The German Drift Toward Socialism
THE German Reichstag passed a law in May, 1910, for the regulation of the potash trade, a law which goes further in the direction of Socialism than any previous legislation in Germany. It assigns to each mine a certain percentage of t he total production of the country, and lays a prohibitory tax upon what it produces in excess of this allotment. It fixes the maximum price for the product in the home market, and prohibits selling abroad at a lower price. A government bureau supervises the industry, sees that prices and allotments are observed, examines new mines to determine their capacity, and readjusts allotments as new mines reach the producing stage.
This legislation breaks sharply with our inherited views of private property. The American law for the regulation of railway rates is not a parallel case, since the State exercises its right of eminent domain to create the railway for public purposes. The railway begins its existence encumbered with a public obligation. The owner of a potash mine has no such obligation. He is absolute owner, and the State has no right to interfere. He may sell his mine or any part of its product, in such quantities and at such prices as he may choose. That is the orthodox doctrine of private property as the world has held it for thousands of years. Such is also the doctrine of Germany in respect to all other property than potash mines; and, indeed, it prevails in respect to these, too, provided an owner wants to sell or even give away his mine; only, he must not sell potash except within the limits prescribed by the State. In other words, he is both owner and not owner at the same moment.
But the radical features of t he law are not complete in the foregoing description, The bill having reduced potash prices, the mine-owners threatened to recoup themselves by reducing wages. But the members of the Reichstag were not to be balked by such threats; they could legislate about wages just as easily as about prices and allotments. So they amended the bill by providing that: if any owner should reduce wages without the consent of his employees, his allotment, should be restricted in the corresponding proportion.
Such is this remarkable innovation in law-making. And yet it would be easy for a foreign observer to overestimate its significance. He might easily assume that traditional beliefs about property are breaking up in Germany, and that the time is not far remote when the fragments may be reassembled and shaped into the Zukunftsstaat. Such an inference, however, would not be justified by the potash law, or by the other factors involved. While the law is indeed decidedly socialistic in tendency, it is not yet Socialism. It hedges private property about with sharper restrictions than would be thought justifiable in countries where, as in the United States, the creed of individualism is still vigorous; and yet it is, in effect, hardly more than a piece of social-reform legislation, though a more radical one than we have hitherto seen.
Certainly the men who voted for it had no intention — with the exception of the Social Democrats — of taking a step to hasten the coming of the Socialist’s millennium. Curiously enough, some of its extreme features originated with the Conservatives, who are dominated by the ‘country squire’element, the sheet-anchor — in Germany as well as in other countries — of traditional beliefs. But the Conservatives are the least inclined of all the political parties of Germany to abandon the individualistic view of property. This was shown by their course in 1909, when they produced a convulsion in the internal politics of the country and forced the retirement of Bülow through their stout opposition to a small tax on the inheritances of direct heirs, — certainly a most reasonable tax from the standpoint of social obligation. In explaining their course, the Conservatives said that they could not think of submitting their property to the mercies of a Reichstag chosen by popular suffrage. In other words, they dreaded future encroachments upon their property rights through the advance of Socialism. The willingness of the Conservatives to throw away their principles in the case of the potash law is therefore without significance, so far as radical Socialism is concerned; they were legislating about other men’s property, where it is always easy to make a show of alt ruism.
But the potash law is significant of one thing at least, — it registers in a striking way how far the German people have lost faith in t he system of free competition. Legislation, education, commerce, manufacturing industry, the activities of the working classes, — all bear witness to the rapid decline of that faith. In Germany, ‘the individual withers,’ and the world of State and Society, with its multifarious demands upon him, ’is more and more.' This is, of course, a socialist ic tendency, but the substitute that the Germans are finding for unlimited competition is not radical Socialism, but organization.
It is astonishing to what an extent the Germans have gone in organizing life in all its activities. The individual is everywhere learning that his independent strivings are ineffective both for himself and society, that as a unit he counts for little. The working people long ago learned that they could better their position only through organization; and as united labor became more self-assertive in presenting its demands, the great employers of labor, the manufacturers of the country, organized themselves for the special purpose of protecting themselves against those demands. Now both employer and employee have surrendered their individual posit ion, committing their rights to the organization, which acts in its collective capacity in the interests of its members; it fixes the wage-tariff and the length of the day’s labor, it settles strikes and lock-outs by treaty with the opposing organization, and in a hundred ways it absorbs and discharges the functions of the individual in his own behalf. Combinations and syndicates of manufacturers facilitate the marketing of goods, make or dictate prices, assign allotments to each factory of the amount of goods that it may produce, in many cases handle all orders for goods and treat the individual manufacturer as merely their agent.
