Another country is building itself slowly to commercial importance, viz., Russia. This huge Empire, stretching from the Arctic Ocean to the regions where grow palms and cotton plants, has by systematic means of communication and economic policy acquired recognition in trade. The policy of the United States and Russia is based on entirely other foundations than that of England, namely, high tariffs and autocracy. By prohibitive duties they have endeavored to supply the home markets with home produce, agricultural and industrial. In democratic America no less than in despotic Russia the traveller has to undergo as searching and humiliating an examination as any criminal. During the last twenty years English imports have practically been shut out from two of the largest commercial countries, and the expectation that other countries would compensate England for admitting their goods free of duty has not been realized. The other hypothesis of Free Trade has also shown signs of weakness; not only has England's unique position in trade been lost, but even her prominence among other countries is threatened. Her superiority in all technical branches has passed over to Germany.

The pro

portion of pig iron has increased since 1880: in England from 7,749,000 tons to 10,000,000, i.e., 30 per cent.; in Germany from 2,713,000 tons to 14,793,000, i.e., 450 per cent. In a more striking manner Germany has surpassed England in its production of ingot iron and steel, as well as in chemical and elec

tro-technical manufactures. Only in certain branches-in machinery, and especially in textiles and shipbuilding has England a very decided start. Belgium, Austria-Hungary, Italy, Japan, and China are creeping slowly forward, and everywhere English trade meets with customs boundaries which threaten to increase.

In the gross total of English exports in the year 1909 33 per cent. went to the Colonies, 42 per cent. to Mexico, Central America, South America, China, Turkey (countries more or less influenced by free competition) and 25 per cent. to Middle Europe, Russia, and the U.S.A.

In the meantime this industrial agitation had left its traces in the Colonies. India, Australia, and Canada had begun to further their own interests, and in the two last-named taxes on imports were levied. The advantages offered by the Colonies to England, as regards the duties to be paid, were not great, because the Motherland had nothing to offer in return. England therefore took refuge in the principle of influencing the Colonies by its policy of credit and by its power of capital. By bestowing a pupillary security for the value of the Colonies, she has procured for herself the possibility of exercising pressure in trade transactions. Whilst reducing loans to those countries which were outside the sphere of British influence, we have seen this method, which private capital adopted, also tried in France, where the Government limits entrance to French money markets to grants of a political, commercial, or industrial nature. To satisfy the whole world is no longer possible. A doubt in the infallibility of the Liberal doctrine, regarded as sacred for nearly half a century, arose strongest on the question of trade, and the Imperialism which flamed forth towards the end of the last century is really nothing else but a sharp criticism of the traditional English economic policy and its vitality.

In close connection with the commercial and Imperial question stands the military one. Until late in the nineteenth century England was the only country whose Budget was capa

ble of producing the sum necessary for maintaining a large fleet-the Army being of small expense-and whose manufactures had so far advanced that it was able to provide the fleet with the newest inventions. But all this has changed; other countries have been able to increase their revenues from different sources, and to add to their trade. Meanwhile the U.S.A., the German Empire, and Japan have become first-class Powers, and they take a great national interest in the command of the sea, and are competing severely in the building of warships, so that England with the greatest difficulty will be able to hold its own on the ocean-all the more because countries not generally reckoned as maritime, such as Austria-Hungary and Italy, feel themselves obliged to take part in naval and war preparations. The never-ceasing number of inventions causes the start made in times past to appear illusory and almost makes it necessary to rebuild the fleet completely every ten years, in which work that country will take the lead which not only can meet the expense but also possesses the newest technical inprovements.

In both directions England is in danger in the course of time of being overtaken by other countries. Even to-day the Budget figures of the confederated States and of the German Empire are higher than those of Great Britain. The total receipts of the German Empire and of the confederated States amounted in 1910 to 7,176,000,000 marks, whilst in Great Britain the total sum was only 4,052,000,000 marks. The direct taxes per head in 1907 in Great Britain amounted in marks to 45.6, compared with only 24.8 in Germany: duties on articles of consumption amounted to 31.7 in Great Britain and 19.6 in Germany; and dues, 15.8 in Great Britain, 5 only in Germany.

This situation of affairs is due to the

difference between the English Liberal financial policy and that of State-Socialism in Germany. Nearly half of the revenue in Germany provided by the confederated States is derived from the railways and crown lands, whilst England is obliged to depend entirely on her customs and taxes; added to this she has to pay almost entirely alone the expenses incurred in protecting and strengthening her Colonies.

