The Iron Ration Part 31

"When one is forty, one is satisfied with being _madame_," said a Hungarian lady to me once, when the subject had been discussed. She meant that the woman of forty was content with being the head of a household.

Such an att.i.tude takes a breadth of view altogether unknown in the Anglo-Saxon world. I found it often in Central Europe, especially in Austria, where one day were pointed out to me two couples who not so very long before had changed mates by mutual consent on the part of all four concerned. One of the husbands is a rich banker, and the other, his best friend by the way, is also well off. The double pair go to the same cafe, sit at the same table, and their friends think nothing of it. They are regularly divorced and married, of course.

While elsewhere in Central Europe the same easy view is not taken, it is a fact, nevertheless, that nowhere much puritanical strait-lacedness is to be encountered. I happen to know a certain successful diplomat who closed both eyes to his wife's infatuation for a young naval officer.

The wife was young and her husband was past middle age. Rather than lose the woman and have a scandal besides, the diplomatist applied to himself what he had so often applied to others--the deception there is in self-restraint.

The three of them got along well together. Often I was the fourth at table. While the diplomatist and I would smoke our cigars and sip our coffee, the two would sit side by side on the ottoman and hold intimate converse. But in Europe it is considered tactless to speak of such matters.

There will be heartache, of course. Many a good woman will find herself displaced by a younger one. But that will not be without some compensation. The husband who would desert his mate because the charms of youth have flown may not be worth keeping. It may even be an act of mercy that he has rekindled his affection at some other shrine. The forsaken wife may have grown very weary herself of the life conjugal.

In Protestant Germany the readjustment will be easier than in Catholic Austria and Hungary. In the latter countries much double-living will result, and that means that more women will have to sacrifice more self-respect. That is the worst part of it.

But, again, the _legere_ views of Central Europe come into play. So long as the man has sense enough to keep his "war" wife in the background, n.o.body will take offense, and the legal wife may not mind. Officially, the paramour will not exist. As soon as she has children she will be a "Mrs." in her own right, and I suppose that many will not wait that long before changing "_Fraulein_" into "_Frau_."

There is no doubt that the condition is unjust to two women at the same time. But there seems to be no escape from it. Ministers of the gospel have already roundly condemned what seeming sanction the government has given to illicit intercourse. But these good men are theorists, while the government is practical--practical for the reason that a great social problem has to be met in the best manner possible. It is far better to give the thing such aspects of decency as is possible rather than to encourage the growth of the social evil into proportions that might for all time impair the health of the race. Students of the social evil generally agree, throughout Europe at least, that its prime causes are economic. Communities in which the man, by reason of small income, is not able to establish a household early in life have not only the greatest number of loose women, but also the greatest number of free-living bachelors.

The problem, then, has an economic side. In the instance here under scrutiny, the economic side is that more women than ever before must earn their own living in Central Europe to-day. The women will readily do that, so long as society will not entirely deny them the company of the man or place upon such company the stigma that generally attaches to it. Without such privileges many of these women--nature decrees ironically that they should be physically the best of the race--would take to vice in such numbers that society would lose more by being ungenerous than by taking a common-sense view of the problem it has to face.

But logic in such matters is no balm of Gilead. The young married woman will be able to compete with the "surplus"; the older ones, I fear, will not. To them the war will be the thing of the hour, long after the gra.s.s has grown over the trenches, long after the work of reconstruction shall have healed the economic wounds.

There will be many who can truly say, "I lost my husband in the war."

And the worst of it is that they will not be able to say this with the tenderness that was in the heart at the departure for the field of battle.

XX

WAR LOANS AND ECONOMY

During the last three years and a half the political economy of Germany and her allies has strongly resembled that in vogue among certain South Sea Islanders, who are supposed to make a living by taking in one another's was.h.i.+ng. The same money has been making the rounds on one of the oddest economic whirligigs mankind has so far seen.