The State, of course, takes hold of the individual life much more broadly, with more systematic purpose. The individual’s health is cared for, his house is inspected, his children are educated, he is insured against the worst vicissitudes of life, his savings are invested, his transportation of goods or persons is undertaken, his need to communi cate with others by telegraph or telephone is met — all by the paternal State or city.
The police system is put at the service of the humblest citizen. The police regulations of Upper Bavaria, for example, contain the following provision regarding the sleeping accommodations for house-servants, apprentices, and similar dependent folk: ‘The bed-straw must be held in a sack, and must be changed as needed, but at least twice a year.' Will anybody say that this is paternalism carried to extremes? But who is to see else that the young man has a decent bed? Now he has his paragraph, and he can appeal to it with effect; and he believes the State is his protector.
But the best work of the paternal German State for the individual consists, not merely in protecting him, not merely in seeing that his physical wants are provided for. It takes hold of his life in a larger, more positive way; it treats him as a constructive social force to be developed and directed. The public schools have in recent years adopted the practice of giving directive advice to their pupils in regard to their life-calling, — advice based upon ascertained physical and mental capacity; and thus much waste of individual effort, much loss of health and happiness through ill-chosen work, is avoided.
Moreover the State does not leave the young man to his own resources after he has left, school; the compulsory continuation trade-school carries on and specializes his training after he has taken up his life-work, —training designed and directed toward making him most efficient for his own particular task. There are now about 375,000 pupils in the continuation schools; in 1884 there were 58,000. Twenty-five years ago the Prussian Government was spending only about $13,500 a year on trade-schools; now it is spending above three million dollars on more than 1300 schools.
The railway, as is well known, is almost wholly a State institution in Germany. The Prussian system, with its more than 400,000 laborers and officials, is the largest employer of labor in the world; and this vast business is administered with remarkable honesty and efficiency. Cases of embezzlement or other crime are extremely rare; relatively few persons are killed or maimed through accident; and the railways are kept quite aloof from politics. American writers were accustomed up to about twenty years ago to regard the Prussian roads as much inferior to American ones; but much less is heard of such unfavorable comparisons now, for the Prussian roads have made great improvements. Freight rates, indeed, are considerably higher than the average American rates, but the bulk of the passenger traffic is carried at lower prices than in America. Bismarck’s purpose to use the railway wholly in the interests of the people, as declared when he nationalized the roads, has not been fully carried out, since rates have been kept at a high enough figure to make them the largest source of revenue for the State, besides paying interest on the capital invested. On the other hand, shippers have the great advantage of absolutely fair treatment; there is no discrimination among them, there are no rebates, secret or other. Another great advantage consists in having a single system to deal with, as well as simplified tariff schedules; before the nationalization there were 63 railways, with 1357 different tariffs.
The moral success of the system of State ownership — which is the most important matter, after all — is complete; now there is absolutely nobody in Germany who would discard it for privately-owned railways. The success of the railways is so evident that, the Socialists like to point to them as a demonstration of the feasibility of Socialism in general. Non-believers in that system of thought, however, see no reason for such a sweeping conclusion, since the operation of such huge undertakings, having almost of necessity a monopolistic character, is a very different problem from the State ownership of farm, factory, and mine. Moreover, it must be admitted that the Prussian railways supply an illustration of what has often been pointed to as a necessary consequence of practical Socialism — its suppression, namely, of the individual. The railway employees are not allowed to organize labor-unions for protecting their interests; they must submit absolutely to the decisions of the State’s representatives at the head of the system. Among the officials, indeed, there is promotion for merit; but the common laborer can never pass into that charmed circle. Picturesque careers, as where a man rises from brakeman to railway president, can never occur in Germany, as they sometimes do in America. But this is to be set down, not specifically as the result of State ownership, but rather as due to the fixity of social classes here, and the rigid bureaucratic system that prevails in all German administrative organizations.
