GERMANY FACED WITH RUIN.

Dunstan Times, Issue 3134, 11 September 1922, Page 8

GERMANY FACED WITH RUIN.

(By Lord Beaverbrook.) The mark is now worth one hundiedi th of its pro-war value. Think what tliis menus when translated into terms of everyday life. Before the war, there were many Germans possessing a million marks, rich, and ranking as millionaires in bourgeois circles. To-day (July 13) you can make yourself a German millionaire by buying €SOO worth of marks! If you wait, you may be able to buy a million marks for £250 or even for L'loo. .Many rich men in Ihe city have speculated in German marks, and lane lost large sums in the last two years. Tito German Government have made tcrrilic efforts to check the fall in value <>l the mark. They have repeatedly used their vast foreign balances to protect, its price. They have bought and bought- but all has proved vain the price has continued to tumble down. On July I.") Germany has to pay a further instalment of reparations. She can do this. I am told, but on August |."> another instalment is due, and no provision has been made for paying it. Thus will the mark go rushing headlong downwards, nor can there he any check so long as the German Government will not, or cannot, balance its Rudget and the printing press is used to make good the deficiency. TliUiie must come a point when credit, and exchange collapse, industry is paralysed, and wholesale bankruptcy ensues. The- first sign of the catastrophe will be the fact that traders in largo areas of Germany will be found doing business through' the medium of sound foreign currencies, sterling, guilders, dollars, francs and liras. What will happen when national bankruptcy comes;-' The nearest parallel instance in the past must be sought in the financial career of the revolutionary Governments of France, which began, in 1789, to issue in the form of assiguats what was in effect paper money. Four thousand million francs were issued iii assignats, each of 100 francs. The- man who got these assignats could choose (J) to take up land to the value of his assignats; (2) to sell the assignats to someone who wanted land. By this second arrangement the assignats became in effect paper money. The plan did not work as it was expected to do. Each revolutionary Government issued assignats when faced with a deficit, and the exchange value of money fell and fell. In the long nut SO.OOO million francs' wtorth of assignats stood unredeemed and practically worthless.

Napoleon restored Franco to solvency l).v drastic methods and rigid economy, hut all the holders of assignats and other revolutionary securities lost tlio creator proporlion of their monev.

Germany will have to go tlio' same way if she is to survive as a civilised community. Her bankruptcy is upon her, and ii i s probable that the sooner the crisis conies the hotter for herself and the world. The German Republic would then at least have a chance to follow the example of Napolean France and to rise again from the financial gutter. To do this she must (1) Repudiate all existing paper currency and all internal bonds and pay the holders of either exactly that proportion of their holdings which will still leave the country solvent under a Government regime- of the strictest economy; she must make use of foreign currencies until such times as a real, instead of a fictitious, German paper currency could he re-established. Tf this is not done German finance, industry, and employment will crash for ever and without remedy. If, on the other hand, the policy of financial reform could be carried through, all these factors in the national life would ho stabilised and could develop progressively in the future. But what will actually happen when the inevitable conies and national bankruptcy has to he faced or liquidated? N) man can tell, for the factors are incalculable. All f can see is tlio certainty of the crash, and bevond that nothing is clear.