No More Learning

There was a similar danger in the Balkans. If we knew
the whole truth of what lay behind the innocent clauses
of the Treaty of 1879, itself a further instalment of the
system begun in 1872, it is quite certain that it would con-
firm one broad conclusion. Germany endorsed cautiously
but deliberately the Austrian bill of exchange in the
Balkans. The nature and extent of the commitment can
only be roughly inferred from the tangled diplomacy that
preceded 1879 and fills the next thirty years. But in 1879
Bismarck took a great risk--all his public utterances con-
firm the guarded language of the Memoirs--and he took it
deliberately. The 'occupation' of Bosnia and Herze-
govina was nominally a transitory arrangement: its con-
version into an 'annexation' was a permanent bait to
Austria, but Germany secured a powerful control, for she
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BISMARCK
could always refuse to support the conversion. He placed
an ally in shining armour behind Francis Joseph and the
Magyar oligarchy: and the ally stood there, not in the
interest of Austria but of a Prussianised Germany. The
contention that the Treaty of 1879 made a Franco-Russian
alliance inevitable rests on arguing back from 1896 to 1879.
It is certain that no alliance between France and Russia
took place before 1890. Diplomatic coquetry and flir-
tations are even less convincing evidence of alliances than
glasses of wine and the toasts of monarchs (drafted by their
ministers) at ceremonial banquets. The whole point of
Bismarck's criticism of the policy of his successors after
1890 is concentrated in the indictment, that while he
prevented such an alliance (which was true), his successors
not merely permitted it, but by their diplomatic bungling
actually brought it about. It is therefore neither fair nor
historical to argue that the Dual Alliance of 1879 made
a Russo-French alliance inevitable. Bismarck could and
did argue that, so far from that result being inevitable, the
Dual Alliance, properly handled, made an entente between
Paris and Petersburg impossible.
Bismarck was a continentalist, and remained a continen-
talist to the end of his days; that is, he held as an axiom
that German supremacy must rest on mastery of the
strategical and political situation in Europe. Efforts out-
side the central European theatre were an excentric and
unjustifiable dissipation of German strength, the concen-
tration of which was required on the major objective.
Secure that, and the rest followed; lose it, and no
gains elsewhere would compensate the loss. Austria-
Hungary and the Balkans--the two could not be separated,
for the problem of south-eastern Europe was the problem
of the Dual Empire--were essential to German hegemony
and the sole avenue of continental expansion. The crisis
of 1875 reinforced the lesson that Europe would not
tolerate a further expansion westwards at the expense of
France and Belgium. But an expansion to the south-east
could secure British neutrality, if not active support, for
it would be at the expense of Russia. To-day we are apt
to forget that in 1879 Great Britain viewed Russia not
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? THE IMPERIAL CHANCELLOR 351
with the eyes of 1908 or 1914, but of 1856 and 1870.
How--Bismarck might well ask--was German trade to
expand after 1879 if Great Britain, the sea-power par
excellence, were driven by German action into the camp
of Germany's foes?
Nevertheless the gravity of the risk taken in 1879 is
proved by the insurance against its exploding into an un-
limited liability. Until 1890 Austria was never allowed
to get out of hand. How precisely this was done we
cannot say with certainty. But it was done. The control
of the Wilhelmstrasse over the Ball-Platz was effective, for
Bismarck had his personal prestige, unrivalled knowledge,
and experience to help in the difficult task. These are
qualities not acquired by intuition, still less by birth or
hereditary succession, but by brains and the travail of a
lifetime. Control of Austria was also assisted by positive
counterchecks--the alliance with Italy and the continuous
ring at the Russian front door. It is safe to conclude that
Bismarck prepared for the inclusion of Italy in 1879, and
that without the Dual Alliance Italy could not have been
secured. We have Bismarck's word for it, and his judg-
ment outweighs a dozen criticisms. For he had the whole
of the facts before him, whereas his critics argue from
edited documents written on one side only.
