1902 Encyclopedia > Germany > Germany - Finance

(Part 12)



The most import expenses which the budget of the German empire has annually to meet are those of the central administration, the army and navy, posts, and telegraphs, the high court of justice, the foreign office, and some smaller items. For defraying these all customs receipts and the net amount of certain excise duties are paid into the imperial treasury (reichskasse). Of the excise duties those on beet-root sugar, salt, and tobacco are common to all the states; but the imperial malt tax is not imposed in Bavaria, Würtemberg, Baden, or Alsace-Lorraine. The three first named states are likewise exempt from the imperial excise on spirits. Additional receipts are derived from the duty on bill stamps, from posts and telegraphs (excluding Bavaria and Würtemberg), from the railways in Alsace-Lorraine, &c. These receipts are, however, insufficient to meet the expenses of the administration, and for that reason the separate states have make contributions to the revenues of the empire, varying in proportion to their population. Bavarian, Baden, Würtemberg, and Alsace-Lorraine pay proportionally higher direct contributions, because they impose taxes on their own account on malt and spirits; so also do Bremen and Hamburh, because they are situated outside the customs territory. For the last few years the average contributions have ranged from £3,000,000 to £4,000,000; but they are increasing with the diminution of the funds available from the French war indemnity. These contributions press heavily upon the minor states.

The imperial budget is voted every year by the Reichstag. The ordinary and extraordinary expenses for the financial year ending March 31,1879, were distributed as follows:—


The direct contributions of the principal states of the empire to the revenue for 1878-79 were as follows:—


Customs Revenue.—The revenue from the customs duties has increased but little since 1872. In that year it was £5,534,000, and in 1873, £6,131,000; but in 1877-78 it was only £5,768,000. No export duties have been raised in Germany for many years. On the other hand, all imported goods were taxed rill 1865, with very few exceptions. Since then free trade has been more in favour, and a considerable reduction has taken place in the number of taxed articles. There are still, however, according to the official lists, about 148 articles on which custom duties are levied under 43 divisions. Raw materials are duty free. Four-fifths of the receipts (£4,323,000) are derived from articles of consumption, coffee being the principal item, after which come tobacco, wine, spirits, &c. The subjoined table shows the customs receipts, in round numbers, from the following items in 1878:—


The preceding table shows great differences when compared with the corresponding list for Britain. The consumption of coffee is considerably larger,—Germany having imported 2,128,000 cwts. in 1876, Great Britain only 1,361,000. The duty is at the same time much higher than in England, where the revenue from coffee was only £200,000. On the other hand, tea yields only £36,000 duty in Germany, but in England £3,700,000; wine and spirits in Germany £517,000, in England £7,500,000; tobacco, in Germany £821,000, in England £7,800,000.

The German customs tariff serves as a protective duty for several industrial products, although in general a free-trade policy has prevailed in Germany during the last ten years. In 1873 the duties on iron were abolished; still its importation, owing to the stagnation of trade, has not increased. The following is a statement of the produce of the duties on special manufactured articles in 1878:—


In 1879, however, German has suddenly returned to an extreme protective system. The present import duties are much increased, and duties are imposed on many articles hitherto duty free. The Government hopes to make a gross revenue of about £8,000,000 by the new customs.

Excise.—The excise duties on articles of consumption have for the most part been considerably increased since 1872, especially the duty on sugar. The tax on tobacco is, however, still trifling (in 1877, £47,000). Bavaria, Würtemberg, and Baden are exempt from the duties both on spirits and on malt, Alsace-Lorraine from that on spirits.


Funds of the Empire.—The extraordinary funds, from which very large sums appear annually in the budget, were created after the French war. Part of the indemnity was invested for fixed purposes. The largest of these investments served for paying the pensions of the invalided, and amounted originally to £28,000,000. Every year not only the interest, but also part of the capital of this fund is expended in paying these pensions. Another fund, of about £5,200,000, serves for the construction and armament of fortresses; a third for building new houses of parliament; a fourth for the construction of railways in Alsace-Lorraine. Further, the empire has put aside £6,000,000 as a Reiche-Kriega-Schatz, or imperial war reserve fund, which is not laid out at interest, but exists in coined hold and bullion at Spandau. The railways in Alsace-Lorraine are also the property of the empire,—France having paid an allowance to the Eastern railway Company of £13,000,000 for the railways brought under the control of Germany. The following table shows the state of the imperial funds at 1st March 1878:—


Imperial Debts.—The loans contracted by the North German Confederation for the war with France have long since been paid off. The extraordinary expenditure of the empire was for several years paid out of the French indemnity, but that resources is now exhausted. Accordingly, for defraying the expenses of the army and navy, the extension of the subterranean telegraphs, &c., two new loans had to be raised in 1877 and 1878, amounting to £8,760,800. There exists, besides, an unfunded debt. The law allows the imperial chancellor to effect an issue of exchequer for short terms to the extent of £7,500,000, and these are destined partly for expenses of administration, and partly fro the completion of the monetary reform. Since 1874 also a debt bearing no interest has been created in imperial treasury bills (Reichscasssenscheine), which are to be substituted for the paper currency issued by the separate states. At that date only four states—Lippe, Lübeck, Hamburg, and Bremen—had no paper currency. Prussia had in 1872 only £3,000,000 of paper currency, or 2s, 6d. a head, but in the minor states the proportion was higher,—reaching in Saxe-Coburg-Gotha 10·3s. a head, in Anhalt 14s., in Mecklenburg-Strelitz 24·7s., and in Schaumburg-Lippe the very high figure of 34·8s. This inconvenience was remedied by an imperial law, ordering the states to call in their paper currency, and replacing it by the issue of imperial treasury bills, amounting to £6,000,000. For many of the smaller states this sudden withdrawal of their paper currency was too severe an ordeal. Accordingly, to these a further sum was advanced for a term of years in treasury bills; £8,338,000 was thus in circulation on the 30th September 1878.