The Prussian State has also long been an extensive owner of coal, potash, salt, and iron mines. In 1907 a law was passed giving the State prior mining rights to all undiscovered coal deposits. In general, however, it must cede those rights to private parties on payment of a royalty; but the law makes an exception of 250 ‘maximum fields,’equal to about 205 square miles, in which the State itself will exercise its mining rights. It has recently reserved this amount of lands adjacent to the coal fields on the lower Rhine and in Silesia. The State had already about 80 square miles of coal lands in its hands, from which it was taking out about 10,000,000 tons of coal a year. Its success as a mine-owner, however, appears to be less marked than as railway proprietor; experienced business men even assert that the State’s coal and iron mines would be operated at a loss if proper allowances were made for depreciation and amortization of capital, as must be done in the case of private companies. The State also derives comparatively small revenues from its forest and farming lands of some 830,000 acres, which were formerly the property of the Crown.
The principle of State ownership has worked so well with the railways that Prussia is about to make a modified application of it on the capacious canals that it is now building. On these it will have a traction monopoly, while the barges will be privately owned. Some features of the Imperial postal system, going beyond American practice, must also be mentioned here. With its admirable package-post, the German system does all the business that we leave to our express companies, and does it much more cheaply. A package weighing eleven pounds is carried to any point in the Empire for 12 cents; and corresponding cheapness is maintained to the maximum weight of 112 pounds. This cheap service is used in a thousand ways that would seem novel to Americans. Many families in Berlin receive weekly packages of meat and other supplies from distant parts of the country, where prices are low; special shops in the big cities do an enormous package trade; army officers often send home their linen by post to be laundered; and the summer tourist, wanting to do a part of his itinerary afoot, sends his baggage by post to any desired point. The post-office also has a monopoly of the telegraphs and telephones, and supplies a cheap service with both. A charge of only 12 cents is made for delivering a ten-word telegram in any part of the country; transmission seldom requires as long as two hours, and usually much less. Even small towns have long-distance telephone connection; and the German telephone system also communicates with many foreign cities.
A few years ago the post-office established a banking department, designed more to facilitate payments than to take care of savings. It is a system of open accounts, on which moneys are paid in and out upon order slips, — an admirable method for making collections. The system has already become very popular; in 1910, only the second year of its existence, the department effected payments amounting to $4,400,000,000. It is operated in connection with the Reichsbank, with which its balances are deposited. The Reichsbank itself, the great central note-issuing institution of the Empire, is a splendid example of what is done in Germany through efficient government administration. While its capital is owned by private persons, its administration is wholly in the hands of the Imperial Government; and a large part of its profits, often more than half, falls to the Treasury by law. With above 500 branches in all sections of the land, with an annual turnover of above $85,000,000,000, with a note-circulation approximating at times $500,000,000, this great institution performs an incalculable service to the people. Its elastic note-circulation,’sometimes expanded by more than $125,000,000 in a single week, wholly prevents those money famines that have often proved disastrous to American business interests. Another semi-public financial institution is the Prussian Central Coöperative Bank (Genossen-schafts-Kasse), whose function is to extend cheap banking facilities to the numerous coöperative societies that, have sprung up in Prussia; its capital of $9,000,000 is supplied by the State, and its administration is under the supervision of the Finance Minister. The Seehandlung, which is the Prussian State bank, is the largest lender of money in the Berlin market. Nearly all the savings-bank business in Germany is also done by public institutions, — only about eight per cent of the total deposits in savings banks being with private institutions. At the end of 1907 there were above 2700 municipal and provincial savings banks, with 6600 branches; and their deposits amounted tomore than $3,000,000,000. At that time, above twenty-eight persons in every one hundred Germans held an account with a savings bank. Such is the extent to which semi-socialistic banking has taken hold of the German people.
The German system of State insurance for the working classes grew out of modern industrial conditions. The twin ideas of a maximum of liberty for the individual and a minimum of State interference, born of the French Revolution, denoted a great advance for civilization over the aristocratic and autocratic systems that they superseded. In time, however, machinery was invented, great factories were established, and men were drawn together in multitudes who had nothing to offer society but the labor of their hands, and who became dependent upon the factory-owner in ways scarcely less obnoxious to personal liberty than under the old régime. The modern city came into being, with its large dependent population, and its new problems of housing and sanitation. The joint-stock company, a necessary creation of the new era of machinery and financial consolidation, displaced the older personal relationship between employer and employed, and reduced the labor contract to a purely monetary transaction. There was war between capital and labor, and the latter was usually the loser in the struggle. Socialism came, and greatly complicated the situation with its radical political and economic programme.