A further consideration is very relevant. Down to 1879
the isolation of France had been the prime object of
German policy. The policy was breaking down. France,
excluded from the Congress of London in 1870, took part
in the Congress of Berlin in 1878. After 1879 the diversion
of France became more important than her isolation: and
with it went the diversion of Russia and the diversion of
Great Britain--in each case the diversion being intended
ultimately to increase the antagonism. But these develop-
ments open up a fresh section of Bismarckian policy, with
an intrinsic character of its own. They lead to the Triple
Alliance and the consequences of that consummation of
the Chancellor's diplomacy.
Gastein in 1865 saw the making of a new Austria; Gastein
in 1879 provided the new Ar stria with an alluring future
and the means of realising it. Vienna was right in welcom-
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BISMARCK
ing Bismarck with a gratitude which deeply touched that
seared, proud, and sensitive heart. The Treaty of 1879
was a masterpiece. 1 It was signed by Bismarck and
Andrassy on October 7. On October 8 Francis Joseph
But the statesman who made it for Austria received the
reward of Beust, Benedek, Rechberg, Schmerling, Buol,
and Bach.
? 4. The New Era--Home Policy, 1878-1888
The years 1878-80 witnessed a gradual but complete
change in the home policy of the Chancellor, culminating
in the establishment of the system which Bismarck main-
tained until his fall. In foreign policy, as has been
already indicated, the development of events prevented
the continuance of the alliance of the Three Monarchies
on the lines originally planned, and imposed on Bismarck
the necessity of a choice. In home affairs the necessity of
a choice was even more urgent. Bismarck practically
said to Bennigsen, ' Do not compel me to choose between
you and Windthorst. ' And Bennigsen's reply was vir-
tually to the effect that the choice must be made.
The several elements in the problems by the spring of
1878 were clear, but together they made a very complicated
situation. First of all, there was the Chancellor himself.
His health and strength were no longer capable of bearing
the continuous strain of mastering and directing the foreign
and home policy of a great and expanding Empire, in
which Prussia was the predominant partner. An imperial
ministry did not exist. The imperial executive was
organised as a branch of the Imperial Chancery, the secre-
taries of the various departments being simply depart-
1 Prince von Biilow writes in his Imperial Germany (edition of 1916):--
'Prince Bismarck, a second Hercules, accomplished many great labours. . . .
If I were asked which of these is the more admirable from the point of view of
foreign policy I should say without hesitation--the Austrian alliance. ' The
whole chapter (v. ), as indeed the whole book, bears out Mr. Headlam's con-
sidered judgment on its importance as an authoritative exposition of German
principles and a German interpretation of the meaning of Bismarckianism--
a meaning falsified by his successors, of whom Prince von Biilow is the ablest.
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? THE IMPERIAL CHANCELLOR
mental and executive officers, appointed by the Chancellor,
and responsible as managers of sub-departments to him
alone. Bismarck had stoutly resisted every effort to convert
these departments into independent ministerial offices,
with ministerial chiefs, colleagues in an imperial cabinet,
and representing their several departments in the Reichs-
tag; and his reason was not pure autocracy and personal
jealousy--the determination to keep everything in his
own hands--though they accentuated his. refusal. The
reasons went far deeper; an imperial cabinet, such as the
Progressives and the Left Wing of the National Liberals
had advocated since 1867 as an irrevocable advance to
parliamentary government and were urging with persist-
ence in 1877, cut at the root of the position of the Federal
Council, and the interlocking machinery by which Prussia
maintained her control of policy as a whole. For the
Federal Council, like the Tudor Privy Council in England,
was the real governing organ in the Empire, and combined
legislative with executive duties (through its committees),
and was essentially the organ which made policy. Al-
though we are without exact information as to how
Prussia, behind the closed doors of the Bundesrat, main-
tained her control, it is clear that it was exercised and
maintained by the chairmanship of the Imperial Chancellor,
who as Minister-President of Prussia cast the Prussian
vote; and in the secret deliberations of the Federal
Council, just as in the Tudor Privy Council or the modern
Cabinet in England, there could be perfect freedom of dis-
cussion, and a complete representation of different points
of view, while the decision arrived at was the decision of
the organ as a whole, and the voting was unknown except
to the initiated. A real Imperial Minister of Finance,
for example, responsible to the Reichstag, would obviously
supersede to a large extent the power and functions of the
Federal Council and transfer them partly to himself and
(no less important) partly to the Reichstag. The creation
of such imperial ministers simply meant that in a few years
the Federal Council would either shrivel into the position
that the British Privy Council has shrivelled into, rela-
tively to the Cabinet and the House of Commons; or, it
b. z
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BISMARCK
would be transformed into a real Upper Chamber of the
Imperial Reichstag, as had been in 1870 the ideal of the
unitarians led by the Crown Prince and the intellectuals
of the 'Coburg and Gotha' school. But such a trans-
formation destroyed the essence of the institution which
was constituted out of, not over, the Federated governments.
