# The American Historical Review/Volume 23/Reviews of Books/The Ruling Class and Frenzied Trade in Germany

The interest attracted to this book of a Swiss professor, at the time of its publication, was probably due in large measure to the fact that it set out to demonstrate the weakness of Germany's economic system. It appeared at a time when perplexity over the financial staying power of the German Empire, under the stress of war, was at its height. Even as late as 1915, the banking community of the world at large had been talking of the war being terminated by "economic exhaustion"; and Germany, with her foreign trade suddenly cut off, with practically no means of raising funds abroad for her war expenses, and with her three allies virtually bankrupt or in a precarious financial situation, had seemed to be indicated as the power likely first to succumb.
Yet not the least indication of such exhaustion had appeared. Each successive war loan, issued at intervals of six months, elicited larger subscriptions than its predecessor. One war loan of 1915 surpassed all previous achievements of any government, and has even to-day been overtopped, in the amount of subscriptions, only by the British war loan of last February and by Germany's own loan of the ensuing April. Professor Millioud's thesis, that the remarkable economic development of Germany, in the twenty or thirty years before the war, was itself built up by essentially unsound methods, and that an overwhelming ​economic catastrophe had been surely foreshadowed as a result of it, seemed to throw light, not only on the German financial achievements in peace, but on the nature and probable longer outcome of the government's financial achievements in war.
From this point of view, there is much that is enlightening in the book under review. The "pyramiding" of capital for purposes of economic penetration of foreign markets; the subordinating of the home market's welfare to the main objective of the world-exploiting policy; the diverting of banks from their proper functions to the promotion of foreign enterprise on a constantly expanding scale, with extension of credits for periods far beyond the limits prescribed by the experience of prudent bankers—each and all of these expedients, described as an element in the period before the war, has subsequently been invoked for the purpose of ensuring success to the empire's war borrowings.
Formal appeals of the treasury to German investors have urged the use of securities already owned as a basis for credits wherewith to subscribe to the government's war loans, and have intimated indefinite extension of such credits. The condition of the currency (shown by the recent discount of nearly 50 per cent. in the mark on foreign exchange), the complete disorder of other industries than those producing war material, and the attempt to dispense entirely with taxes as a means of meeting war expenditure, are parallel instances in the subordination of the home market to the imperial programme. The extent to which the portfolios of the German private banks have been progressively crowded with loans to promote subscriptions to the government's borrowings is at least suggested by the prodigious rediscounting operations of the Reichsbank at every quarter-day; notably by the $1,000,000,000 expansion of its loan account in the week before last April's loan was floated. It is no unreasonable presumption that, whether or not Professor Millioud's view is correct, of economic catastrophe as an outcome of Germany's methods in obtaining economic dominion over the outside world, the prophecy will at least be realized in the longer sequel to her war financing.
But this is not what the author undertakes primarily to prove. The aim of his book is to demonstrate that misgiving and apprehension as to the approaching crash, in consequence of the overdone exploitation of foreign fields, were the real cause of the present war. Rather than await "the downfall of her credit, the misery which must overwhelm her people, and the fury which would perhaps possess them in consequence", Germany seized what she thought to be the opportunity for a successful war, such as would sweep aside all other considerations.
The reader will hardly be convinced that the events of 1914 admit of this single explanation. That the commercial classes may have been reconciled to those events, through doubt regarding their own financial prospects, is possible. There is evidence that such an influence prevailed in Austria, whose financial condition in 1914 was notoriously ​bad. Yet all the evidence which we have goes to show that the great bankers and business men of Germany were simply swept along in the rush of governmental actions and policies suddenly disclosed, and that ever since the possibility of an immediate victory disappeared, they have been insistent in pressing for peace on the best terms obtainable.
Professor Millioud examines, and dismisses as unsatisfactory, each of what he describes as the four prevalent explanations of why Germany declared war. It was not a counter-blow against the suddenly imminent "Russian peril". It was not expression of the Nietzschean doctrine that might is right and war the proper assertion of it. That pleasing theory, the author states, was effect, not cause. The war was not a blow to free Germany from the strangle-hold of the surrounding powers; no such strangle-hold existed. Nor was it, so thinks the author, an attempt to achieve lasting prosperity through crushing and financially ruining commercial competitors. Germany, he holds, was perfectly well aware beforehand that in a long war she had economically more to lose than her antagonists; especially with England one of them.
These explanations once disposed of. Professor Millioud asserts that his own explanation, of a desperate recourse to avert or obscure the approaching financial crisis, is established. The conclusion will not be readily admitted. It leaves quite out of account the gospel of hate, the fanaticism over a coming trial of strength with France or England, the belief, not only in Germany's invincibility but in the certainty of her speedy victory with a huge indemnity, which had for years possessed the mind of the dominant military caste in Germany. The secrecy and suddenness with which what appeared to be their opportunity was seized by them—even the Kaiser possibly being taken unawares—is no bad evidence of a long-postponed but predetermined purpose. It is possible, indeed, to apply to this military caste the supposition applied by Professor Millioud to the commercial magnates. May not the Junker party, rather than the banking and exporting group, have foreseen the probable downfall of their power in Germany; a personal catastrophe which could be averted only by an early and successful war?
Alexander D. Noyes.
This work is in the public domain in the United States because it was published before January 1, 1929.
The longest-living author of this work died in 1945, so this work is in the public domain in countries and areas where the copyright term is the author's life plus 78 years or less. This work may be in the public domain in countries and areas with longer native copyright terms that apply the rule of the shorter term to foreign works.
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