all hazards. As our
consul-general at Frankfort observed in 1907,
“Finance and industry in Germany are closely allied,
and both tend towards international expansion.” As
long as Germany was compelled to draw from abroad
great quantities of commodities and owned insufficient
wealth in capital invested abroad to pay for them
the expansion of her export trade was bound to
remain of exceptional interest. One of the results of
this perpetual fostering of an external market has
been the persistence of a high protective tariff, which
was necessitated, if for no' other reason, by the
unsatisfactory state of Imperial finance.

Taking this view of the case, the following extract
from a report issued by the “ Central Union of the
Berlin Mercantile, Commercial and Industrial
Societies” upon the year 1909 is of striking
interest:—

“ The last boom broke down, not on account of over-
production . . . but because the available capital
was insufficient to continue the boom. Germany com-
pelled to compete with as old an industrial country as
the United Kingdom, with as powerful a rival as the
United States, with as rich a lender as France . . .
bound to yield annually thousands of millions for the
purposes of State and for the schemes of social policy,
has every cause to keep a watchful eye upon the pro-
portion which her economic advance bears to the new
acquisition of capital; she must not allow the undoubted
growth of her wealth to hide from her the fact that the
financial support of her international trade is based
upon a banking credit.”

We have already said that this financial policy has
been one of the chief causes of the present war. It
must be remembered that until the opening of the
twentieth century the “ industrials” had scarcely any
word in German political affairs. After the boom of
1900, however, the large commercial groups began
to resen the dominance of the Agrarian party, in

whose interests the commercial treaties had largely
been devised. The formation of the Hansa Bund, in
1909, was the turning point, and since then the
“industrials” have acquired an importance which
has the full recognition and support of the Imperial
master, whose mind was continually set upon
international and racial expansion. In the
Gwinners, Krupps and Thyssens, the Ballins and
Rathenaus, he saw his most potent tools, for it
was from the industrial party that the means for
aggrandisement must come. But the money has not
always been forthcoming to satisfy these dreams.
Imperial schemes of taxation had repeatedly to be
modified; an elaborate policy of foreign bills was
persistently pursued by the Reichsbank, whose
directorate have sedulously attempted to educate the
people towards “payment without cash”; and all
the time the economic pressure was increasing. It
is interesting to remember now how the establish-
ment of branch works in England and elsewhere bj
the large electrical concerns excited official dis-
pleasure in Germany, because they permanently
withdrew capital from the German market. We
have only to look at the matter in this light to see
how illusory the Norman Angell theory becomes.
Why go on paying money to English workmen when
a huge military and naval establishment is bringing
in no return ? An act of conquest may be cheaper
than peaceful barter, when the munitions of war are
lying idle

For this we believe to be the crux. These huge
engines of war have placed a great burden upon the
German people, and rather than admit the folly of a
cherished institution they have preferred to realise
these idle assets. The industrial party, who owe
great debts to the Prussian Government for the
facilities that have been granted to them in the
shape of bounties, “ exceptional” railway rates, and
credit generally, cannot be held guiltless.

__________________________ i

In 1898 Sir William Crookes
Sulphate created some sensation by predicting
and its the early exhaustion of Chili salt-
Competitors. petre and the consequent dearth of
nitrate fertilisers upon which the
growing populations of the world are becoming
more and more dependent for their food supply. He
estimated that in 1935, that is 20 years from hence, the
present date, the world’s demand for nitrate fertiliser
would amount to twelve million tons. These pre-
dictions, however, will probably require to be
modified somewhat in the light of discoveries in
agricultural chemistry. We no longer, for example,
believe that shortage of crops in India, China, or
Russia are due solely to nitrogen starvation. It is
possible, also, that by a judicious use of leguminous
crops in rotation with wheat, soils could be made
self-fertilising, and independent of artificial methods
of recuperation. Modern man has become highly
extravagent in his habits of consuming far more
nitrogenous food than he really needs, and it is
possible that the Japenese diet of soy-bean, a
vegetable rich in proteids, could with advantage be
extended to Western lands, thus enabling sounder
methods of agricultural rotation to be followed, and
thus doing away with the need of fertilisers.

Such a consummation, however, is not in the least
likely to be realised while soils can be rendered
artificially productive, and the demand for nitrogen
compounds is, therefore, destined to increase in the
direction anticipated by Sir William Crookes.

In the meantime, it is a remarkable fact that at
the present time we appear to be threatened with
an over production of artificial fertilisers from a
source totally unexpected a few years ago; and it is
equally striking to note that at the present time more
attention is being bestowed upon the development
of synthetic processes of manufacture of nitrates than
upon the recovery of ammonia from wasted sources.

Let us trace this new development of synthetic
chemistry which seems destined to play so important
a part in the maintenance of the fertility of the soil.
As long ago as 1785 both Cavendish and Priestley
showed that nitrous compounds could be produced by
means of electric discharges in the atmosphere. The
development of water power at Niagara Falls led
two American chemists, Messrs. Bradley and