No less serious (and to all Prussians of the Bismarckian
and conservative type, far more serious) would be the
effect on Prussia. The British student is apt to forget
that beside the Federal Council (Bundesrat) and the
Imperial Reichstag existed the Prussian Ministry, presided
over by the Prussian Minister-President, and the Prussian
Parliament (Landtag), and that Imperial Reichstag and
Prussian Parliament were frequently sitting at one and the
same time in Berlin. Indeed, a large number of Reichstag
members (who were Prussians) spent their time between
the two bodies, voting on and fighting the same issues in
two separate legislatures. The Kulturkampf was essen-
tially a Prussian affair, and the greater part of the 'May
Laws' was a Prussian, not an imperial, concern: just as
the administrative execution of those laws was mainly the
duty of the Prussian Minister of the Interior.
Prussia had, like the other federated States, her separate
(and very narrow) franchise, ministry, and bureaucracy,
the only difference being that Prussia was very nearly two-
thirds of the Empire, and that behind ministry and
bureaucracy stood a solid concrete wall of tradition and
conventions, the parapet of which was the royal autocracy.
There was a Prussian Minister, but no Imperial Minister,
of War; a Prussian Minister of Finance, Education, and so
forth, and the Prussian Foreign Minister was the Minister-
President who was also-Imperial Chancellor: an Imperial
Minister of Finance or War, not directly under the Chan-
cellor's control, involved the dual system in a terrible
dilemma. Either it meant the government of that im-
perial department by Prussia, or the government of that
Prussian department by the Empire. The former would
have led to a revolt of every non-Prussian State from the
imperial system, the latter to the dissolution of Prussia
in the Empire. Bismarck plainly told the Reichstag more
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? THE IMPERIAL- CHANCELLOR 355
than once that an independent Imperial Minister of
Finance would have for his greatest antagonist the Prussian
Minister of Finance. He might have added with even
greater truth that an Imperial Minister of War would
either have to swallow the Prussian War Office or spend
all his time in fighting the Prussian Minister of War. Was
the Imperial Minister to exercise the prerogative of the
Prussian Crown, or only the much more restricted power
of the Imperial Praesidium?
The duty of correlating this dualism and ensuring its
harmonious working was Bismarck's main task, and he did
it by combining the office of Chancellor and Minister-
President, by controlling the Federal Council, and by the
domination of the conservative majority in the Prussian
Landtag. As Minister-President he took care that the
decisions of the Prussian Ministry broadly coincided with
the policy of the Federal Council; as Imperial Chancellor
he took care that the Federal Council's decisions coincided
with the broad requirements of Prussian policy. Further-
more, his control of the Prussian Ministry was ensured by
the Cabinet order of 1852 by which the Prussian Ministry
in its relations to the Prussian Crown acted through the
Minister-President alone; the Minister-President was in
the same constitutional relation to the sovereign that
custom has assigned to the Prime Minister in the British
Cabinet. The Minister-President was the sole channel
of communication with the Crown; and Bismarck's im-
mense prestige, personal gifts, inexhaustible powers of
work, political tact, and commanding influence with the
sovereign enabled him to accomplish a perpetual miracle.
From 1871 to 1888 it must also be remembered that
Bismarck was the servant of a sovereign rapidly ageing.
William 1. was seventy-four in 1871, and he was content
to leave Bismarck a very free hand. The King was not
capable of doing the amount of work that autocracy and
an intimate personal control implied. The autocracy
was in fact shared by the King-Emperor with Bismarck.
