came to lay before him a detailed scheme to assist Italian emigration to and trade with Canada was so overwhelmed as to become completely incoherent. He produces the same effect upon the mass as upon the individual. He is one of the finest of a nation of dramatic orators. The husky voice begins almost in a whisper. The weary statesman has hardly sufficient strength to tell the nation of the work he has achieved for it. Then the eye begins to lighten; the voice clears and rises. Suddenly the thick body stiffens, the great head is flung back, the lips curl away from the teeth, the eyes glare, and a lightning phrase is jerked out with the clang and the ring of a struck shield. There is never much substance in his speeches, but they excel in the unexpected word and in driving force. It is probably his ubiquity that has given him his unique personal position, for by sheer force of personality he has won an enviable facility in securing applause whatever he does. The nation was solid behind him over the Corfu business. He is universally congratulated for concluding a treaty with Jugo-Slavia which gives the latter exactly what Count Sforza was broken for suggesting. His weakness is a liability to personal hatreds. He sincerely detests persons like Albertoni, Nitti, Sforza, and Amendola, and is not fair to them. As for his colleagues, some of them-De Stefani, Federzoni, Acerbo-are fine men.

This attempt to appreciate the character and motives of the Fascisti will have succeeded if the reader has realised that he is studying a phenomenon which contains the germs of a really big world movement, of which the spiritual side is far the most important. He should not be blind to its practical defects, its local terrorism, its occasional mistaking of savagery for strength and of paradox for paradise. Yet its devotees undoubtedly possess a capacity for self-sacrifice which raises it above a mere political movement, and which gives grounds for the belief that it may develop into a ruling caste so wide and so approachable as to be ever freshly virile, so unselfish as to be proof against criticism, so wise as to be safe from calamity. My greatest fear is that the Fascisti may not understand themselves, may be unable to formulate their ideals, and so may suffer the fate which overtakes even the best intentioned when the accident of events makes living hard, or when the newness of their gospel is tarnished by time. It is really worth their while to ponder the Samurai ideal, and think whether it is not what they want: the expression of the unformed desire of eager souls searching they know not quite what. It would give them coherence and permanence, and future ages would hail them as the discoverers of a system which had brought peace and justice to the world.

COLIN R. COOTE.

THE FAILURE OF THE GERMAN

SOCIALISTS

In a book published two or three years ago, a well-known German economist said that his country was now inhabited by two distinct peoples the dancers' and the 'weepers.' It was a very happy description of the extraordinary situation brought about by the fall of the mark.

During the past four years the accumulation of vast fortunes has gone on in Germany pari passu with the impoverishment of the masses of the people. Probably there has never, in any country, been a period in which the enrichment of the rich was so precisely the measure of the impoverishment of the poor. For what has taken place has been a wholesale transference of the property of those who had little into the pockets of those who had much. Nor has this transference been the result of the free interplay of economic forces. On the contrary, it has been, in the main, the inevitable consequence of the deliberate policy of Governments. Germany has, in fact, been ruled in such a way that the poor not only bore almost the whole of the burden of maintaining the State, but were also delivered over by the Government to despoilment at the hands of their wealthy fellow-countrymen. And it is a very singular and instructive fact that while this was going on the Socialists were the largest party in Parliaments which acquiesced in it and played a leading part in Governments which carried it out.

It is often made a reproach to the German Socialist leaders, by their own rank and file and by foreign sympathisers, that they have failed to put into practice any of their own political doctrines. The charge is an ignorant and foolish one. At no time have the Socialists had anything like an absolute majority in the Reichstag, and any attempt on their part to turn the economic fabric of the country upside down would not even have been democratic.' (They have never reached the point of political hypocrisy which allowed the Bolsheviks to tyrannise over Russia through a junta of middle-class intellectuals and call it 'the dictatorship of the proletariat.') Besides, it would have been madness to attempt a complete transformation of the economic foundations of so highly industrialised a country as Germany during the period of VOL. XCV-No. 567

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confusion, uncertainty and instability which resulted from the war and the pressure of victorious creditors. And even if the Socialists had made the attempt, it would only have led to their own overthrow in a bloody civil war. Germany is not Russia, and her classes were both able and ready to fight for their property, if not for their privileges.

Attack on the Socialists for their failure to realise their ultimate doctrines is, in fact, the most effective form of apology for them, since it diverts attention from their much graver failure to realise the opportunist portion of their programme. Before the revolution they persistently demanded that the main burden of taxation should be shifted from the weaker to the stronger shoulders; but at no time and in no country has the cost of maintaining the State been so largely borne by the poorer classes as under recent German Cabinets. They persistently demanded that the administrative activity of the State should discriminate, if at all, in favour of the poor, but at no time and in no country has it shown such bias in favour of the rich as in Germany during the past four years. They persistently demanded that the artisan classes should be protected against exploitation by employers of labour, but, with Ministerial portfolios in their hands, they acquiesced in an exploitation of labour without a parallel in modern times.

