growing stringency of the blockade. As head of this office he systematized scientifically the exploitation of the wealth of Belgium and of occupied France for the benefit of his own country.

In April, 1915, he resigned his post, where his political and social opinions had made him enemies. The following year found him at Berne, commissioned to allot orders and raw materials to Swiss factories making munitions for Germany. At the same time Rathenau tried to obtain from the Swiss government a concession for electrifying the federal railway system. He also enIdeavored to defeat the efforts of the Allies to exclude German industry and trade from Switzerland.

When the war was over he devoted himself again to his private affairs. Under his direction the General Electric Company of Germany has continued to grow. Last year it absorbed one of the largest German bulb factories, and recently it has taken over one of the largest locomotive and car works in the country, and important sheet-metal works. Such instances of so-called vertical concentration are the more notable, because Walther Rathenau has always advocated horizontal concentration in industry; that is, uniting only enterprises which deal with raw materials in the same stage of manufacture. But his mind is adaptable, and accommodates itself to the needs of the moment. He exhibits the same quality in politics. Meanwhile the General Electric Company has increased its capital to eight hundred and fifty million marks.

Rathenau's business affairs never prevent him from writing and talking. Some of his works have passed through seventy-five editions. They deal with art, æsthetics, science, religion, and morals. He touches every field, but he is interested mainly in the reorganiza

tion of society. His enthusiasm and mysticism are remarkable. He says of himself: 'I am a German of remote Jewish descent. My nation is the German nation, my fatherland the German fatherland. My faith is the German faith, which is above all religion. However, it has pleased Nature, in her mischievous but well-meaning caprice, to mingle the two currents of blood that flow in my veins in such proportions that I have an equal passion for the world of material things as for the world of the spirit.'

No one has criticized more severely than he the defects of our present economic system. Its vice is the abuse of individualism, which he tells us is an outcome of the French Revolution. The encyclopædists taught the emancipation of the individual from autocracy, from the Church, and from the survivals of the Middle Ages; but they were hardly aware that a social problem existed. Rathenau says, in speaking of Rousseau, that Emile describes the education of an aristocrat. Rousseau's Rights of Man is merely a defense of individualism. We know only too well to-day where this movement has ended; in the rule of the bourgeoisie, in plutocracy, in imperialism, with all their terrible consequences, culminating in the World War of 1914. Rathenau does not believe that Wilhelm II is responsible for the war. The true guilt rests upon the German bourgeoisie, which sold itself to the Kaiser, and before that sold itself to Bismarck. But he holds the middle classes of all Europe, not those of Germany alone, responsible; for the bourgeoisie of Europe was engaged in an economic war long before 1914. This economic warfare preceded and provoked political warfare. The burden of guilt rests upon the 'European conscience.' This is the theme of a pamphlet which he published in 1919, under the title, Der Kaiser.

His explanation of the cause of the war explains his reticence prior to assuming office regarding reparations.

Whatever our opinion of Rathenau's creed, we must recognize that the charges which he brings against the empiricism of our existing industrial methods, and against the anarchy that results from them, are worth considering. He denounces the inexcusable waste of time and materials which is so common today. Men are permitted to erect factories and works wherever they will, without a competent study of local conditions. Their haphazard capriciousness increases unnecessarily the average cost of production, which falls upon the community as a whole. It causes a wasteful use of transportation, a wasteful consumption of coal, and other useless expenses. In our processes of manufacture we turn out a great variety of unnecessary models, which prevent standardized production, the only economical way of making things. In our excessive tolerance of individualism and personal caprice, we permit customers to insist on twenty-five patterns of cotton goods of the same color and texture, or to order a motor-car of eleven and a half horsepower when the standard type is twelve. Such wastefulness should not be permitted. Twenty shirt patterns are unnecessary. Neither would a well-organized society permit individuals to depreciate exchange by importing useless articles of luxury.

Reasoning along the same line, he condemns the improvidence and wastefulness which permits hundreds of thousands of able-bodied and educated men to be employed in cities, selling cigars and similar luxuries, when they might be producing wealth. He considers that the selfishness and frivolity of the general public are responsible for our economic anarchy. 'If we should have an epidemic of phonographs, or if

it should become fashionable for every well-to-do woman to bathe in rosewater, we might find our iron and steel furnaces employed entirely in making phonographs, and our grain-fields converted into rose gardens.' Rathenau never hesitates to use an absurdly extreme example to emphasize his point.