William's governing interest, the army, fell outside the
shared power. Bismarck provided the legal basis and the
money, and left the army to the King and the General
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BISMARCK
Staff, for in his eyes the army was simply a superb executive
instrument of policy. The General Staff provided him,
through its chief, with the information necessary for a
correct judgment of any political situation, but he would
have resented the intervention of the ' demi-gods' in the
office of the Wilhelmstrasse even more fiercely than Moltke
resented the effort of the Imperial Chancellor to overrule
in problems of strategy the chief of the General Staff.
The system therefore rested on the individual char-
acter and gifts of King-Emperor and Chancellor more
securely than on the legal and constitutional relations
established by the Imperial and Prussian constitutions.
But if we assume that in 1878 the Cabinet order of 1852
had been repealed, and that in the place of William 1. , aged
eighty-one, was a sovereign young, active, capable, able
to do the work required, and with his own views of home
and foreign policy, not necessarily identical with those of
his Chancellor and Minister-President, the system would
have begun to show widening fissures that no papering
over by photographs, decorations, and eulogistic letters
would cover. What took place in 1890 might have taken
place at any time between 1878 and 1890. 'The older
one gets,' said Frederick the Great, ' the more convinced
one becomes that His Majesty King Chance does three-
quarters of the business of this miserable universe. ' In
1878, when a crisis had been steadily developed and Ger-
many and Bismarck had reached the cross-roads of a great
decision, had the bullet of Nobiling ended the life of
William 1. and put the Crown on the head of the Crown
Prince, it is as certain as anything can well be that the
history of the next ten years in Germany would have been
fundamentally different. The fate of Liberalism in
Germany might have been decided with a moderate
Liberal on the throne. 'King Chance ' provided that it
should be decided with an aged and very conservative
sovereign, the two attempts on whose life profoundly
influenced a critical general election. Had the Conser-
vatives and the Clericals hired the half-witted miscreant
who fired at the old gentleman to whom age, character,
and service to Germany should have given a perpetual
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? THE IMPERIAL CHANCELLOR 357
immunity, they could not have done a better stroke for
their parties.
In 1878 Bismarck recognised that personally he could
not carry on as he had done. The law which authorised
the creation of a Vice-Chancellor (Stellvertreter) to act
for the Chancellor, if required, was intended to relieve the
strain but retain the system. In 1873 Bismarck had met
it by resigning the Minister-Presidency to Roon, but that
solution had proved a failure. The Stellvertreter law of
1878 was a deliberate effort to avoid the other solution--
the creation of imperial and responsible ministers, who
could be real colleagues to the Chancellor, and relieve him
of half his work (and more than half his power). The
debates on the law revealed the issues, and the law passed
because Bismarck, for the reasons previously explained,
categorically refused any other alternative. The Reichs-
tag had to choose between Bismarck and an approximation
to parliamentary government. No one in 1878 could face
the possibility of governing the Empire and Prussia with
Bismarck out of office and in opposition; no one had any
confidence in a foreign policy directed by any one but
Bismarck; for the Congress of Berlin, the antagonism
between Russia and Austria, the renaissance of France, the
policy of Great Britain, and the menacing problems offered
by Italy, the Mediterranean, Greece, and the Ottoman
Empire--unsolved by the Congress--made no other de-
cision possible. In 1878 the Reichstag voted first for
the man, and with reluctance, for his system. The life
of States, as of families, was once more proved to be
dependent in the great crises on the individual.
Bismarck now had to keep the system that he had created
efficient. If it failed in efficiency, his own personal posi-
tion would crumble away. It was not enough to direct
foreign policy, anticipate and neutralise hostile coalitions,
and rivet in that German hegemony which, as he said
himself, had to face four fronts at one and the same time.
The German at home must be satisfied by material proofs
that Bismarckian government was the best both in theory
and practice. In 1878 the Germans had begun seriously
to doubt the adequacy of the theory and the benefits of
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BISMARCK
the practice. It was openly asserted by friends and foes
alike that Bismarck had done his work. The Reichstag was
the crux. The irresponsible autocracy of the Federal
Council that made policy must either work with the major-
ity in the Reichstag or make a majority for itself. The
Bismarckian system which in theory made the government
independent of party could only achieve its purpose
through the manipulation of the party vote. The per-
petual creation of King's Friends in sufficient numbers to
ensure 'the right' decision in the Lobbies was essential.
