long been more or less of a mystery. According to a statement made on the authority of the Hamburg Shipowners' Association, the Government paid the companies the last instalment in March 1923, the whole sum paid under this heading amounting to 116,000,000,000 marks (paper). This amount the Association estimates to have been equal to about 25,000,000l.

The Schiffbau Treuhand Bank, which was in 1920 entrusted with the disbursement of the sums granted for the rebuilding of the mercantile fleet, finally closed down on October 1, 1923. When the Bank was inaugurated it was estimated that its task would take at least ten years to complete. As a matter of fact, it has been accomplished in little more than three.

In the three years from July 1, 1920, to July 1, 1923, the tonnage launched from German yards to the order of German owners has averaged at a low estimate about 500,000 tons per annum. In order to estimate the magnitude of this effort it may be recalled that the output of the German yards on behalf of German owners in the three years immediately preceding the war averaged only about 300,000 tons per annum.

The new German mercantile fleet on July 1, 1923, amounted to 2,490,000 gross registered tons. At the present moment there are in the German yards a little over 100,000 gross registered tons awaiting completion for German companies. It is stated that new orders for shipping are not to be expected when once these new ships have been launched. Exact figures are not yet available for the output between July 1 and December 31, 1923, but including the 100,000 tons just mentioned, it may reasonably be assumed that at the close of 1923 Germany will possess an aggregate of 2 million gross register tons afloat.

The financial manœuvres of the German shipping companies, and especially the manner in which the inflation policy has been exploited by the great industrial magnates acting in collusion with the shipping companies and the shipbuilding works, have aroused a good deal of criticism outside Germany. The retort of the shipping companies is that their policy was fully justified by the needs of the nation as a whole. If by faltering they had missed this wonderful opportunity for commercial recuperation, Germany might well have had to wait many years before regaining a place on the sea; in the meantime the whole of the overseas trade upon which she is to such a large extent dependent, to say nothing of the vast transit trade done by such ports as Bremen and Hamburg, would have been forfeited in favour of the foreign shipping companies that swarmed into the North Sea ports after the war.

'To be perfectly frank,' said a leading Hamburg banker to me last week, one must confess that German labour has been sadly exploited in the process of reconstructing the mercantile

fleet' ('Die deutsche Handelsflotte ist auf dem Rücken des deutschen Arbeiters gebaut worden'). 'It is no less true, however, that the fleet could not have been built without very considerable sacrifices on the part of the German capitalist as well. The capitalist has had to forego his dividends by continually reinvesting his profits in the laying down of new keels.'

This argument would seem to limp, in so far as it forgets that the capitalist has been very considerably helped by the Government's milliards, and that he has now a handsome commercial asset in his possession, while the German working man has only the remembrance of some very lean and ill-paid years.

It is a well-known fact that the German Mercantile Marine has been earning copious profits since again taking up its old trade routes. When shipowners are reminded that they have been demanding payment in dollars and pounds sterling while paying their own employees, wherever possible, in unstable paper marks, they urge that they are obliged to pay for many of the commodities used in the shipping trade, e.g., coal, oil, lubricants, textiles, ship's paint, etc., in foreign currencies. True, they say, the German seaman has had to be content with three pounds a month or less where the British sailor was getting nine, but as a set-off to this there has been the extra outlay entailed by the three-shift system, which the Socialists have made compulsory on German merchant ships, and by the cost of converting and altering ships so that they may comply with the post-Revolution regulations for the comfort of the crew.

A still further financial privilege enjoyed by the German shipping companies under the inflation system has been the opportunity which that system has afforded them of redeeming their pre-war loans and mortgages by paying what are really mere fractions of the original debt incurred. The HamburgAmerika Line, for example, is stated to have paid off in March 1923 an old debt of 500,000l. with an actual expenditure of a paltry 100l. This has been made possible by the ruling of the German courts that a 'mark's a mark for a' that.' German companies paying off in this manner their debts to their fellowcountrymen are naturally at liberty with their new assets as security to take up new loans abroad in dollars or other stable currencies and thus to perform with ease financial operations quite beyond the power of their British confrères. The Hamburg bank director above referred to smilingly admitted that the shipping companies had got rid of various burdensome loans in this way, but insisted that the companies had also lost money in the same way, owing to the fact that people who owed them. money had in their turn exercised the same right to pay in depreciated paper marks. This had been the case, he asserted,

with the immense war loan debts payable to the HamburgAmerika Line and other companies by the State. In the universal gamble that inevitably ensues under such a policy of inflation, those who are financially imaginative come out on top, while the ordinary citizen, possessed of no such financial flair, is naturally reduced to beggary.

