Papers Relating to the Foreign Relations of the United States, Transmitted to Congress, With the Annual Message of the President, December 4, 1883

No. 164.
Mr. Sargent to Mr. Frelinghuysen.

[Extract.]

Legation of the United States,
Berlin, November 13, 1882. (Received December 4.)

No. 79.]

Sir: The spectacle of a nation reducing its national debt by one thousand million dollars in fourteen years, while reducing taxation as well, besides paying all current expenses and a prodigal pension list, is wonderful in European eyes, if not a cause of envy here to statesmen and people. A far different spectacle is presented in Europe, and there are groans from a variety of sources just now, when the annual exhibit of budgets and estimates calls attention to the enormous proportions of national debts, and to various deficits that will appear in the figures despite all official ingenuity. For the first time since the Franco-Prussian war there is a deficit in the Prussian budget that amounts to the serious sum of 30,000,000 marks. Most of the newspapers refrain from commenting upon this disagreeable showing, as if actuated by a wish that the world at large, and especially France, shall not understand that the nation is exceeding its income. This deficit is in the face of a taxation heavy in degree and searching in operation. The servant and capitalist alike, after their kind, contribute to the coffers of the state. The imperial budget comprises the expenditures of the imperial Government, foreign missions, the military and naval departments, the paying of interest upon the imperial debt, and its extinguishment. The income is derived from the stamp tax, customs duty, postal and telegraph departments, railroads, and a matricular contribution estimated according to the population of the several states. Prussia has taken charge of the military budget at the rate of $225 per man annually. Bavaria and Würtemberg, managing their own military affairs, do not contribute to the imperial debt, but make a much larger matricular contribution in proportion to the population than the other states. Bavaria, Würtemberg and Baden have a malt and liquor tax of their own, the proceeds or which do not flow into the imperial coffers, and are therefore excluded from a share in the imperial income. The whole amount of imperial and state debt is about $830,000,000.

The deficit to which I have referred was unquestionably foreseen, and the strenuous efforts to pass the tobacco monopoly bill at the last session of the Reichstag were exerted in the belief that that measure would prevent such a result. Alone among the newspapers I find that the Berliner Politische Nachrichten discusses this gap between the Prussian revenues and expenses, and I inclose its article with translation.

This subject of national debts is one that can hardly be ignored in Europe much longer. It has come to be a question of strength of the public back—what burden can be carried without breaking down the carrier. Wherever an observer looks, the prospect is not assuring. The Russian debt stood at $185,000,000 in 1842, and has grown in forty years to $2,765,000,000. It has increased during the last ten years by $1,205,000,000, and the average annual deficit in the Russian budget is $120,000,000. It is true a large part of the borrowed money has been expended in railways, but these have had a military rather than a commercial end; and as in Germany, where heavy outlays have been made by the Government for the same object, the railroads have not yielded the expected profit.

The excessive burden assumed by Russia, as above stated, is largely caused by actual wars, or by enormous annual expenditures to keep its military organization to a point of efficiency. In this respect its history is not peculiar. The great strain of taxation all over Europe is due to these causes, and it must be added that Russia is not alone in the fact that its debt weighs upon a people, a vast majority of whom are in a state of chronic poverty. One of two results must follow this condition of things—disarmament or bankruptcy.

But can there be disarmament? The necessity for it is seen by many statesmen, and yet it is safe to say that it is the last remedy to which resort will be had.

* * * * * * *

Is the other alternative, exhaustion and bankruptcy, to be expected? That is a question that this generation must see solved. Thirty years of financial strain like those just passed; thirty more years of military chess-playing in Europe such as have closed, may well be apprehended. The last Turkish war cost Russia £133,000,000, the Crimean war £142,000,000. The powers which opposed her in those wars spent even more, for they fought on her soil.

