REPARATIONS TANGLE

Dominion, Volume 16, Issue 157, 21 March 1923, Page 7

REPARATIONS TANGLE

HOW ALLIES HAVE BEEN DEFRAUDED, , POLICY OF NO TAXES WEALTH HIDDEN IN FOREIGN CAPITALS "An American in Germany” contributes to the London "Morning Post” an illuminating article on "Germany’s Juggle,” exposing the methods by which Gorman capitalists have hitherto defrauded the Allies. .

“The genesis of the reparations tangle,” he says, “as I and many others see it, is that the Treaty of Versailles was cast into its existing shape in the belief, which all its signatories, with the possible exception of the Germans, shared, that tho financial position of tho German Government must necessarily reflect in the future the financial position of German industry and vice versa —that if industry flourished, the Government would automatically assume a condition in which reparations could be squeezed out of it; while, on the other hand, if the German Government deliberately set out to bankrupt itself, it was bound to ruin German industry at the same time. In a comparatively short time the Germans made it clear that this assumption was incorrect, that a flourishing industrial Germany and a bankrupt German Government could, in fact, live together. Tho French quickly saw their mistake, and have ever since been trying to persuade the British Government to assist them in rectifying it. German Treasury Bare.

“Looked at from this angle it is easy to understand why Germany and Germany’s hired scribes are so indignant at the French preparations., to occupy the Ruhr. . So far the Allied occupation of German territory has been nothing but a military display. Not the slightest attempt was made by the Allies to prevent the German Government’s fraudulent bankruptcy even in these areas. On the two recent occasions when I was in tho Rhineland I found the German workman here, as elsewhere in Germany, travelling 25 times as far as a British workman can for the same proportion of his income, purchasing 25 times as much tobacco and cigars, and imbibing 25 times as much alcohol. Everyone knows that one of the reasons why the German Government has no money with which to pay reparations is that it flatly refuses to collect any taxes on tob'acco or spirits or beer, or to charge economic fares on the State railways and freights, and so raise enough revenue, if not to pay a profit, at least to pay wages and overhead charges, which at present are being mot by constantly increasing issues of paper marks. It is not a question of the exchange. Tho fares charged are absurdly low in proportion to the German workman’s wages. The freights are preposterously small in proportion to the valuo in marks or any other currency of the goods shipped. Why, one may ask. should tho German Government. make any attempt to remedy this state of things for the benefit of the Allies, when the Allies in four years have made no attempt in the areas under their control to remedy it for their own benefit? Squeezing the Right Peonle. “But the Ruhr is a different matter. France, having seen her mistake, proposes now to abandon squeezing the German Government, from which nothing can be extracted, and prepares to squeeze German industry, which is stuffed with wealth. She will succeed, and that is why the Germans and their friends, not merely those who are paid to befriend them, but those who simply resent the exposure of the fallacies under which they lhave been labouring, are so full of wrath. If. the new occupation was simply a military extension of the old areas on tho old basis the German industrialists would not complain. They would

rejoice. I repeat that German, industry is stuffed with wealth. but that wealth is limited to two classes, personal property—real wealth—at home and credits abroad. Germany is the richest country ‘in the world, not excepting the United States. ‘Ah,’ says the German, “but we can no longer afford to buy these things.” That makes no difference. The things are there,' and they are the property of the German people, of this one if not of that one. There is . enough plunder in the shops of Cologne and Frankfort alone to pay three years’ interest on the British debt to America. For some reason or another the Allies will not go in and take this stuff, nor will they make the Germans pack it up. sell it in South America, and pay the proceeds to the Reparations Commission Working the Fraud. “With this self-denying ordinance in vogue it follows that anything tho Germans can get into Germany in the way of goods—Russian furs, for example—in return for their paper marks, is go mush to the good, and tho rich Germans are denuding Austria and Poland and Russia of their material wealth. Tho other kind of wealth the Germans have is capitalpurchasing power +o credit, if one prefers to call it that—but they do not keep that in Germany, but in foreign capitals where the Allies cannot touch it. How’ this capital is accumulated is easy to see. A German manufacturer exports goods and sells them in Buenos Aires for ten thousand dollars. The price being an economic one covers cost of materials and a profit. The cost of the materials replaces the materials. The profit remains in Buenos Airos in the form of credit. If tho German took his profit in dollars and turned it back into marks it would ultimately lose all its value, as the value of the mark divind'ed. What tho Gorman manufacturer does is to buv marks as he requires them to pay his wage bills and intra-German and keens tho rest in Buenos Aires. The result of this is obvious. The German exporter is coining money which he dare not bring into Germany, unless he intends immediately to buy labour with it or to convert it into material wealth. He is tho upner millstone beneath which the middle-class German is being ground. Tho lower millstone is the farmer. He buys a paper and fixes the price of his produce, according to the day’s rate of exchange, on a strictly dollar basis. With the nroceods To immediately burs dollars, or occasionally pounds, and nuts them in n. safe place. When the time comes to nay his hands or buv fertiliser, he finds that wages and prices have gone

up in marks but not so fast as the increase in the number of marks he qan buy for his dollars. Value of the Ruhr. “Of all the German profiteers the farir.' r alone is invulnerable. He controls the necessities of life, and the public must pay the prices ho chooses to fix. But the other profiteer is not so invulnerable. Tho exporting manufacturer must in almost every instance have coal if he is to continue to manufacture, and must often enough have iron and steel; or he depends on the products of others, who must have these things. And they all come from the Ruhr. -It is the jugular vein of German industry, land France proposes to take it between finger and thumb. It is not the object, of France tn net the money she is looking for out of Ruhr coal, whose profits, naid in marks, nre more or less illusory, but out of the exporting manufacturers who must have coal if they are to continue to expert. To them France ~..pi in effect: ‘Yes vo,, ear have a thousand tons of coal, but first von must Unnsfer to the Allied account two thousand pounds in cash. Vmi know vou have R hidden awan- in Bueno= Aires or Bnrelona. s . n ol ’]- it.’ The process is not difficult to follow’ ” . Coal Tax Swindle Tho London “Dailv Mail” of January 20 publishes tho following extract from tho Berlin weekly journal, ‘Melt am Montag” :— “For a number of months tho most powerful of our industrial barons the coal magnets, have been allowed to defer the payment of coal tax to the amount of many tlicuisands millions of marks. Th< is a monstrous wrong to the workmen whose payment of tax is never allowed to be in arrears, but is deducted directly from their wages. It means inexcusable loss to our empty Treasury, for a thousand million marks, which wore due jn September, are worth only a hundred million or less if paid to-day. The whole difference is lost hv the. Empire, that is to say, by tho taxpayers, to the advantage of the privileged taxpayers—the coni barons. It is an ugly business, which the dead silence of practically tho whole of tho German Press does not dispose of. It became known through tho report of the proceedings of a Reichstag committee, aqd through the Labour press. Abroad this is being discussed in every detail. Silencj? must be regarded as an attempt to hush up the business —if not an attempt to condone it. Much is still not clear. But on: thing is certain—it has an evil odour,”