Under these changed conditions it was inevitable that men should lose faith in the efficacy of the doctrine of laisser-faire; indeed, that faith would have died even if Karl Marx and the other Socialist writers had never lived. The economists of Germany were among the first to abandon it, and to demand a larger activity for the State in the presence of the new social struggle; and it is the merit of the German Government that, it was the first to recognize the fact that the new conditions demanded, not merely palliative and restrictive measures for the protection of the working classes, but an elaborate and systematic plan of positive action to secure their permanent well-being. Thus the system of State insurance for workingmen was established.
The motives that determined the German Government to adopt that system were mixed. The humanitarian motive undoubtedly was a strong influence, but a stronger one was the growing danger of the Socialist movement for the State. The Anti-Socialist Law had greatly embittered the working classes, and the Government thought it wise to try to allay their discontent by extending to them the kindly hand of the State; and it was even hoped that Socialism could in this way be checked. A still more everyday motive was to lighten the poor-law obligations of the local authorities. Bismarck frankly avowed this motive before the labor-insurance laws were framed; and that fact should be remembered in estimating the financial results of the insurance systems; a part at least of the big sums paid out should be set down as public charity.
Nevertheless, the value of the system has been proved beyond dispute. The authorities several months ago celebrated the twenty-fifth anniversary of its establishment; and the Reichstag is now occupied with a voluminous bill to codify the various insurance laws and extend their application, thus giving its final verdict of approval to the entire plan. When the old age and invalid insurance law was passed in 1889, the Socialists voted against it because it did not go far enough, and the Radicals because it was not in harmony with their creed of individualism; but when the law was revised and extended in 1899 both parties voted for it, — so rapidly had the system borne down opposition through its influence in practice.
There are three distinct kinds of insurance, — sick, accident, and invalid insurance. The last also includes oldage insurance, which is available for workmen upon reaching their seventieth year. The sick insurance embraces more than 23,000 local organizations, and insures 13,385,000 persons, of whom 5,700,000 received sick aid in 1908. This form of insurance protects the laborer for six months, after which he becomes a charge upon the invalid system. The expense of sick insurance is borne by employer and employee, the former paying one third, the latter the rest. The accident system, adopted in 1884, makes employers liable for accident-injuries to their men, and compels them to organize themselves into coöperative societies for insuring them. There are 48 such companies for agricultural labor, organized by provinces or states; and 66 for industries and trades, partly national and partly district organizations. The assessments vary in the different organizations according to the danger-risk in the trade they represent; payments to the injured averaged $37.60 for each case. The companies send their inspectors into every factory under their jurisdiction, to see that regulations for protection of life and limb are carried out, and they may impose heavy penalties for failure to observe them. The invalid and old-age system, which was adopted in 1889, insures 15,444,000 persons. It pays pensions averaging about $36 for old age, and $40 for invalidity. The insurance fees are paid in the form of stamps, pasted weekly upon a card issued by the Government for each laborer. The expense is borne equally by employer and employed.
Now, something as to general results. The aggregate revenues of the threesystems in 1909 were $210,000,000, and they paid out $165,000,000 in pensions and indemnities. They owned invested funds in 1908 amounting to $496,000,000. The contributions in the three systems have been estimated by a careful statistician at 6.75 per cent of the wages received by the insured, of which the employers pay 3.68 and the employed 3.07 per cent. The insurance payments have a serious effect upon finances of employers. Thus the famous Krupp Company in 1908 paid $807,000 in insurance money, which was in the ratio of $13.60 to $100 of net profits. With another great iron company this ratio exceeded $22, and with a third it was nearly $47. Of course such expenses, in addition to heavy general taxation, must prove a serious handicap to German industry; and it is not to be wondered at that the feeling is gaining ground among manufacturers that they are doing enough for their help. Yet there is no indication that social-reform legislation is to be checked. The bill before the Reichstag, referred to above, extends sick insurance to farm laborers and household servants, a change which will raise the burden of this system for employers from $24,000,000 to $36,000,000. The bill also provides for pensioning the widows and orphans of insured laborers at an estimated additional expense of about $17,000,000. The Imperial Government has also just published a bill for establishing an entirely independent insurance system for the protection of persons not included in the labor systems; it will apply to practically all employed persons having a salary less than $1200.