An article from the Berlin National Zeitung of November 2, which I inclose with translation, charges that the oppressive military burden under which Europe is at present groaning, has been imposed upon it principally by France, which has carried on “a financial war” against Germany, compelling it to keep up great armaments by maintaining one of its own. In the view of this able journal the other European states, and principally Germany, are made to suffer for the military armament of France, and it pregnantly adds:

If France, made wiser by the present events, should precede Europe in a partial disarmament, a step which Europe would certainly follow, it would not only thereby really place itself at the head of civilization, but protect its present institutions from the dangers of imperialism and socialism. It would also confer an incomparable blessing upon the poorer and suffering portion of Europe. How much good could be done by France and the other states, by the millions which are now swallowed up by the military budget, if a treaty looking to a partial disarmament were agreed upon. If France persists in closing her ears to the warning given to her in the recent [socialistic] disturbances, and continues, by her insensate armament, to exhaust her own power and that of Europe, the danger will certainly sooner or later recoil on her own head.

I doubt if France can be charmed by such arguments into disarming, while other great powers keep up their armaments. Heavily as the pressure bears on rulers and industries, the moment has not yet come when such a treaty as that proposed could be agreed upon or observed.

I have, &c.,

A. A. SARGENT.

[Inclosure 1 in No. 79.—Translation.]

Extract from the National Zeitung.

The oppressive military burden under which Europe is at present groaning has been imposed upon it principally by the French Republic. The hope and desire to exhaust Germany financially have been frequently expressed in France by forcing it to constant and heavy military expenses. “The financial war,” as it was called, was principally waged against the hated neighbor. The recent disturbances in France plainly show that the sword with which French diplomatists have been playing for years, was a two-edged one. France has burdened herself with a constantly increasing budget which her increasing income even cannot balance. The lion’s share of these expenses falls to fortifications, the army and navy, and foreign enterprises. Little remains for the advancement of the public welfare.

The Republic, in her present martial array, fears the danger of succumbing to Cӕsarism within her. The discontent arising from the neglect of the interests of the working classes, the pressure which the heavy, indirect taxes impose upon them, is finding expression in the socialistic anarchist movement, and already voices are heard clamoring for the protection of the sword. French statesmen have fostered these socialistic dangers by their unfortunate military diplomacy.

The other European states, and principally Germany, are made to suffer for the military armaments of France. It is very natural for the working classes to see the cause of all their privations in the course pursued by Gambetta. If France, made wiser by the present events, should precede Europe in a partial disarmament, a step which the rest of Europe would certainly follow, she would not only thereby really place herself at the head of civilization, but would protect her present institutions from the danger of imperialism. It would also confer an incomparable blessing upon the poorer and suffering portion of Europe. How much good could be done by France and the other states with the millions which are now swallowed up by the military budget, if a treaty looking to a partial disarmament were agreed upon. If France persists in closing her ears to the warning given her in the recent disturbances, and continues by her insensate armament to exhaust her own power and that of Europe, the danger will certainly, sooner or later, recoil upon her head.

[Inclosure 2 in No. 79.—Translation.]

Extract from the Berliner Politische Nachrichten.

Ever since the report of a deficit of 30,000,000 marks in the Prussian budget for the coming year has been made public, attempts have been made to explain away, in a most glowing description of the financial condition of Prussia, the cause of this deficit by the myth that twenty-five millions had been appropriated to the purpose of meeting the expenses of a general increase of the wages of officials. In connection with this explanation, it was also dexterously insinuated that this appropriation was the prelude to a general increase of salaries of army officers.

The real cause, however, of the presence of so large a deficit is a very natural one. The current budget is balanced, as has been frequently explained, exclusively by the appropriation of a so-called surplus of twenty-nine millions from the year 1880–’81. For the year 1881–’82, however, a surplus to that amount is altogether out of the question. Nor are we aware that such a surplus is claimed in official sources. We can consider ourselves fortunate if our imperial stamp tax of two to three millions for the second half of the year can be appropriated to the use of the budget of 1882–’83. Furthermore, the guarantee law absorbs many more millions than was the case during the last business year. Then, too, the total income from the law courts, as shown by exhibits made last year, is less, and will be felt in the budget. These three items, which will become apparent at a glance to any unprejudiced mind on studying the question, will show that, in case all the other items are balanced, the cause of the deficit of 30,000,000 is sufficiently explained.