Ashburton Guardian Magna est Veritas et Prævalebit. THURSDAY, JULY 26, 1923. GERMANY AND HER MARKS

Ashburton Guardian, Volume XLIV, Issue 9877, 26 July 1923, Page 4

Ashburton Guardian Magna est Veritas et Prævalebit. THURSDAY, JULY 26, 1923. GERMANY AND HER MARKS

Very shortly the Franco-Bel-gian reply to Germany’s proposals and to Britain’s Note theron, will be drafted and come under discussion. There appears at the present moment to be a strong likelihood of the ball being now set going toward a solution of the reparations problem, out of which has arisen the French occupation

of the Kulir. It is interesting therefore to examine the proposals and Germany's apparent ability to carry them out. Taking the latter task first, we find that Germany is for all practical purposes, a completely bankrupt Empire. A private firm, in Germany’s state of insolvency, would simply walk out’ of its business and let its creditors take possession of the assets. Germany cannot do that. The German people obviously cannot, en

masse, walk away from their assets —their homes and their country—and start life afresh elsewhere, for no other land would permit 60 or 70 million Germans to enter. The German people, therefore, through their Government, have to do the next thing. They are meeting with debts by further borrowing. Their borrowings are effected by the simple process of printing paper marks. A paper mark is, in effect, expressed or implied, a

promise to pay a shilling. A promise of payment from a bankrupt is not always worth its face value, and neither is the German paper mark. It is worth so little that nothing smaller than a thousand-mark note is worth printing at all, and that fabulous note is to-day worth at the mints one farthing—on the foreign exchanges about one mite. They are printing these scraps of paper in Germany now by the million, and so desperate has been the frenzy in which they have been produced that it is said to be doubtful if anybody can now sayyhow many millions or billions' of paper money are really in existence. Yet each 1000-mark note, now selling for a farthing, is a promise of the German Government to pay the holder of it some day £SO. The currency situation in Germany to-day is almost past imagination, it would be somewhat parallel to it if one went into an Ashburton shop for a 2d

box of matches and had to pay for it a £4OO B.N.Z. note. Some day, theoretically, the German Government must redeem these notes at their face value. That is why people are speculating 1 in them. They have been sold on the open exchanges at two million German paper marks for a British £1 bank note. If Germany could satisfy the demands of the Allies for reparations by means of paper marks the international crisis could be solved to-morrow. The printing presses would do it. How singularly is the irony of a scrap of paper recoiling! Let us recall to mind the amount of reparations the various Allied groups are de-

manding. The Franco-Belgian group apparently demands that the amount be 6,600 millions sterling. Mr Bonar Law a few months ago suggested 2,500 millions sterling, hut the French rejected it quite promptly. If rejected it quite promptly. Germony offered 1500 millions stermany offered 1500 millions sterling. If Germany were to attempt to mete a demand for 6600 million pounds sterling by means of

paper marks the following curious position would develop. She would have to print marks to a total denomination of three hundred and thirty million million marks. She would, if any buyers existed, sell them (at their present price of issue) for 6,600 million pounds sterling, hand the proceeds over to the Allies, and then leave to German posterity the staggering task of redeeming them in silver and gold of' a value of 16£ million million pounds sterling. If Germany succeeded by heroic efforts in rate of 165 millrrgu. dash Bhl2 paying off such a stupendous debt at "the rate of 165 million pounds per year it would take her 100,000 years to get clear of debt, not counting the interest. These, at all events are the conclusions to which an arithmetical examination of the position brings us. They will serve to show that Germany is not likely to adopt the paper way outlined to pay her reparations debt. She proposes instead to pay what an impartial tribunal (like the Hague Tribunal) shall decide she is “able to pay.” In view of her having already flooded the voili with 1.0.U5. that make her obviously bankrupt France may conceivably decline to pledge heiself to any such decision. Such then is the dilemma from which the diplomats and financiers ot Europe are at the present moment trying to find Germany an escape. It explains vhy , German promises to pay a slnl- ' ling sterling are not worth a twopenny box of matches^