In contrast to former times, the chief anxiety also of the Chancellor of the Exchequer in England is to discover new objects on which to levy taxes, and the expenditure for the maintenance of the fleet has reached a height which even in that rich country is anything but appreciated.

But the question of the fleet is not so difficult as that of the English Army; even if it were possible for the former to maintain its superiority, it seems impossible to create a real Army in England. The increase of capital has almost done away with the peasant class, and without peasants no army can exist.

From these various facts one can explain the increasing dread felt towards Germany, whose trade, finding "closed doors" both in Russia and the U.S.A., seeks, like England, an outlet for its exports in other parts of the world, including the British Colonies. Political, financial, and economic reasons are forcing England to alter her relationship with her Colonies, and Germany would be the country most seriously affected. It is not, therefore, unnatural that a certain anxiety should exist in these two countries-as the conflict arising from such profound interests must influence the opinions of men in determining the economic question. The strategic aspect must also be considered. Germany can concentrate its fleet within sight of England, whilst the Mother Country, to preserve her interests, must dominate not only the At

lantic but also the Mediterranean Sea, the Indian and the Pacific Oceans.

It has also come about that the parties, which till now have been organized mainly from the political point of view, are beginning to divide on social and class questions.

Capitalism has reached its highwater mark in the British Empire; in agriculture, as in manufactures and trade, it had been fully and universally developed there before even foundations had been laid in other countries. Owing to his English experiences, Karl Marx wrote that great and strange work which has become the modern Bible for the labor class on the Continent-on the Continent, not in England. In considering the development of manufactures, one would have concluded that a Labor party would have appeared in England at least a generation before it appeared with us. As a fact, it appeared a generation later. Long ago England was aware of the abuses caused in the way of producing goods for the great capitalists. Cotton goods in Lancashire-the pride of England-were made largely by women, but principally by children, whose pitiable overwrought condition found an echo in the pathos of Carlyle and in the dramatic appeals of Marx and Engel. England possessed cruel laws

against combination, and for years watched these laws being misconstrued and administered in a harsh and inconsiderate manner. However, without having recourse to a revolution, a way was found by the making of factory laws to escape from this paid white slavery in Lancashire and Yorkshire, and by a remarkable and unique system of labor unions to evade the prohibitory laws. The Chartist movement brought England near to a revolution, but already, through the Reform Bill and Anti Corn Laws-the propaganda of the reformers, Cobden and Bright-the points of contact be

tween the middle classes and the working classes had become too important and too numerous for the Chartist to be able to realize his ideal of a complete political democracy. A new generation of artisans grew up, who, under the influence of the teachings of political economists and reformers. sought for an improvement in their position by organized self-help. Then began the period of trade unions, with their relief clubs and the substitution of trade union tactics for class struggles. For decades the working classes of England were unfamiliar with the central thought of Continental Socialism. the endeavor to gain political power by improving, and if possible re-organizing, the economic condition of the working classes. To the middle of the 'eighties the principle of laissez-faire was the political and social creed of the trade unions' leaders. Ten years later a new spirit of socialistic ideas predominated in the union-congresses of the Socialistic party.

Henry George shook the artisans up, the writings of Marx were scattered abroad, and the uneducated workpeople organized themselves. The Fabian Society encouraged also the socialistic tendencies of the members of the bourgeoisie. But scarcely had this new spirit in the working classes gained recognition, when youth and strength flowed towards Parliament and municipalities, and a Labor party arose in the House of Commons, with Socialistic views. As long as English manufacturers ruled the markets of the world, the working class--especially the educated artisans-were fully occupied and received sufficient wage, but developments during the last century have changed all that. British trade has not grown in proportion to its population. English capital has sought and found its sphere of activity principally in the Colonies. The number of commercial ventures which have arisen

in India and Australia is very considerable, and although the English capitalist reaps the benefit of these, the English workman derives no profit. The Mother Country is increasingly being transformed from a preponderatingly industrial into a trading, navigating, and even partly into a merely investing State, owing to the commercial policy of foreign countries, and the development of Colonial industries. The vast use and improvement in machinery has tended to lessen the number of workmen employed in the manufacture of English goods. Take, for example, the manufacture of textiles. Although the value of the production during the last fifty years has risen from 110,000,000, to 205,000,000l., the number of workmen employed decreased from 1,500,000 to 1,300,000. In spite of the extraordinary development in this important branch of British industry, 6,700,000 fewer people (including members of families) are in employment than was the case half a century ago. The backwardness in many branches of industry, owing to foreign competition, has become painfully apparent to the English, and during the last ten years desperate efforts have been made to regain ground lost. The superiority of German manufactures has been ascribed often to better preparation at school, consequently a reform in education was planned, and the sum voted for it was enormous. To protect trade all German-manufactured articles had to be marked "Made in Germany." A law relating to patents was passed which brought about the creation of a number of foreign branch establishments. But all these precautions could not bring back to the British Empire its lost commercial preeminence.

