THURSDAY, SEPTEMBER 11,1923 GERMANY'S FINANCE.

Auckland Star, Volume LIV, Issue 219, 13 September 1923, Page 4

THURSDAY, SEPTEMBER 11,1923 GERMANY'S FINANCE.

There is now some prospect that the | German international loan, the negotiations lor which W ere under way when they were interrupted by the Huhr complications, will become an accomplished fact. It. is announced that £(>n.noo.ooo "f this loan will be floated in Britain, •and £TiU,IKXIJMII) in the Cnitcil suites. This >.HII leaves a balance of i'iin.OOO.OOO. [and it is dillicult to see uliat other ! <<ountrif>K could supply these funds. It Jniay be presumed, therefore, thai this' j balance will form a supplementary credit, [ which*may be extended by Great Britain iind the I'nited States, especially by the latter country, though other countries may contribute a limited amount. The I negotiations which were in progress j ! prior to the .omplications of the Ruhr imbroglio seemed to indicate that the greater portion of the fund., would be supplied by the I'nited States; that country certainly is the- one best able iinrlcr present circumstances to finance the situation. But there are good reasons I why the British Government should also I lend a helping hand in thp financial] rehabilitation of Germany. Germany is anxious to buy goods from Great Britain. but is severely hampered by the financial situation. A loan of £00.00(1.000 made Iby Great Britain to Germany would simply mean that, that amount would" be placed to the credit of the German Government in London. The German Government, through the medium of the banks, would then be able to sell drafts On London for this amount to the merchants of their own country, and the money would he spent in the purchase of British goods. Xov Zealand and Australia would also l>enefit by the process, as German merchants would be able to send them drafts on London in payment for goods ordered. During the course of the war, at. a time when the British Government had great difficulty in obtaining gold supplies, it made a similar arrangement with r-ome foreign countries, notablj' the United States and! the -Argentine, whereby it was enabled to obtain necessary supplies from those countries > for the loan really amounted to a credit, being mainly expended in the purchase of commodities which those countries could supply. The proposed loan is not made for the purpose of finding the money with which Germany can pay her reparations, for it is expressly stated that under the provisions of the loan the respective lending countries would supply raw materials, manufactures, etc., needed by ' Germany to assist her industry, and thus aid in the re-establishment of j the normal conditions of world trade. Nevertheless, in an indirect manner, the loan will also be of benefit to Germany ias far as the payment of reparations are concerned, for without her commercial and industrial rehabilitation it will bo extremely difficult for her to provide the large sums which the reparations will j require. It is tentatively suggested that] I the necessary guarantees to lie ofi'crerf to France will consist, partly at least, of a .'lO per cent share in German industrial undertakings. The loan will give la stimulus to the formation of new companies and the extension or rehabili- j tation of existing ones, so that in- | i directly it will Im> of benefit in many different ways. A further hopeful sign is the report j that the German Government has decided | to solve the currency problem by the j establishment of a gold note bank, which will be legally independent of Stale finances, but closely collected with the Kcichsbank. and that this institution will commence operations at an early date. This involves an important change in the financial policy of the German Government, which has hitherto ignored gold us a circulating medium, and, in fact, penalised it. in the vain attempt to give a fictitious valv_«e to their paper j currency. Now that this currency has | fallen to such an extent that more than | a million German marks can be obtained for a penny, the German Government has awakened to the fact that the j further continuance of the policy of making unlimited issues of inconvertible paper is ruinous. Moreover, the persistaiice of the Government in this policy has decreased its popularity. There is ;i growing demand on the part of (he j German people for some stable species of currency, and though the Government has made it a penal offence to traffic ill those foreign currencies which have a more or less stable value, the practice lias now become so universal that punishment i> practically impossible, and tiie Government prohibition is practically a [ "lead letter. Kuropean peace, which has ■-'► long been threatened, would be placed n " a tinner foot ing if Germany's desperate finaucial state could be relieved, . „ „. .