Reform of the Currency.—The German empire adopted a gold currency by the law of the 4th December 1871. Subsequently the old local coinages (Landesmünzen) began to be called in and replaced by new gold and silver coins. The old coins, amounting to £4,550,000, have been successively put out of circulation, so that none actually now remain as legal tendersbut the thaler (3s.) Silver currency to the amount of £52,000,000 had been withdrawn up to the 30th September 1878, and copper coins to £157,600. To replaced these there were coined up till the 30th September 1878—gold pieces, £81,9000,000; silver coins, £21,330,000; nickel and copper, £2,237,800. The currency reform was at first facilitated by the French indemnity, a great part of which was paid in gold. But later on that metal became scarcer; the London gold prices ran higher and higher, while silver declines. The average rate per ounce of standard silver in 1866-70 was 60 5/8d., in January 1875 only 57 1/2d., in July 1876 as low as 49d. It rose in January 1877 to 57 1/2d., but again declined, and in September 1878 it was 50 5/8d. While, therefore, the proportion of like weights of fine gold and1 fine silver in 1866-70 averaged 1 to 15·55, it was 1 to 17·79 in 1876, and 1 to 17·18 in 1876, and 1 to 17·18 in 1877, and the difference again increased in 1878.

Banking.—A new banking law was promulgated for the whole empire on the 14th March 1875. Before that date there existed 32 banks with the privilege of issuing notes, and on the 31st December 1872 £67,100,000 in all was in circulation, £25,100,000 of that sum being uncovered. The banking law was designed to reduce this circulation of notes; £19,250,000 was fixed as an aggregate maximum of uncovered notes of the banks. The private banks were at the same time obliged to erect branch offices in Berlin or Frankfort for the payment of their notes. In consequence of this regulation 13 banks resigned the privileged of issuing notes, so that at present there are in Germany but 19 note-issuing banks of which 5 belong to South Germany (Frankfort included). The Imperial Bank (Reichsbank) ranks for above the others in importance. It took, the place of the Prussian Bank in 1876, and is under the superintendence and management of the empire, which shares in the profits. Its head office is in Berlin, and it is entitled to erect branch offices in any part of the empire. It has a capital of £6,000,000 in shares of £150. The following table exhibits the position of the German ReichsBank as compared with the other 18 banks at the 30th September 1878:—


Subjoined is a comparison with the great banks of England, France, and Austria at the same date:—


Finances of the separate States—the budgets of the different German states are so variously arranged that it is difficult to group them on uniform principles. We extract the following particulars from the scheme published by Prof. H. Wagner in the Almanach de Gotha for 1874. The expenses and receipts of the empire and those of the separate states are in the two tables taken together. The first table contains the net expenses for 1872-73, the charges of collection being deducted:—


Professor Wagner’s second table gives the principal items of revenue:—


In the absence of trustworthy statistics the local taxes have not been taken into consideration in the above table. These, however, are very considerable in many cities in Germany, in consequence of recent expenditure on schoolhouses, sewage-works, &c.

A comparison of the foregoing tables with the corresponding statistics for the United kingdom (1874) gives the following result. The payments on account of the national debt in Great Britain formed 42·2 per cent. of the total expenditure after deducting the charges of collection; in Germany only 18·14 per cent. The army and navy in England absorb 39·3 per cent. of the expenditure (or 68·0 per cent. after deducting the charges of debt), in Germany 35·6 per cent (or 43·7). The expenses of the national debt in England are about 17s. a head, in Germany about 5s. The expenses of the army and navy in England are about 16s. a head, in Germany 9s. The public property in domains and forests is greater in Germany than in any other state of Europe, the sea of the state forests being no less than one-half of their expenditure by the revenue from domains and forests. From this source Germany is able to meet nearly one-fifth of her expenditure (17·3 per cent.), whereas in England only 0·6 per cent. is thus obtained. On the other hand, the expenses incurred by Germany for the civil lists and for annuities to the princely families are very considerable. Germany pays 3·6 per cent. of the national income to her princes, great Britain only 1·04 per cent. In the minor states the princely households absorb 10 to 12 per cent. of the expenditure. The proceeds of establishments managed by the state cover 17·5 per cent. of the whole expenditure in Germany, but only 2·5 in England. The proportion of direct to indirect taxes is in England as 17 to 83, in Germany as 31 to 69. But on the whole the English are taxed twice as heavily as the Germans. The gross revenue in NEgland was, in 1874, 42s. a head, in Germany 16·2s; of these sum 13·2s. came, in England, from customs duties, and 13·3s. from excise on spirits and malt (apart from the customs duties), while in Germany the corresponding figures were only 3s. and 2·4s.

A considerable part of the public debt of the separate states was paid off by them after the war. In 1873 the total amount of all debts of the German states was only about £171,000,000. In this sum was included £9,500,000 of currency. The greater part of this liability has incurred for productive purposes, particularly for the construction of railways. The railway debts (which are not directly charged in the population) were in 1873 about £96,500,000. Since then some states have gone on reducing their debts still further; Prussia, for example, has done so by more than £11,000,000. Others again, such as Bavaria, Saxony, Würtemberg, and Baden have contracted new loans for constructing railways, or, as Saxony, for purchasing them. The entire debt of all the German states, including the imperial debt, at 31st December 1877, may be estimated at £220,000,000, of which sum, however, more than £140,000,000 consists of railways debt. The average sum per head will accordingly be £5, whereas in Great Britain it is £23 to £24. When the railway debts are deducted the proportion is less than £2 a head in Germany.

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