their sufferings. Adversity is a most excellent teacher. The Prussian national character has been immensely strengthened by the terrible sufferings endured between 1806 and 1813. Iron is tried and steeled by fire and nations by their sufferings. The experiences of that period have not only created the determination. and the will to victory of Prusso-Germany, but they have aroused among the people that undying hatred of France which was manifested both in 1870 and in the present war. That savage hatred was caused probably not so much by defeat, national humiliation, and loss of territory, which after all signify but little to the individual, but by the tyranny with which the French armies ruled Prussia during seven years and by the enormous and exhaustive extortions which they practised. Germany has, with incredible shortsightedness, applied the régime under which she suffered from 1806 to 1813 not merely to Belgium and France, but to all the countries with which she is at war. She has thereby steeled the character and determination of her enemies and has sown a seed of hatred which will last for many decades, and perhaps for centuries. Prussia owed her humiliation and sufferings in Napoleon's time to the incompetence of the two kings who succeeded Frederick the Great and who vainly strove to act in the manner of that great monarch. Great men are frequently fatal to nations, not only because they incur great risks, but also because their example invites their incompetent successors to embark upon a policy of adventure. It is dangerous for small men to step into the shoes of a great genius. The war of 1806 was brought about by Prussia's duplicity and faithlessness, but its direct cause was a Prussian challenge addressed to Napoleon. Frederick William III. sent to the French Emperor an unacceptable and offensively-worded ultimatum because he, and many of his supporters, believed that Prussia was still as irresistible as she had been under the great Frederick. Queen Louise, the Prussian King's consort, sadly said to Napoleon: "La mémoire du grand Frédéric nous a fait égarer. Nous nous crûmes pareils à lui, et nous ne le sommes pas."

One-man government established Prussia's greatness and oneman government brought about her downfall. Frederick William III., unlike his father, was only dull, weak and vain, but not vicious. The people remained loyal to him and deplored his misfortunes. They considered that Napoleon, not he, had been the aggressor. Had Frederick William III. possessed the character of his father, or had the war with France been caused by criminal recklessness on his part, they might have risen against him and driven him out of the country. In 1806 Prussia easily forgave Frederick William III. for the national disaster which was caused

only by weakness and lack of judgment on the part of the King. Will the Germans and the Prussians as easily forgive William II. if the war should end in Germany's downfall, and if the people should find out that it was brought about by the Emperor's recklessness? Prussia's outworn institutions were modernised in consequence of Jena and Auerstädt. Defeat led to the liberalising of the Prussian Government and of the national institutions. A defeat in the present war should have similar consequences. It should democratise Germany and might make it a republic.

Prusso-Germany has waxed great at Austria's expense. For centuries she has persistently pursued a policy hostile to Austria. The present war may result in Austria's disappearance as an independent State. The Dual Monarchy may become a German vassal, unless, indeed, the Habsburgs should make a separate peace with the Allies, stipulating that for the Slavonic, Italian, and Roumanian territories, which they are bound to lose in accordance with the Allies' declaration of policy made to President Wilson, they should be given Silesia and the South German States as compensation. Silesia was Austrian until 1740, and the South German States followed Austria's lead until 1866. If the war should bring about such a rearrangement, Austria might once more become the predominant Power in Germany, and Prussia would lose what she has won during centuries. The Emperor Karl of Austria may conceivably revenge himself upon Frederick William I. and Frederick the Great. The far-seeing Mirabeau wrote in his book, De la Monarchie Prussienne, which was published in 1788:

"Si jamais un prince peu sensé monte sur ce trône, on verra crouler soudainement, sans cause apparente, ce géant formidable; et l'Europe étonnée n'apercevra plus à sa place qu'un pygmée débile."

His prophecy came true in 1806, and it may be confirmed by the result of the present war.

FABRICIUS.

WAGES, PRICES, AND SUPPLIES: A VICIOUS CIRCLE.

THERE was never so much money in circulation in this country as at present-and we were never so poor; the queues of women and children at the shop doors, waiting for hours in the cold for small quantities of butter, tea, sugar, or other articles, present a picture with which happily we have hitherto been unfamiliar. Things are getting worse, and for a very simple reason. As we have devoted our energies increasingly to the prosecution of the war by land,1 to the neglect of sea power (which means economic and financial power), we have been creating money by the simple process of printing pieces of paper as mediums of exchange. In the middle of last month "notes and certificates" were outstanding to the amount of nearly £200,000,000. The greater the output and the wider the distribution of these pieces of paperTreasury Notes-the bigger has become the demand for commodities, of which, owing to reduced production and reduced importation, the supply has been steadily declining. The result of an artificially fortified demand on restricted markets, owing largely to the want of ships, was a continuous rise in prices, seriously disturbing the normal household budget. At last, the State was induced to endeavour to arrest this movement by recourse to all kinds of expedients, which, in the absence of co-ordination, have been to a great extent cancelling out each other, thus causing further confusion and embarrassment, until a point has been reached when it seems as though there were no way of escape except a clean-cut back to those sane economic laws. which are the real safeguards of wealth, content, and happiness.