To check the evils of excessive individualism, Rathenau suggests organizing groups or alliances in every branch of trade and industry. The government would confer upon each group or alliance complete administrative authority over its special field. In return the government would reserve general rights of control, and levy upon collective earnings the sums necessary for running the state and promoting social welfare. Rathenau rejects the theories of Marx, because he believes that capital is indispensable to industrial progress. But he condemns equally the economics of modern liberalism. Government intervention has now become necessary, because we must produce more than we did before the war, in order to replace the enormous losses that that conflict caused. Only the government has power enough to do this.

Rathenau began to preach these views in 1917, at a time when he expected Germany would win the war, or at least make it a draw. He has consistently advocated the same views since. Two threads of thought run through his doctrine: organization and labor. We are familiar with his ideas regarding reparation. He says it is all nonsense to talk of taxes and budgets and imports and exports; that the only thing that counts is hours of labor. He says that politicians and statesmen and financiers are obsessed by words and papers. They sit in their offices and pore over printed and written papers covered with figures copied from other papers. They become entirely detached from the physical things with which

these papers deal. They handle tokens of wealth which they have contributed nothing to create. The only real wealth of Germany is the thirty-two billion labor-hours at its disposal annually. If these labor-hours produce eighteen billions of marks, how much can be set apart from this sum for reparation, after providing what is indispensable to support the people?

He concludes that if the Entente tries to collect six billions in gold from Germany every year, the people will have only one fourth as much to consume as before the war, unless they work longer hours and more efficiently.

It is only a step from this position to the conclusion that Germany cannot pay the indemnity imposed upon it. Rathenau contended that Germany could not honestly agree to pay this sum, because no nation can honestly assume an obligation running for an unlimited time.

But his views have changed since he took office, as official views usually change. Having after long hesitation. and debate decided to accept the cabi

net post offered him by the new Chancellor, he has made a public statement recognizing the great losses suffered by France and the magnificent effort she has made to repair them. Under these conditions he is ready to lend a hand. Now let us see what he will do.

He is already being bitterly attacked by the Pan-Germans, who abuse him on account of his Jewish descent. In fact there are already three Israelites in the new Cabinet, without counting Dr. Rosen, the new Foreign Minister, whose wife is a Jewess. Rathenau is criticized also on account of his socalled Socialist theories. To be sure, he has agreed to let his theories rest for the present, and has repudiated any design to try to revolutionize German business. None the less, he is an object of suspicion in the eyes of the other great captains of industry and the Junkers. Furthermore, his appointment to the cabinet is regarded as a direct thrust at Hugo Stinnes. Rathenau has always opposed Stinnes in social and political matters, although he has got along very well with him in business.

THE Chancellor has informed you regarding myself and my functions. I cannot describe in detail to-day what my policy will be, or what my field of labor will be. The functions of my office are so broad that I have not yet gathered data which enable me to speak

VOL. 310.-NO. 4021

with confidence and authority regarding them. I intend to study the range of my new duties most carefully, before I attempt to lay before this body an account of what has been done by my predecessors and what I believe should be done by myself.

I persuaded myself with difficulty to accept this office. It is no light thing for a man to disassociate himself abruptly from great business enterprises with which his whole life has been identified. However, that was easier than it was to assume this great task, the boundaries of which no man's eye can scan, because they will be drawn by others and not by ourselves. Neither was it easy for an outsider, already past the prime of life, to take a post so near a high-tension political machine, whose construction and operation he does not understand, beyond knowing vaguely its perils. I was swayed in my final decision by the thought that my duties would not be political. I was not invited to undertake this post as a member of a party. I therefore assume that I have the right to accept it without making political commitments.