A better result of the insurance systems than the modest pensions and indemnities that they pay is to be found in their excellent work for protecting health and prolonging life. Many offices have their own hospitals for the sick, and homes for the convalescent. Excellent results have been achieved, in particular, through the timely treatment of tuberculosis,—against which the insurance offices are waging a systematic warfare. Treatment is partly at home, and partly in special hospitals, which are usually located in healthy country districts. Houses or apartments in which tuberculosis develops are thoroughly cleansed and disinfected by the insurance office; above 60,000 such disinfections are undertaken yearly. In many cases where it is not necessary to segregate a patient, the office protects the other members of t he family from too close contact with him, and secures him proper warmth and rest by giving him a new bed. All these protective measures have already told effectively upon the death-rate for tuberculous diseases. In the t hree years ending with 1908, deaths from pulmonary tuberculosis dropped from 226.6 to 192.12 per 100,000.
The accident system has also had a powerful effect in stimulating among physicians and surgeons the study of special ways and means for treating accident-injuries, with reference to preserving intact the strength and efficiency of the patient. The insurance system has also given a strong stimulus to legislation for securing sanitary conditions in factories and other places of work. Before the era of social-reform legislation set in, sanitary conditions in German factories were extremely bad. Dangerous chemicals were handled without precautions for protecting health, ventilation and light were badly supplied, floors were filthy, and there were no legal restrictions upon the length of the work-day for adults, while even young children often had to work from ten to fourteen hours a day. Now all that has been changed, to the great improvement in health and comfort of the working people.
Something must be said, before leaving this subject, about the moral results of the system. Have the insurance laws had any substantial effect in promoting pacific relations between capital and labor? Are the laboring classes better contented with their economic position, more reconciled to the existing social order? The goal of the whole system, as announced by Emperor William I in the Imperial Rescript of November, 1881, was to ‘give the Fatherland new guarantees of internal peace.' The present Emperor evidently had the same goal in mind, when, speaking to Bismarck of the Socialists, about the time when the old-age and invalid insurance law was adopted, he said, ‘You leave them to me, — I shall dispose of them alone.’ Now, if we judge of the effects of the insurance laws from both these standpoints, the social and the political, it must be admitted that the goal set by their imperial sponsors has by no means been reached. On the contrary, social peace seems fart her off than thirty years ago. Strikes and lockouts have grown more frequent, as well as of greater dimensions. In 1910, a lock-out covering the whole nat ion was ordered by the builders’ organizations. The relations between employers and employees also appear to have grown more strained, and even embittered. Influential Socialists say that the insurance laws themselves have had the effect of even intensifying the opposition of the working classes to the capitalistic order of society, owing to the very inadequacy of the pensions paid. Herr Sydow, the Prussian Minister of Commerce, has expressed himself in a similar strain: speaking recently of conditions in the coal trade, he said, ‘The more that is done by legislation and by t he private initiative of the mine-owners for the welfare of their laborers, the further removed we appear to be from our goal of good relations between employers and employed.’
The growth of the Social Democracy certainly indicates that the discontent of the working classes has deepened and spread. The number of Socialist votes has increased threefold since William II ascended the throne; and his embitterment against the Socialists over his failure to make good his rash promise to Bismarck, is itself one of the serious factors in the social-political situation of to-day. Notwithstanding the unfavorable opinions just quoted as to the moral effects of the insurance system upon the workmen, however, there are grounds for believing that counterbalancing good results have been attained. The system has certainly deepened the feeling of solidarity among the working people themselves; and not a few observers say that they have become more accessible to considerations of public interest, more amenable to public opinion, in dealing with labor matters.