The general election of 1877 proved that under no con-
ceivable circumstance could the united Conservative
parties command the majority required, or indeed now
hope to win more than one-fourth to one-third of the
votes. The Conservatives must therefore be united with
another strong party. There were only two from which
to choose--the Liberals or the Clerical Centre. Union
with the Centre gave a working, with the Liberals a hand-
some, majority.
Which therefore was to be secured?
The whole point lay in the ' securing. ' In Great Britain
under similar circumstances there would have been a
Coalition Ministry, representative of the fused parties.
But in Germany the problem for Bismarck was to get the
votes without admitting the voters to the control of policy.
Hitherto, the National Liberals had solidly supported the
government. The negotiations with Bennigsen revealed
two interesting results: National Liberal support would
be continued if the previous policy were continued, but a
change of policy meant probably a struggle with National
Liberalism. To the Liberals above all the maintenance
of Free Trade, the issues involved in the May Laws, and
ultimately parliamentary government, were the three
cardinal items.
Conservatism combined with the Centre involved
marching down the road to Canossa, and it was uncertain
that the Centre would vote for a new fiscal policy. While
Bismarck-faced this troubled political situation, accident
helped him partially to solve it. The death of Pio Nono,
and the elevation to the Pontificate of Leo xin. , created
a new situation at the Vatican. The new Pontiff could,
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? THE IMPERIAL CHANCELLOR 359
without damaging Papal prestige, inaugurate a more
conciliatory attitude; Bismarck without disinterring a
penitential white sheet could enter on an 'exchange of
views. ' Both sides, thoroughly tired of the struggle, in-
dicated through appropriate channels that conversations
would at any rate do no harm; and in the autumn of 1878
Bismarck sought a cure at Kissingen, which was also
recommended as the one health resort in Germany that
would help Monsignor Masella, the Papal Nuncio to
Bavaria. Nuncio and Chancellor met by an arranged
accident and exchanged views. They were really deter-
mining what they could buy or sell, and in 1878 the wares
on either side were simply brought out and handled in a
friendly manner.
More decisive for the present was the attempt (May 11)
by Hodel on the Emperor's life. The government at
once brought in a very severe bill which practically put
the Social Democrats at the mercy of the Ministry of the
Interior. For years the growing organisation of Social
Democracy had been alarming the Conservative classes.
Argument having failed, force alone remained. But the
bill was so comprehensive in its severity that it threatened
all political organisations not approved of by the govern-
ment. Despite a denunciation by Moltke of Social Demo-
cracy as the enemy of God and society, Bennigsen and
Lasker from the Liberal benches tore the measures in pieces,
and it was rejected by 251-57 votes, the Centre voting
with the Liberals. A few days later (June 2) Nobiling, a
doctor of philology, attempted to assassinate the Emperor,
and succeeded in wounding him severely. Bismarck heard
the news at Varzin. He struck his staff into the ground.
'Now,' he cried, 'we will dissolve the Reichstag. '
The dissolution was decreed promptly by the Bundesrat
(June 11), and the elections were held in all the excitement
of panic, aggravated by indignation. Liberalism was
aghast at the Chancellor's stroke: and the result bore out
their fears. They lost thirty-two seats at least, and the
united Liberal and Radical forces numbered 106 as against
176 in the old Parliament. The Centre gained a couple
of seats, but the seats lost by Liberalism went to the
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BISMARCK
Conservatives, who now disputed with the Clericals the
claim to be the strongest single party in the legislature.
The anti-Socialist law was promptly reintroduced, and
passed by 221 votes to 149. Bismarck was obliged to
accept some amendments from the National Liberals, for
without their help the measures could not become law,
and the chief concessions were two: first, the operation
of the law was limited to three years (March 31, 1881);
secondly, electoral meetings were excluded from its pro-
visions. But, as passed, the discretionary powers granted
to the government were tremendous, for it enabled the
central authorities in the States to prohibit public meetings,
dissolve political associations, suppress newspapers and
books, and decide who was or was not a Socialist, what was
or was not Socialist doctrine or objects calculated to under-
mine the State. Socialists could be banished from their
homes, and a whole district could in case of urgent danger,
decided by the authorities, be placed under a state of
minor siege.
