FINANCES OF GERMANY

Press, Volume LXXVIII, Issue 23744, 16 September 1942, Page 5

FINANCES OF GERMANY

EVIDENCE OF LACK OF CONFIDENCE PEOPLE HOARDING NOTES (Special Correspondent N.Z.P.A.) (Rec. 9 p.m.) LONDON. Sept. 14. There is growing evidence that the confidence of the German public in the reichsmark and in the long run in the solvency of the Reich Government has become undermined to no slight degree during the current year, states the "Financial News." Germany, the "Financial News" claims, is also driving France towards inflation. In Germany the growing volume of hoarding of notes is one of the manifestations of a wave of distrust. The Reichsbank's note circulation trebled after the outbreak of war, and the pace of increase has been accelerated in the lest 12 months. Germany's older middle-aged genera, tions, remembering the acute shortage of actual currency accompanying the 1923 intlation, feel safer in possessing large amounts of cash than in holding deposits which might be frozen by a moratorium in the event of a collapse. Because of this hoarding the Reich treasury finds it increasingly difficult to cover the deficit by normal borrowing, and has therefore adopted various devices. These devices include the sale of ordnance factories to private interests, the calling up of large holdings of shares against payment in blocked bonds and their resale against cash to the small, investor, the encouragement of the purchase of securities in the conquered countries resulting in an increase of block reichsmark clearing balances at the treasury's free disposal, and the discontinuation of Government advances to contractors. Few Goods Available Needless to say, the German public resorts to hoarding notes only to the extent to which it is unable to find anything else worth hoarding. The demand for goods and securities is so persistent that their supply has largely become exhausted. Whereas in Britain it is possible to spend almost unlimited money on almost anything except clothing and certain types of food, in Germany the stage has been reached where it is almost literally impossible to buy beyond the barest necessities. Many Germans have discovered ways of hedging against the depreciation of the reichsmark and the possible collapse of German finances. From Hitler downwards the privileged class of corrupt Nazis have nest eggs in Switzerland, Sweden, and Argentina, and others'are buying gold coins which are reaching Germany from Switzerland, resulting in a boom in the Swiss market for such coins. Another method is the purchase of securities in the occupied countries, | which is officially encouraged, since the Germans pay in reichsmarks while foreign sellers are paid in their national currencies by their own central banks. The result is that the reichsmarks remain at the disposal of the German treasury while Germany secures control over European industries, which will make post-war disentanglement more difficult. Germans are hoarding to the limit of possibility. "It is aa interesting development," states the "Financial News." "While it would be idle to infer the possibility of an early financial collapse of Germany, the trend is certainly worth noting and following." Undermining: French Financial Stability So that Hitler's vindictive mind should be satisfied when he conquered France, it was essential that the franc should collapse in the same way as the mark did in 1923, but to avoid increasing difficulties in keeping down the French people it was necessary to postpone this satisfaction. Thus for the present a degree of inflation has not been forced on France sufficient to create a false feeling of prosperity but only enough to allay immediate discontent and assist in securing the smooth working of French arms industries for Germany's benefit. The degree of inflation in France is largely determined by the burden imposed by Germany in the form of occupation costs and the frozen clearing balance. The occupation costs in 1942 will total 109,500,000,000 francs, which is a decrease on the 1941 figure, but there has been a considerable increase in the frozen clearing balance on France's trade with Germany. Since French exporters cannot wait indefinitely, the French authorities have to finance their claims against the clearing account. It is expected that this frozen clearing balance will increase in 1942 by 50,000,000,000 francs or £250,000,000. This means that against an estimated revenue of 80,000,000.000 /rancs there will be an ordinary expenditure of 138,500,000,000 francs, occupation costs of 109,500,000,000 francs, clearing balances of more than 50.000,000,000 francs, making a total expenditure of more than 300,000.000.000 francs. At the present pace the franc would become hopelessly undermined in a few years, and unless France can be liberated Hitler will have the diabolical satisfaction of watching a repetition in France of the ghastly experience of a currency collapse. Nothing but the comparatively early liberation of France can save the franc from utter doom. RUSSIAN WINTER AID FOR ENEMY AS WELL AS FOR RED ARMY (Rec. 5 p.m.) SYDNEY, Sept. 15. The coming winter weather in Russia would not aid the Red Army any more than it would aid the Axis invaders, said M. Vladimir Mikhaiv, Tass representative, who has just arrived in Australia. "Some people are basing their hopes on the winter as a kind of third front." he said, "but the Germans last spring began preparations for this coming winter. They mobilised all their factories to produce warmer clothing and appropriate foodstuffs. They took all the warm clothing they could beg. buy. or steal from all the occupied countries. "Russia and the other United Nations will have to rely on themselves and not on the winter, which is due in Moscow about mid-November, and later than that at Stalingrad."