As children we were amused by the story of King Canute sitting on the shore and commanding the waves to obey his bidding. We have been expecting a greater miracle to happen. The engineer has set boundaries to the sea since Canute's day: Holland, with her dykes, bears testimony to the triumph of man over natural forces, and that triumph is illustrated by every breakwater and lighthouse. We have outrivalled Canute, because we have expected economic laws to stand still at our behest, and are now

(1) Our naval efforts have imposed little strain on our economic strength. "The expenditure on our military forces at home. . . excluding the cost of men in hospitals or convalescent establishments, is no less than two-thirds of the present cost of the Navy, including construction and all auxiliary services.” -Select Committee on National Expenditure. Our naval shipbuilding programme is "far larger than was ever attempted in peace times." First Lord of the Admiralty, House of Commons, December 13th, 1917.

surprised because the adventure has failed, bringing upon us a host of troubles, each new one aggravating and increasing those other troubles with which war had already made us familiar. In an article written two years ago, the present writer suggested that "our naval success is our greatest peril":—

"There is practically no unemployment; wages are exceptionally high; and the war is popular with the wage-earners. The nation is, nevertheless, confronted with increasing economic embarrassment. On the one hand, trade is being crippled, with the result that the country is becoming poorer day by day-using up wealth at a prodigious rate; on the other, it, or rather a large section of it, is enjoying a period of apparent prosperity and spending freely the war wages and war allowances, forgetful that a country which is ceasing to produce wealth to the normal extent, and whose expenditure will fall little short of £1,600,000,000 in the present financial year, must have a rude awakening unless it mends its ways." I

Two years have elapsed. Warnings were in vain. We are now spending at the rate of £2,765,000,000 a year. How much of that money is being wasted we shall learn later on. We have been caught in a vicious circle. For over three years British statesmen have remained dumb in face of a movement-uneconomic, disconcerting, and dangerous. In the first place, under the compelling influence of war developments beyond our control, we, living in an island, which is the centre of a maritime Empire, transformed ourselves into a great military Power, withdrawing several million men from agriculture, shipbuilding, mining, manufactures, and other essential industries. A shortage of labour soon occurred, and then came the submarine campaign-an entirely new and menacing development, because the Navy was suddenly called upon to fight a foe for the most part invisible. It is an extraordinary reflection upon the wisdom of those responsible for our policy that, whereas in the years preceding the war, when little or no thought was given. to the U-boat, then undeveloped, they professed to be nervous of our ability to keep the seas and use them, once war had broken out and the U-boat had appeared, our maritime security was accepted as a commonplace, and measures were adopted, in a fit of military enthusiasm, to withdraw still more men from the two vital industries-agriculture and shipbuilding.

This country receives four out of every five loaves from the hands of its seamen, besides most of its raw materials, and must therefore have ships for transport, or perish. That is an economic condition which was deliberately created by a previous generation, which declared that it was a matter of little importance where our food was grown so long as we were able to buy it in (1) "British Commerce in Wartime the Abuse of Sea Power," FORTNIGHTLY REVIEW, January, 1916.

:

(1) In respect of July, 1917 (and subsequent months), these accounts include, so far as particulars are available at the time of compilation, articles imported and exported in public as well as in private ownership, except exports for the use of His Majesty's Forces on active service. The figures for earlier months of 1917 and for all months of previous years include, in the case of imports, all articles of food, but do not include other goods which at the time of importation were the property of His Majesty's Government or the Governments of the Allies. In the case of goods exported, the figures for these months include goods bought in the United Kingdom by, or on behalf of, the Governments of the Allies, but do not include goods taken from British Government stores and depôts, or goods bought by His Majesty's Government and shipped on Government vessels.

(2) The values of the imports represent the cost, insurance, and freight; or, when goods are consigned for sale, the latest sale value of such goods.

(3) The values of the exports represent the cost and the charges of delivering the goods on board the ship, and are known as the "free on board" values.