Since my duties promise to be primarily those of an organizer, of an economist, of a business] man, in a labor of both national and international importance, I feel that I can disregard their political implications and act upon the theory that they will continue to be similar to those with which I have had experience in the past-those of a business executive. I feel no concern because my coming tasks will borrow certain ideas from our wartime-regulation of industry. [Disorder on the Right.] I am no advocate of our war-methods or of other compulsory methods of dealing with industry. [Interruption from the Left: 'He's learned his lesson!'] I did not devise our so-called 'system of warregulation' ['Aha!' from the Right]; but I did design and organize the raw-materials section of the Royal Prussian Ministry of War. [Agitation.] In that position, I performed the task which was given me to do. Those who were in authority at that time convinced me that we could not carry on the war

without such an organization. After eight months in that position I resigned, turning over my office to an army officer, who carried on the work successfully along the lines I had laid down. Neither my successor nor myself had anything to do with government bounties, with food-control, or with other departments of what we call 'warregulation.' So there is no danger that I shall attempt to copy that system. I am determined to keep my office free from all that savors in the least of illicit trading and reparations-profiteering. [Applause. Calls from the Left, 'Just wait!']

I address you, not only as a man without political commitments, but also as a man unprejudiced by his previous business practices. My work as a captain of industry is over; but my scientific labors are not completed. I do not contemplate playing false to my intellectual convictions. I am as convinced to-day as ever that our whole system of economic organization is destined to undergo a great transformation within the lifetime of men now living — not only in Germany, but in every other country. But I shall not start out with the idea of making over the German business world. That would be not only presumptuous, but most untimely. Our economic organism, like our whole national organism, is far too debilitated for heroic remedies. You don't drill your firemen during a fire; you don't change horses crossing a river. I do not refer here to changes of personnel, but to changes of method. I believe radical business reforms must be deferred, if they are to succeed, until the people are solidly back of them. You cannot benefit a nation by imposing ideas upon it which the opinion of the majority is not ready to accept. I claim the right, therefore, to administer my office free from theoretical commitments of any kind, and to take

I have been induced to accept this office primarily by the fact that we now have a cabinet which the Chancellor yesterday characterized as a 'cabinet for doing things.' The time has come when we must find a way to reconcile our people with the rest of the world. I know that our Chancellor intends to do this. I would not have joined a ministry which I did not believe intended to pursue this purpose, of coming to an understanding with our neighbors. I say that for both domestic and foreign consumption.

In the second place, I took office because I am convinced that France wants to set about reconstruction. Many people have said to me, 'Look out! This reconstruction talk in France is a sham.' I am convinced that it is honest. It is very difficult for our people, in their present oppression and sorrow, to think impartially. But if we are to do business with France, we must deal with that country on a basis of fact instead of sentiment. The facts are that France must address itself seriously to reconstruction, because it has suffered cruelly from the war. The facts are that three and one third million hectares of its soil have been devastated. The facts are that 300,000 of its buildings have been completely destroyed, and 370,000 others more or less injured. The facts are that it owes 83,000,000,000 gold francs abroad and 223,000,000,000 francs at home; and that its trade-balance shows a deficit of 13,000,000,000 francs. [REPRESENTATIVE HELFFERICH, German Nationalist: 'Did show!']

Quite true! But a country in this condition must desire reconstruction, even with our aid. Figures showing what it has already accomplished prove that it has made most commendable efforts. The French Ministry of Re

is a significant achievement-in rebuilding sixty per cent of the local roads and bridges, in bringing under cultivation fifty per cent of the ruined fields, in starting again thirty to forty per cent of the factories and six per cent of the mines.

To be sure, only two per cent of the private dwellings have been rebuilt. Yet candor compels us to acknowledge that this is a very remarkable achievement. So France seriously seeks reconstruction. Our negotiations during the past few days encourage me to believe that it seriously seeks our coöperation in this work.

Now, if France wants to restore its ruined territories, we are obligated to help restore them. This brings me to certain statements which His Excellency, Mr. Edler von Braun [disorder] recently addressed to me personally from the floor. His Excellency [Renewed disorder, shouts from the Left: 'We have no Excellency here']—This is the first time that I have addressed you gentlemen. [Laughter.] Representative von Braun read a memorandum. I endorse without qualification the gist of this memorandum, that very grave objections existed to accepting the recent ultimatum. The Chancellor and other members of the Ministry are perfectly aware of that. But Mr. von Braun has not explained why I opposed accepting the dictate of the Entente. He did not explain that I have never disputed the Allies' figures, but only the attached conditions.

These conditions I still consider, as I did before, the most misconceived and unfortunate which possibly could have been hit upon; and I am firmly convinced that this truth is beginning to dawn upon the rest of the world. These conditions are as much against the interest of our opponents as of ourselves. If it is not the duty of every individual