The debates were remarkable for three utterances.
Bebel, in his attack on the bill, revealed the qualities which
in ten years were to make him the most remarkable political
character in Germany, after Bismarck himself. Richter
the Radical leader told the Reichstag that he feared
Social Democracy more under this measure than without
it. The Chancellor, after explaining that Socialism sought
a heaven in momentary and material enjoyment alone,
and confessing that if he lost his own faith in God and a
future life, he could not live a day in any peace of mind,
urged all parties to unite in making a bulwark against the
common enemy to the Empire. He also foreshadowed
the necessity of counteracting the insidious poison of these
pestilential foes by measures of social and economic benefit
to the industrial proletariat.
The Radicals and Progressives, with the left wing of the
National Liberals, gallantly fought the fight for freedom
of opinion and liberty of political utterance and association
to a finish. But the National Liberals by their action
threw the earth on their own coffin. The programme of
Social Democracy has always terrified middle-class Liberal-
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? THE IMPERIAL CHANCELLOR 361
ism more than any other party. Chastened by the
election the Liberals were in a sad quandary. Fearing
the further loss of public support if they resisted the anti-
Socialist law, and surmising that Bismarck could throw
them over and secure the Clerical Centre, they supported
the measure, not from conviction but on calculation.
Persecution of the Socialists was a lesser evil in their eyes
than driving the Chancellor into the arms of Windthorst
and the Vatican. They therefore clung to the broad
principle of supporting the government as the sole means
of retaining their political influence. But in doing so
they sacrificed the essentials of their Liberalism, and they
virtually buried their party as an instrument of progress
and political freedom. Bismarck was quick to recognise
the weskness. He had forced them against the wall and
they had refused to fight. Another sledge-hammer blow
and they would break up. In political arithmetic that
meant that he would get half their votes without any
further concessions, and the other half would melt into
coalition with the Progressives and Radicals. When
National Liberalism had ceased to exist as a solid phalanx
the way would be open for a reactionary Conservatism.
National Liberalism was to learn the wholesome lesson
that when parties prefer tactics to principles and oppor-
tunism to convictions, the funeral service with their
antagonist as the officiating minister is at hand.
The anti-Socialist law was put into operation with
drastic severity. 'Now for the pig-sticking' (Jetzt geht
die Sauhatz- los ! ) Bismarck is reported to have remarked,
and the Prussian police got to work with energies whetted
by their failure against the Catholics. Everything that a
strong executive can do, when directed by men to whom
Social Democracy was the creed of the canaille, was done.
Berlin was placed under the minor state of siege, as were
later Hamburg, Leipzig, Stettin, and other city fly-belts
of the plague. Every club savouring of Socialism was
broken up; newspapers were prosecuted, pamphlets sup-
pressed. The police even forbade subscriptions for the
unfortunates selected for banishment from their homes.
Indeed, everything was done to provoke the broken into
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BISMARCK
violent outrage, to be used as a justification for further
severity. What the Chancellor felt about freedom of
speech was shown in his proposal, first, that two Socialist
members of the Reichstag should be delivered over to the
police because they had dared to attend the Parliament to
which they had been elected; secondly, that the Reichstag
should by law take power to limit the freedom of speech
within the House itself. Both these proposals were
rejected. Every one, except Bismarck and the Conser-
vatives, knew that the ' Muzzling Bill' (Maulkorbgesetz),
as it was speedily nicknamed, would be employed by the
governmental majority in crushing all serious criticism.
Criticism that is successful is always 'offensive' to auto-
crats and bureaucrats. It would be better to close the
Reichstag at once. Well might the most distinguished of
living German historians, Mommsen, publicly say in 1881
that 'the Prussia we had, the Germany we believed we
had, are at an end . . . the freedom of Germany will be
lost for many years to come. '
The anti-Socialist law was thrice renewed by a compliant
legislature (1881,1886, 1888), and the results were remark-
able. The Social Democratic party, thanks to wonderful
leadership and organisation, grew under persecution. In
1877 it had twelve members in the Reichstag and polled
half a million votes; in 1893 it had forty-four members
in the Reichstag and polled more than two million votes.