The war has been carried on by means of funds derived mostly from war loans. By means of them Germany has so far raised, roughly, $19,800,000,000, and Austria-Hungary $8,600,000,000, making a total of $28,400,000,000. In addition to that the two countries have spent on the war about $2,300,000,000 derived from other sources--taxation, indemnities levied in occupied territories, and property here and there confiscated.

Within my scope, however, lie only the war loans.

The interest on the German war loans so far made amounts to $762,000,000 per year. To the German public debts the loans have added $293 per capita, or $1,082 for each producer in a population which the war has reduced to about 67,500,000 fit individuals. Each wage-earner in Germany will in the future carry a tax burden which in addition to all other moneys needed by the government will be weighted every year by $43.28 interest on the present war loans.

Austria-Hungary's load of interest on war loans will amount to $344,000,000 annually. The burden is $204 per capita, or $816 for each wage-earner, out of a population which war losses have cut down to about 42,200,000. The annual interest each Austro-Hungarian breadwinner will have to pay on the war loans is $32.64, and in addition he must provide the revenues which his governments will need to operate.

This means, of course, that the cry for bread will be heard long after the guns thunder no more. It must be borne in mind that the average yearly income of the wage-earner was a scant $460 in Germany, and $390 in Austria-Hungary. The war loan interest so far in sight will const.i.tute about 9.3 per cent. and 8.2 per cent. respectively--no small burden when it is considered that all other revenues needed by the government must be added to this.

But the bitter cup of economic losses due to the war is by no means full with these figures. The Germans have so far lost, killed in action and dead of wounds, fully 1,500,000 able-bodied producers, and have at this time to care for about 900,000 men, of whom one half is totally incapacitated and the other half partly so. The Austro-Hungarian figures are 650,000 men dead, and 380,000 totally or partly crippled. In other words, Germany has lost 2,300,000 able-bodied men, and Austria-Hungary 1,030,000. It may well be said that those dead can no longer figure in the economic scheme, because they consume no longer. On the other hand, each of these men had another twenty years of useful life before him. This long period of production has now been lost, and two decades must elapse before the Central states will again have as many producers as they had in 1914. Their propagation has also been lost, though, with the women as strong numerically as before, this loss will probably have been made good within ten years.

Before treating further of the effects of war loans and their influence upon the body politic, I will examine here how these loans were made, in what manner they were applied, and what the system of economy was to which the transaction gave birth.

The figures I have cited may well suggest the question:

How was it possible under such conditions to make war loans?

The superficial reply to that would be:

By raising the money in the country--inducing the people to subscribe to the loans.

The reply has no value, since it does not disclose how the necessary money was made available. The funds invested in the war loans were a part of the national capital, not a portion of the national wealth, the term wealth standing for the natural resources of a community. But capital is the surplus of production, and production results only from applying labor to natural resources; for instance, by tilling the soil, mining coal and ore, and engaging in the conversion of the less useful into the more useful, as is done in industry. A surplus of production is possible only, however, when consumption falls below production, for that which is left over of the thing produced makes the surplus. This surplus is capital.

Incomplete figures which I was able to gather in 1916 showed that before the war the average wage-earner of Central Europe had produced and consumed in a ratio of 55 against 48, so far as the scale of pay and cost-of-living showed. The difference of 7 points represented the amount of money he could save if he wanted to do that. The 7 points, then, were the actual increase in the national capital.

In the winter of 1916-17 the figures had undergone a remarkable change.

Wages had been increased to 70 points, while the cost of food had risen to 115 points as against 48 formerly. In other words, while the wage-earner was getting 15 points more for his labor, he was paying 67 points more for his food and the necessities of life. The place of the 7 positives in capital production had been taken by 45 negatives, which meant that the national capital of Central Europe had fallen below static, the point where neither increase nor reduction takes place, by 38 points. The national capital had been decreased 38 per cent., therefore. That much of all present and former surplus production of the two states had been used up in the pursuit of the war.

Governments deem it a safe policy to issue in times of financial stress three times as much paper currency as they have bullion in the vaults.

One million in gold makes three millions in paper with that formula.