Nothing is farther from me than to suggest that this astonishing result of Socialist influence on Governments has been due to insincerity, dishonesty, or even the corrupting influences of power and emoluments. On the contrary, German Socialist leadership has all along contained a stronger element of disinterested idealism and sincerity of purpose than is to be found in most political parties. In fact, the most tragic feature of the Socialist fiasco in Germany has been its fresh demonstration that good intentions alone can effect nothing, and that safety is to be found not in quantity of counsellors, but in their quality. Where the Socialist leaders fell short was in their ignorance and their inability to think. Like most politicians, they had learnt by rote, with greater or less thoroughness, the text-book moves in the game of platform controversy. They knew the stock openings in the game and the stock rejoinders to the stock answers. But very few of them had been trained to real independent thinking, and an unprecedented situation, without even analogies in the previous politics of their time, found them devoid of the mental energy and adaptability necessary to cope with it. They thus fell easy victims to shrewd men of business whose own affairs had required precisely this mental energy and adaptability, and had also, to some extent, presented problems similar to those on which the whole economic life of the nation was now to depend. While the Socialists strained at the gnats which were familiar to them from their old pre

revolutionary propaganda, they swallowed whole herds of camels, the nature of which they did not recognise. They fumed and fretted because the Imperial monogram was not removed from public buildings, or because titled officers were allowed to remain in the Army, but meekly acquiesced in the greatest fiscal raid ever made on the poorest classes of a nation, and allowed the whole position won by the artisans at the revolution to be steadily undermined till nothing remained of it but a quaking crust.

The most striking instance of the failure of the Socialist leaders to protect the interests of those who had sent them to Parliament is found in the incidence of the income tax. This tax was regularly deducted on pay days from the salaries and wages of petty employés and of workmen. These classes, therefore, were compelled to pay it in full both quantitatively and qualitatively. The full nominal percentage due from them, which was deducted from their remuneration before they received it, was at the same time, at any rate approximately, the full due proportion of the gold value' of their earnings. Seldom were the fall of the mark and the corresponding rise in prices so rapid that the purchasing power of the workman's earnings, or the actual value of that proportion of them surrendered to the State as income tax, was appreciably reduced before wages were paid out at the end of the week. Only in the autumn of 1923, when it became general to adjust prices instantaneously to the value of the dollar, did the workman's income tax lose any considerable proportion of its 'gold value' before it was paid into the Treasury. Taking the inflation period as a whole, it may be said that he paid and the tax collector received value due.

Farmers, manufacturers, merchants, and professional men, on the other hand, paid their income tax months, or even years, after their assessments had been made, and, nevertheless, paid only the nominal sum due under these assessments. How this worked out can best be shown by illustration. Let us suppose that a manufacturer, who was assessed on January 1, had in the preceding year made 1000 articles, on each of which his profit had been M. 100. His income from this source would have been assessed, on the basis of past profits, at M. 100,000. If he came into the class which pays 20 per cent. in income tax, the amount due from him would have been M. 20,000, or his profits on 200 of the articles manufactured by him. Before he actually paid his tax, however, it might very well have been that, in consequence of the depreciation of the mark, the price of these articles, and, consequently, his nominal profit on them, increased a thousandfold. In that case his income from this source would have been M. 100,000,000, and the profit from one of the articles which he manufactured would have sufficed to pay his income tax five times over.

It must not be supposed that this imaginary illustration is fantastic in its details. Owing to the confusion brought about in the Finance Ministry and its agencies by the fall in the mark and the resulting perpetual revision and readjustment of accounts of all kinds, the collection of assessed income tax fell badly into arrears. It was no uncommon thing to hear of income tax being collected a year or even two years after it had fallen due, but still only in the nominal sum of the original assessment. Indeed, it is notorious that in consequence of delay in collection the bigger fortunes, to all intents and purposes, escaped income tax altogether. There were periods in which the income tax deducted from salaries and wages before they were paid constituted between 40 and 50 per cent. of the entire Treasury receipts. And it should be remembered that in England most of the contributors to this 40 or 50 per cent. would have escaped altogether, as their remuneration would have fallen within the free limit.

If we take that portion of the last financial year which was not affected by the issue of the rentenmark, namely, April 1 to October 31, 1923, we find that during these seven months income tax deducted on payment of salaries and wages yielded 17,185 billion marks, that levied by way of assessment only 3256 billion, or less than one-fifth as much. The total revenue from direct taxation during this period was 28,486 billion, of which income tax from small incomes accounted for more than four-sevenths. The total ordinary recurring revenue for this period was only about 49,467 billion.

The grotesque injustice of laying the main burden of the national expenditure on the weaker shoulders was greatly aggravated by the dishonesty of the self-assessment of the more affluent classes. Immediately Erzberger launched his financial policy, which, but for depreciation, would have made very large calls on the property of the prosperous, the evasion of taxation became an important feature in the affairs of every German business man. It soon became an almost universal practice to keep two sets of books, one for the information of the heads of the firm and a second to hoodwink the tax inspector. Nor was a specious justification of such duplicity far to seek. It was urged that money paid to the Government was handed on to the Allied Powers as reparations, and that it was the duty of a patriotic German to oppose obstacles to this process. Eventually the sense of financial obligation to the State disappeared almost entirely. Fraud against the Fisk ceased to be a subject of shame, and became one of pride. Wealthy men boasted against one another how they had settled their last year's income tax for the price of a glass of brandy or a box of matches. It became axiomatic that no one but the clerk and the artisan paid direct taxes to the full