The moral effect of the insurance system upon the employers is less open to doubt. It has evidently given them a keener sense of their responsibility for the welfare of their workmen. Their standard of social duty has been raised by the regular payment of the insurance tax; they are less inclined than formerly to treat all labor matters from the standpoint of hard cash. They certainly take more readily to improved methods of constructing factory buildings; it has almost grown to be a rule with German manufacturers to go even beyond the requirements of law in building for the best sanitary results. Just as with the laborers, too, manufacturers and other employers have been drawn together by the insurance system. The compulsory organizations for accident insurance gave them a new feeling of solidarity, and acted as a powerful stimulus toward the formation of trade combinations, which have become more numerous in Germany than in any other land.
But German society does not regard its duty to the working classes as exhausted with the insurance systems already described. In many other ways the State, the municipality, and private organizations, extend a helping hand to the laborer. Bismarck once, in a speech in the Reichstag, explicitly recognized the laborer’s right to work. Some twenty German cities have given practical effect to his words by organizing insurance against non-employment; and the governments of Bavaria and Baden have taken steps to encourage this movement. Under the systems adopted, the laborer pays the larger part of the insurance money, and the city the rest; in a few cases money has been given by private persons to assist the insurance.
A fine example of what German municipalities and other bodies are doing in behalf of the working classes is presented by the public employment offices. These are well organized, succeed in keeping up close communication between all classes of working persons and possible employers, and have thus become an important factor in the economic and social life of the country. An Imperial law for their regulation and promotion went into effect in October, 1910. An annual convention of the various employment agencies has been held for some six years, at which methods of work and other matters of special interest to the managers are discussed. The good work accomplished by the German agencies has stimulated a similar movement in other countries. The Scandinavian states and Switzerland have passed laws and organized employment agencies after the German model; and in 1909, England passed a law under which over one hundred agencies have been organized. A year ago the French Minister of Labor recommended to the municipalities that they establish agencies like those of Germany.
One of the latest tendencies of legislation in Germany is to place in the hands of the laboring classes the means for protecting themselves. Several years ago a dreadful disaster causing a heavy loss of life occurred in a coal mine of Westphalia. The miners believed that the explosion could have been prevented by more frequent and thorough inspections of the mine, and they thereupon began a general agitation in favor of a law authorizing them to elect supplementary mine-inspectors from among themselves. Such a law was passed within a year. The miners at each colliery elect their own inspectors, who must examine safety conditions underground at least once a month, and at the owner’s expense.
Just now the Reichstag is occupied with a bill of similar tendency, providing for the establishment of socalled Chambers of Labor. To make clear to the American reader what this means, attention must be called here to the difference between the German and the American chamber of commerce. Such a body is in America a voluntary, self-pepetuating organization; it represents the broad commercial interests of the city only in so far as its members are public-spirited business men; but the merchant community itself has no means in its hands to enforce its views and interests within the chamber of commerce; hence independent organizations spring up in cities where the merchants believe that their interests are not adequately looked after by the chamber of commerce. In Germany this is different. The chamber of commerce is elected under the law by the entire body of merchants, for stated periods; thus all classes can secure representation in it, and the membership can be changed from time to time to meet the wants of the community. Moreover, the chambers of commerce thus organized are the legal organs of advice to the governments, national, state, and municipal, on all matters pertaining to commercial interests. In the same way t he farmers of the nation have their legal voice in many chambers of agriculture, having a central organization which represents the farming interests of the entire nation.
The Chambers of Labor are designed to bring together the laborers and the employers of each industry by districts, in organizations in which each shall have equal representation. Their functions shall be to assist in fixing the terms of the wage-tariff where men are employed under a collective contract; to further the establishment of employment agencies under the joint auspices of employers and employed; to take part, when called upon, in the settlement of strikes and lock-outs; and to collect information by circular or otherwise regarding labor matters in their territory. The bill for establishing these chambers has passed its second reading in the Reichstag; but there is still some doubt as to its ultimate fate. The Reichstag amended it by extending its provisions to the State railway employees, and by making the secretaries of labor-unions eligible to membership in the chambers — changes which the Government declared that it would not accept. Whatever becomes of the bill, however, it is highly significant as showing the willingness of the Government to recognize the equal position of the working men along with their employers in the adjustment of labor interests. It is worthy of mention, too, that working women have an equal voice with men in voting for representatives in the Chambers of Labor.
