GERMAN FINANCE.

Auckland Star, Volume LVIII, Issue 114, 17 May 1927, Page 6

GERMAN FINANCE.

The financial crisis that has for the moment overwhelmed the Berlin Stock Exchange is an event from which not only the Germans, but their British admirers, may derive certain useful lessons. There has been in recent months a tremendous "boom" in industrial and commercial securities in Germany, and overspeculations have been followed by the ustfal disastrous consequences. The imperial Bank, finding that its reserves were running low, had to restrict credits, and the need of ready money forced the weaker financiers to "unload." The heads of German finance have adopted a policy toward commerce and industry essentially different from the traditional policy of British banks and bankers. Early in the history of the German Empire the banks were instructed—indeed, commanded—by the Imperial Government to lend all possible assistance to the country's expanding industrial and commercial interests. This meant, in the first place, a policy of systematic advances which soon exceeded the limits fixed by the more conservative traditions of the City of London, and, in time, of virtual partnership in industry. This policy was pursued after the war. The banks, having lost their financial independence and having locked up their "liquid" assets in trade, are unable to afford adequate assistance to commerce and industry in times of stringency, and are involved with their own clients in the losses and failures that are the inevitable incidents of incautious speculation and overproduction. Before and since the war many critics of the British monetary system have pointed to German banking as an ideal policy for the encouragement of the country's industry and trade. Possibly this recurrence of the periodical crises which have so plentifully diversified the history of German finance may cause them to modifv their