Twenty years later it was to be the strongest single party
(one hundred and thirteen members) in the Reichstag,
polling four and a quarter million votes, a third of the
total electorate voting, and owning no less than eighty-
six newspapers. Richter's prediction in 1878 was more
than verified in Bismarck's lifetime.
The transient victory of 1878 did not solve Bismarck's
problem. He could not reckon on an unsuccessful at-
tempt at assassination every year. The anti-Socialist law
did not give him a working governmental majority, nor
did it bring in money, and he needed the latter more than
the former. The new economic policy that began in 1879
was due to the needs of the imperial revenue. The Im-
perial government was not paying its way, and it was
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? THE IMPERIAL CHANCELLOR 363
confronted with a stagnant or declining revenue and ever-
increasing expenditure.
With characteristic thoroughness Bismarck planned a
complete reconstruction of the fiscal and financial prin-
ciples and machinery on which the Federal Empire had
hitherto been based, to be followed by a new departure
in the objects to which the revenue was to be devoted.
The Reform period lasted from 1879-88, and involved the
abandonment of the Free Trade principle of taxation for
revenue alone; a return to a Protective tariff, increasingly
severe in its successive emendations; a halt in the system
of direct taxation and a large substitution of indirect for
direct taxes; an attempt to establish gigantic State mono-
polies in articles of such general consumption as tobacco. ,
creating for the industrial workers compulsory insurance
by the State against accidents and sickness, and establish-
ing old-age pensions. The broad result of these nine years
of feverish effort and strenuous controversy was completely
to alter the economic and political structure of Germany. 1
The essential details and progress of this comprehensive
programme are noticed below, but it is desirable to en-
visage at the outset the problem as Bismarck evidently
saw it and the solution that he provided.
First and obviously, the provision of an automatically
expanding revenue was his main concern. The existing
system had four main defects. It kept the Imperial
government in dependence on the Reichstag. The
annual Budget was voted by the Reichstag, and the dis-
cussion enabled any strong party to hold up the imperial
authorities either by refusing a particular item or by
amending or refusing the specified appropriation. The
greater the need of the government the greater the lever-
age of the opposition. Bismarck foresaw that through
the Budget the Reichstag would in time secure by con-
tinuous flanking attacks that parliamentary control which
1 On the whole question see the Report (Pari. Papers, CD. 4530, August
1885) drawn up by Mr. Strachey, discussing the fiscal, commercial, political
and other points at great length and with elaborate wealth of detail and
statistics. The evidence for the prosperity of Germany both under a Free
Trade and a Protectionist system is impartially examined.
comprehensive legislative code
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? 364
BISMARCK
it had failed to secure by a frontal onslaught. Secondly,
the requisition that deficits must be made good by matri-
cular contribution from the federated States was very un-
popular with the contributories, and the opposition made
itself felt in the Federal Council, where the governments
could outvote Prussia and resist measures of policy that
involved further expenditure with a corresponding in-
crease in the fro rata matricular contributions to imperial
revenue from the States. Hence the control of policy was
threatened. Thirdly, an increase in direct imperial
taxation was not practical politics. The several budgets
of the federated States were dependent on direct taxation,
and it was impossible for the imperial revenue either to add
an imperial to the State tax or to remove from the State
governments their main source of income. Fourthly,
without much larger sums of money, unification and cen-
tralisation through the imperial executive would come to
a standstill. Even more pressing was the cost of defence.
Foreign policy and the general principles of the State
polity necessitated the arming of Germany to the teeth.
An expanding population automatically provided the men,
and the Empire had to pay for their equipment. The
more scientifically that an army is organised, the larger
the amount of science that it brought into armaments,
the more costly will that army be. Efficiency can only
be purchased by increasing expenditure. If the German
army was no more efficient, better equipped, and in ad-
vance of all rivals in the quality and amount of its materiel,
the basis of Bismarckian foreign policy was shattered.