The times of abundant employment for the whole of the working classes is over even in England, and the numbers of the unemployed are increasing. It

remains to be seen whether the settlement of the labor question, the economic policy of the Government, and the Poor Laws will succeed in solving the difficulty. Already once before the island kingdom has been face to face with the same question, namely, at the beginning of the last century, when Malthus devised his gloomy doctrine and Goethe regarded the reclaiming of land from the sea as the crowning ideal in Faust's life-purpose. At that time British genius found a way out of the difficulty. Principally by means of English capital large territories beyond the sea were made accessible for farming, and the products were admitted to England free of duty. Today the question is a more knotty one; it is as much a problem of production as of distribution. The problem is how to increase industrial productivity and markets in spite of the protective duties of other large States in proportion to the growth of the population, to encourage agriculture in the oversea dominions, and to check the growing disproportion between machinery and wage capital.

It is impossible to speak about English political economy without at least alluding in a few words to their credit system and their national debt. The typical spread of the cheque system has replaced the use of paper money, and has given to their money market a wider range than is the case in any other country. Almost two hundred years ago, long before the Continental banks were founded, England had made use of cheques, and the banking facilities there are considerably greater than anywhere on the Continent. Many of the leading English deposit banks have the control over more than 6-700 business houses.

And yet just in this wonderful arrangement for supplying the want of ready money there is a danger. The whole great money market rests on the

narrow gold reserve of the Bank of England. London is still the only place in the world where one really receives gold, and therefore if there is a dearth in money loans, the Bank of England is the first to be exposed to an attack on its reserve. But although this Bank is to meet the claims of all the world's markets, and is to serve as the foundation for all deposits, yet it is considerably smaller in its funds than, for example, the AustroHungarian Bank. Herein we have an explanation of the frequent changes in the English bank-rate during the last ten years.

reserve

Striking is the energy displayed in England in paying off the National Debt. The nineteenth century lay as a burden on the rising generation in Germany; in England it was just the contrary. The English National Debt is 200,000,000l. smaller than a hundred years ago. It is extraordinary that the British nation, in the middle of building Dreadnoughts, were able to pay off in one year 15,000,000l. borrowed during the Boer War. In strange contrast to this is the great fall in the value of Consols, which is at present lower than at any time since the Napoleonic wars. This may be partly explained by Goschen's conversion of them, and by the South African War; but mainly by the privilege given to a large category of colonial investments.

Since the time of the Romans no other nation has succeeded in striding across the earth and maintaining its mastery over far-reaching empires in different continents. But in contrast to what happened in the Roman Empire, there appears to be no sign of decadence either in the political or the social condition of England. The vigor and thoroughness of the race, the dignity of the individual, seem rather to have strengthened with time. other nation has done so much in

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in

spreading what we call civilization, by the way in which it has intervened in developing the prospects of less prosperous countries and in ameliorating the lot of the people. England, with her wonderful statesmanship, spreading education and a love of justice, has wrought inestimable benefits to mankind. Although her economic supremacy was not accompanied by an abundance of artists, as was the case in the Italian towns, in Spain and in the Netherlands, yet Great Britain, after acquiring political and commercial importance in the Victorian era, exercised through men like Carlyle. Darwin, Spencer and many others, the strongest influence on the development of intellectual life. Only in the narrower sphere of the plastic arts must England give place to the Continent, except, perhaps, in the domain of applied arts for satisfying the practical necessities of life.

The Empire-parts of which are united by the slenderest threads-rests on the foundation of unquestioned mastery at sea and on the peace of the world; hence the nervousness displayed by England on account of the naval and warlike preparations of other countries. Modern capitalism almost resembles a house of cards, which will fall down if one card is taken out. The narrow gold reserve, on which a huge credit system is built up, the dependence of the Mother Country on foreign imports, the great national movements in the Colonies, the decrease in employment of labor in manufactures, the formation of strong foreign fleets, the necessity for introducing universal military service, the great change in the old traditional Constitution by reforming the Upper Houseare all problems of such deep importance that no nation has so far had to solve them all at the same time. Already the hold over Ireland is beginning to slacken, in spite of the pressure used