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came the paradise ot state-owned enterprises. This is referred togenerally, along with the social-welfare measures, as an example ofGerman state socialism. It was, however, in no sense a surrender tosocialist ideas. It was the policy of very hardheaded, pragmatic administrators.The central government and the states, in need offunds and finding the taxpayer reluctant, turned to state enterprise.The various German states owned and operated public utilities,railroads, mines, forests, telegraph and telephone systems, andcertain industrial enterprises as a means of making profits for thegovernments to supplement the inadequate tax revenues. Bismarckmade a number of efforts to buy up all the railroads for the centralgovernment to solve its revenue problem but was balked by thestates. He admitted he was aiming at a monopoly of tobacco andspirits production for the empire as a means of swelling empirerevenues. Unable to get the railroads for the central government,he succeeded in having the Prussian state government take them.He did this by issuing government bonds—60 billion marks—forthe shares of the private companies. 8The extent to which the German federal and state governmentshad come to depend on the profits of their enterprises to pay theirbills may be seen from the following figures compiled by ¯L·e Figaro(which explains the use of francs instead of marks) in 1909. Thisestimate includes the revenue of the empire and the states, whichwas 9,656,000,000 francs. Of this sum only 3,887,000,000 was collectedin taxes. The balance—5,769,000,000—was derived fromrailroads, mines, post offices and wire systems, forests, and otherenterprises. Only 40 per cent of the public revenues was receivedfrom taxes. 4It must be said here, of course, that a good deal of the publicdebt arose from public investments in revenue-producing enterprises.This applies chiefly to the debt of the states. Most of thedebt of the central government arose out of non-revenue-producingexpenditures. It was dead-weight debt. 5*Prince Bismarck, by Charles Lowe, Cassell & Co., New York, 1886.*"The Secret of Germany's Budget," translated from Le Figaro's reports, Harper's Weekly,Vol. Î3, January 2, 1909.°Various reasons have been assigned for World War I. The causes of that were doubtlessmany. But the fiscal policies of the imperial government may well bear their full share. It89