'It must never be forgotten,' wrote Frederick the Great,
'that distrust is the mother of security. ' Bismarck's
system started from profound distrust and fear of foreign
States, and the assumption that distrust and fear made the
foreign policy of all other States. He studied the omens
of the international situation with the superstitious creed
of the augur, profoundly convinced that the gods were
jealous, malevolent, and implacable, and the human beings
they influenced a debased copy of the gods. If the
Socialist Democrat, according to Bismarck, interpreted
life in the terms of a carnal and fleeting hedonism (which
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? THE IMPERIAL CHANCELLOR 365
he did not, for he lived and throve on ideas and ideals),
Bismarck for all his belief in God, Heaven, and a Hereafter,
seems to have been convinced that the sole justification
of Heaven and an after life lay in importing as much of the
Devil and of Hell into international relations as were neces-
sary to provide a deterrent to coalitions against Germany.
The prestige of Germany depended on the universal con-
viction that Bismarck relied on force, and that the German
army could be at the gates of its foe within ten days of
a rupture. The army therefore must be provided with
strategic railways and vast stores; and on the horizon
there already grew out of the sea the little cloud that fore-
told an imperial navy no less efficient and ready. The
navy was an imperial affair. As yet it was in its cradle,
but even cradles are expensive, and those who rock them
must be paid. The most fatal disaster to be apprehended
was a limitation of German armaments imposed by a
Reichstag that refused to tax the Empire any further.
The advantages of a new, were as conspicuous as the
defects of the old, system. Bismarck saw the German
nation, in consequence of its unification, its long intel-
lectual preparation, its intoxication from victory, and its
belief in its own disciplined, intellectual, and moral
strength, growing in wealth, numbers, and solidarity.
A tariff and indirect taxation would tap the expanding
national reservoir and disguise the withdrawal of the wealth.
In his eyes the supreme advantage of indirect taxation
lay in the concealment of the tax. It would fall on the
ignorant consumer, not on the taxpayer directly mulcted
by the action of a government. A tariff was an arrange-
ment that could not be annually revised, for it would rest
on an economic code enacted for a period of years, or be
largely regulated by treaty beyond the revising power of
the legislature. Hence the revenues derived from indirect
taxation would fall into the same category as the military
Septennates, and pass from parliamentary control into
the hands of government. More than ever policy would re-
main the monopoly of the Federal Council and Prussia, and
the Reichstag be reduced to a debating society, incapable
of interfering at any point with the central springs of power.
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? 366
BISMARCK
Already in 1879 Bismarck foresaw one further marked
advantage. The existing structure of society was the core
of the Prussian system. The real danger of Social Demo-
cracy did not lie in its opinions, for the executive could
always ignore or crush opinions and ideas, but in the
reconstruction of society that the Socialist programme
avowedly contemplated. The Bismarckian system and
the State which stood for Power could not exist on
a different stratification of society to that established in
Prussia. Social Democracy aimed at a social revolution,
the political effects of which would be simply consequential
to the economic and social redistribution. Apart, how-
ever, from Social Democracy, the existing structure was in
1878 threatened more insidiously and continuously by the
operation of social and economic changes, not confined to
Germany, though accentuated by the rapid industrial
revolution that set in after 1871. Agricultural depression,
if unchecked, meant that Germany would shortly be
dependent, like Great Britain, on imported food; but
far more serious politically was the pauperisation of
agricultural Junkertum. The squirearchy would be trans-
formed from an independent landowning and governing
class into a class no longer able to staff the army and the
civil service, but divorced from the land and driven like
the bourgeois to earn a middle-class living. Industrial-
ism, too, was throwing up a new aristocracy of brains and
money whose power rested on their capacity, their wealth,
and their potent material interests. Sooner or later they
would usurp the position occupied by the old Junkertum,
because they were quite as able, worked as hard, and com-
manded a. far greater share of the elements of material
power. It is as hard to argue with the masters of industrial,
as with the master of military, legions.
Bismarck's economic and fiscal policy from 1879to
has absorbed the analytical attention of the economist and
the political philosopher, but the major premises from
which he argued and the conclusion to which he marched
with relentless energy, derive their deepest significance
from their relation to the principles of his statecraft. For
by his policy at the critical moment of development he
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