This had been done in Germany and Austria-Hungary to quite an extent by the end of 1916. For every million of gold in the vaults there was a million of _bona fide_ paper money. That was well enough. The currency system of the United States adheres to that principle in times of peace even. But upon the same million of metal there had been heaped other paper currency which carried the promise of the government that on the given date it would be redeemed for gold or its equivalent. This method of national finance is known as inflation. It was this inflation that caused the wage-earner to show in his own little budget a deficit of 38 points.

Why the government should have inflated its currency in that manner is not so difficult to understand as it may seem. From its own point of view, the wage-earner had to be lashed into greater effort if the moneys needed for the war were to be available and if the food and material consumed by the army were to be produced. The more the consumer had to pay for what he required to sustain life the harder he had to work. His deficit of 38 points was the yoke under which he labored for the army in the field, which was consuming without producing anything. These 38 points were only 17 points less than the 55 which had represented his income before the war--in round terms every two wage-earners in Central Europe were supporting in food, clothing, munition, and ammunition a soldier at the front. It could not be otherwise since two political aggregates having then approximately, with the women included, twenty-five million wage-earners, were keeping under arms about ten million soldiers, and were meanwhile providing the heavy profits made by the war purveyors.

Though the 38 points were a deficit, the producer-consumer was not allowed to look at them in that manner. It was his task to cover this deficit. This he did by paying more for his food and necessities, through a channel which the inflated currency had filled with water in the familiar stock-jobbing phrase. The middlemen who owned the barges in the channel were taxed by the government on their war profits, but enough was left them to preserve interest in the scheme of war economy, a friendly act which the middlemen reciprocated by generous subscriptions to the war loans.

The first, second, and third war loans in Central Europe were subscribed to with much, though later dwindling, enthusiasm. Patriotism had a great deal to do with their success. Real money was required by the government, moreover. Bank accounts, government securities, sound commercial paper, and savings deposits were turned over. The loans made later were devoid of many of these features. Those who bought war-loan certificates did so because it was necessary for one reason or another, and many of the war bonds obtained in the first loans were converted.

The war and all that pertained to it was now entirely a matter of business with those who could subscribe. The poor were tired of any aspect of war.

The government could not prevent their being tired, but it could see to it that indirectly the ma.s.ses supported the war policy, no matter what they thought. That was not difficult. The high cost of living took from the producer-consumer what the government needed, and there is no system of discipline that is quite so efficacious as keeping a man's nose to the grindstone.

Sleek bankers used to inform me that there was much prosperity in the country. There was from their point of view. The margin between the wages paid the producer and the prices asked of the consumer was great enough to satisfy the interested parties, government and middleman alike. The war loans had hardly been closed when a good share of them was again in circulation. The whirligig of war economy was spinning l.u.s.tily, and there was no danger of things going wrong so long as the producer-consumer was kept well in hand.

How the war loans made the rounds is quite interesting. It is the closest approach to perpetual motion I have come across.

Since the Central states could buy in foreign countries only by means of special trade agreements that called for an exchange in commodities rather than for the medium of exchange, the money raised by the war loans remained within the realm. Much of it went to makers of arms and ammunition, of course. In their case a million marks--I am using this small amount as a unit only--would lead to the following results: To the manufacturer would go 60 per cent. of the total and to labor 40.

Subdivided these shares paid for raw material, plant investment, operation expenses, and profits so large that the government could impose a tax of 75 per cent. without making it impossible for the manufacturer to subscribe to the next loan. Labor, on the other hand, found itself barely able to sustain life, and if a few marks were saved by some, little or nothing could be bought for them. The man who was earning 70 marks a week, instead of 55, was paying for his food and necessities 115 instead of 48 marks--an economic incongruity at first glance, but perfectly feasible so long as those affected could be induced to live on about 85 per cent. of the ration needed to properly nourish the body, and had given up entirely the comforts of life. That scheme left him hope for better times as the only comfort. No matter how often the money of the war loans rushed through his hands, none of it ever stuck to them.