Of course, organized means for preserving peace between employers and their men have not been neglected in Germany during all these years. Courts of arbitration after the English model were established many years ago, and these have been developed and improved from time to time through new legislation. They are for the most part organized under municipal auspices ; and an official, usually of the municipality, presides over them. The four other members are elected equally by the employers and the employees. Their duty in cases of labor difficulties is first to try to effect a settlement by putting forth conciliatory proposals; but if these fail the court, has then the right to adjudicate the matter. The arbitration courts have at present only a local jurisdiction; but, in view of the wide extent often reached latterly by strikes and lock-outs, it is growing evident to all concerned that a national court of this kind is needed to deal with them.
Systems of taxation in Germany have been influenced by the socialreform movement to only a limited extent. The Imperial revenues are still derived almost wholly from indirect taxes, which are always, from their very nature, a relatively heavier burden upon the poor than upon the rich. The German import duties are only in part graduated with a view to lightening the tax on cheaper goods. The worst feature of protection in Germany is that it greatly enhances the cost of bread and meat to the people; and in t he internal revenue system are included such ‘unsocial’ taxes as the sugar, the salt, and the match tax. But the principle of sparing the poor man is better recognized in the State and municipal systems of taxation. The most important. State tax is that on incomes, which is in all cases graduated down to a very low rate on the smallest income; in Prussia there is no tax on incomes less than $214. The cities also collect, the bulk of their revenues from incomes, using the same classification and sliding scale as the State.
A highly interesting innovation in taxation is the ‘unearned increment’ tax on land-values, first adopted by Frankfort-on-the-Main in 1904, and already applied by above 300 German cities and towns. It is based upon the sound social-reform idea of recovering to the community a part of new value that a growing population gives to land. It is a fact strikingly proving the popularity of the new tax that the Reichstag adopted with practical unanimity a resolution favoring it in the summer of 1909, at a moment when that body was hopelessly divided as to all other forms of taxation; and a law on the subject has just been enacted.
The position and influence of the Social Democracy throughout all this movement, together with its future prospects, call for a few concluding remarks. It has already been said that the hope of conciliating the working classes and winning them away from radical Socialism was one motive leading to the adoption of the insurance laws. The same hope, accentuated certainly by grave apprehensions as to the growing power and confidence of the Socialists, has also been a strong incentive with the governing classes for undertaking ot her social-reform measures. But at times, it cannot be doubted, the Government has also been held back from undertaking reform measures by the policy of the Socialists, who avail themselves with avidity of every opportunity placed in their hands for building up their party’s strength, and tightening their hold upon the working classes. They elect mining inspectors, members of insurance boards, and other representatives of labor on public boards, on grounds of party expediency only. Hence not a few of the friends of social reform deplore the Socialist movement as a hindrance to many good measures which were else feasible and would receive the support of the governing majority.
For the moment the prospect s of t he Socialist party appear very bright. They had lost half their voting strength in t he Reichstag at the elections of January, 1907, but during the past two years they have elected their candidates in nearly every by-election in which they made a contest, and their votes have heavily increased. It is now expected in all quarters that they will make great gains in the general election to be held this year. Such a result would probably quicken the pace of social reform on the part of the Government. But it is to be regarded as very doubtful — looking further into the future — whether the Socialists will be able to continue their onward march. It is a well-known fact that, for some years, many voters have been helping them who by no means subscribe to the Socialists’ creed, — doing so as the most effective means of protesting against the general policy of the Government. It is equally certain that a large part of the regular Socialist membership is composed of discontented men who have but a lukewarm interest in collectivism, or believe that it can ever be realized.
The best propaganda work for Socialism is done by the Government and its immediate supporters. To them the common laboring man is not an equal, but an underling; he has no political rights which they would be willing to concede except under stress of circumstances. Germany is committed to democracy in form only, not in spirit. That is shown in hundreds of ways, — most of all by the refusal of suffrage reform in Prussia. The working people know, too, that the whole socialreform movement has been largely tainted by an undemocratic, condescending spirit; by a willingness to give money, but not more precious things than money. If a change should come over Germany, if Prussia should get rid of its plutocratic suffrage law and give real ballot reform, if the protective duties should be reduced in the interests of the poorest class of consumers, — it may be safely assumed that the tide of Socialism would soon begin to ebb. That is the conviction of a growing number of the intelligent people of Germany.