In these latter years, owing to the phenomena connected with inflation, the German shipping companies have enjoyed the further advantage of paying next to nothing in taxation. The months that elapsed between the assessment and the collecting of the tax often saw the amount dwindle to comparative nothingness. This exemption from the burdens of taxation is also acknowledged by the shipping companies, their only comment being that, if they had been obliged to pay a normal sum in the way of taxation, they could never have achieved what they have done.

In short, in the great transfer of the wealth of Germany from the pockets of the many to the pockets of the few-a transfer that always characterises inflation-it must be confessed that the German shipping companies have not come off at all badly.

It must be remembered in this connection that the German population has for the past four years been schooled by the Press to attribute to the infamous reparation demands of the Entente ' the general impoverishment and the ills of all kinds that in reality have accrued from the inflation system. The self-wrought woes of Germany have been utilised to fan the flame of national indignation against every injustice and folly except those perpetrated by Germany's own Government.

Paradoxical as it may sound, intellectual Germany has in these years of tribulation learned more thoroughly than ever before the necessity of united national action for national ends, even where those ends are merely commercial. The big German shipping companies have been among the first to encourage this reborn nationalism, and the two most important of them, the gigantic Hamburg-Amerika Line and the North German Lloyd, are among the most fervid exponents of the theory that the German economic area should be for the German flag, a spirit, it must be admitted, that is becoming increasingly prevalent in most countries.

The Hamburg-Amerika and the Lloyd are, moreover, leaders in the remarkable new system of highly organised trusts that characterises the new Germany, whose watchword is 'national industrial co-operation.' In the days before the war these two companies were often keen rivals. Nowadays, while respecting each other's spheres of interest, they work into each other's hands wherever possible. Around these two companies are grouped a

score of other German shipping firms, all alike recognising the principle of national collaboration in a united effort to bring Germany to the front again.

The very important and interesting commercial entente between the two great American lines, the United States lines and the United American lines on the one hand and the North German Lloyd and the Hamburg-Amerika Line on the other, forms a chapter by itself.

No one in Germany is blind to the fact that in a world overstocked with shipping, as is the case at present, the coming years are likely to put to a severe test the staying powers of the Reich. Germany, nevertheless, full of confidence in her own industrial strength and in the youthful energy of her 60 millions of inhabitants firmly embastioned in Central Europe, looks forward to regaining in a few years the maritime laurels she has lost on the Seven Seas.

As long as her aims in commerce are aims that can be achieved in the field of fair competition, and as long as there is no inclination to return to the use of the submarine as a form of economic argument, Germany need have no fear that outside nations will have any desire to prevent her winning a place in the peaceful comity of nations. It is of vital importance for Germany herself, and for Europe in general, that she should by thoroughly frank and straightforward action finally convince those among her former enemies who still hesitate to trust her that a return to prosperity need not mean a renewed appeal to a policy of 'blood and iron.'

F. SEFTON DELMER.

EDUCATION AND ECONOMY'

It is not to be supposed that the economy campaign which found its principal expression in the Geddes Committee will be allowed to flag in the New Year. The panem et circenses offered by the traditional Clodius have been replaced in these more enlightened days by 'reduced taxation.' 'Economy,'' the spending departments,' 'the people's money '-these will always be popular cries with the politicians. It is so easy and so true to cry out that the Government is spending more than it ought, that it is wasting the people's money, that a Government of business men, etc., etc. He would be a feeble demagogue who neglected such a slogan, one which puts him in an attitude of protection towards his hearers while at the same time absolving him from any of the uncomfortable necessities of a constructive programme.

We must not be surprised therefore when these skilful axemen of our public life, these fearless loppers off of the green and sappy brushwood of Government departments, grow drunk with their own facility in the use of the instrument, and, in an access of patriotism, lay the axe to the root of the tree, the Department of Education. Whether they be merely opportunists and timeservers, scum which at all costs must float on one wave or the other, or those more dangerous, because sincere, blind products of the board school who, never having tasted education, imagine it to be, like port, an immoral luxury of the rich, it is all one : the taxpayer groaning beneath his burdens welcomes them with joy. 'Education must go!' they shout. Your children will cost you less!'

A few weeks ago a writer in one of the papers put forward a grave indictment of the Board of Education. He showed how the Board undid in secret the work it publicly professed, how nursery schools, though sanctioned by Parliament, were not allowed to come into being, how area schemes were discouraged, and how the day continuation schools, admittedly the most important provision of the Fisher Act, were not being opened. It would be easy to pour the acid of criticism over the whole of the secondary and board school education of to-day until little remained unscorched, to expatiate on the folly of turning boys and girls