Before long it was plain that in this fas.h.i.+on the Central Powers could keep up the war forever. Their financial standing in foreign countries need not worry them so long as they could not buy commodities in them.

To be sure, the public debt was increasing rapidly, but the very people to whom the government owed money were responsible for that money. If bankruptcy came to the state they would be the losers, and that responsibility increased as their wealth increased. Capital and government became a co-operative organization, and both of them exploited the producer-consumer, by giving him as little for his labor as he would take and charging him as much for the necessities of life as he would stand for--and that was much. When now and then it seemed necessary to placate the producer-consumer, he would be told that in the interest of the Fatherland the government was compelled to do what it did. But the necessity for this came not often. The small man was generally overjoyed when the government was able to announce that the war loan had been a success or had been over-subscribed. That is all he wanted to know, so long as he was not required to go to the front. The success of the war loan meant that he would have work--and live to see the end of a war which everybody claimed had been forced upon the state.

It is certain that the Central states governments would have been bankrupt long ago had they been able to buy in the foreign market _ad libitum_, though in that case the foreign trade connections would have also seen to it that war loans were made to the Germans and Austro-Hungarians. There is no doubt at all that a Germany permitted to buy abroad would have later been less able to organize herself as efficiently economically as she did when her financial strength was still unimpaired for internal purposes. To this extent the swift descent of the British blockade is one of the gravest errors booked on the debit side of the Entente's politico-military ledger. Absolutely nothing was gained in a military sense by shutting the import door of the Central states. Far-seeing statesmen would have allowed Germany to import all she wanted and would then have seen to it that her exports were kept to a minimum, so far as the shortage of man-power in the country did not automatically bring about that result.

As it was, the Central states supplanted and subst.i.tuted right and left, made new uses of their own natural resources, and fitted themselves for the long siege at a time when doing that was still easy. The British blockade, if applied in the winter of 1915-16, would have had effects it could not hope to attain in the winter of 1914-15, when almost any rational being knew that to starve out the Central states was not to be thought of. The Central states would have continued to live very much as before, and by the end of 1915 the governments would have been obliged to shut down on imports of food for the civilian population if the gold reserve was not to be exhausted completely, as would have been the case if exports could not balance imports to any extent. Production and consumption would then not have been as well organized as they were under the auspices of the premature blockade, and the downfall for which the Entente has until now vainly hoped, and which will remain the greatest _spes fallax_ of all time, would then have surely come. That bolt was shot too soon by Great Britain.

Though the Central governments were fully aware of this, as some of their officials admitted to me, they had no reason to bring this to the attention of their publics or the world. The British _Aushungerungspolitik_--policy of starvation--was the most potent argument the Central governments had to present to their war-tired people. What the German air raids on London accomplished in promoting the British war spirit the blockade of the Central states effected in the German Empire and Austria-Hungary. In a war of such dimensions it was foolish to thus drive the governed into the arms of their governors.

The financial condition of the Central European states to-day is as sound as that of the Entente states. That would not be true if any great share of the Central European war loans had been raised in foreign countries. But, as I have shown, this was not done.

That the war debt is great is a fact. The government's creditors are all in the country, however, and if need be it can set against them the tax-tired mult.i.tude. For that there will be no necessity. The depreciation of the currency has automatically reduced by as much as 25 per cent. on an average all state indebtedness, in so far as capital is a lien against the community's natural resources and labor. But of this more will be said at the proper time.

Early in the summer of 1917 the German and Austro-Hungarian governments were occupied with the question to what extent it would be possible to lighten the burden of the taxpayer. Nothing came of it for the reason that finally it was concluded that the time for financial reorganization was not yet come. Inflated money and high prices would still have to be used to keep the producer at maximum effort and prevent his consuming more than could be permitted.

But the methods of financial reorganization, or we may call it reconstruction, that were discussed are none the less interesting. They involved a reduction of the interest which the government has to pay on war loans, as well as a lightening of the war-loan burden. It was tentatively proposed to either cut into half the rate of interest or to reduce by one-half the princ.i.p.al.