GERMAN INFLATION INVOLVES RUIN.
(By Sir Philip Gibbt,.) Germany is (slipping rapidly into the deep pit of international bankruptcy. In Berlin, where 1 write this article, every German is panic stricken by tho precipitous fail of the mark and asks what will happen to this country tlr.f winter. That question is answered not only by Germans but by British and American business men with one sinister word- revolution. My that they mean bread riots, social disorder and i tidal wave of anarchy implied by the hungry masses. They see no way of cseape from economic collapse and social upheaval, whatever happens, tor Germany, by its own fault or not. has fallen into such a rotten financial condition that her diseases can only be cured by a remedy which would cause an immense amount of suffering. That remedy- the only one—is to restrict the issue of paper money. For the last throe years the German Govvernment has met all her financial troubles by speeding up the printing presses to make notes. Her issues of these notes has reached figures beyond tho imagination of ordinary mortals. They are astronomical figures reckoned in milliards. For some time this inflation of prosperity and enabled German manufacturers to compete at cut-throat prices in world markets. Cheap money prevented unemployment and gave a feverish stimulus "to industry. But every time new issues of notes' flooded Germany the value and purchasing power declined inside and outside the country. Prices rose, and to catch up with them wages had to be- increased. Then began the whirling of a vicious circle. Now notes were issued to pay increased wages and the cost of government. Again paper money decreased in value. Again more was needed to Inutile same amount of goods or service. Again, note issues multiplied. It became a mad dance, a financial jazz round and round like a dog chasing its tail Then the reality of economic laws challenged sanity. Germany has had to buy AH per cent, of its 'grain supplies from abroad 1 . She has had to buv from foreign countries raw material tor clothing her people. She is buying 1,000,000 tons of coal weekly from England. She is buying meat from America. She cannot pay for these things in false paper money. Foreign exchanges reduce her marks to their true value, now standing as I write at about 1400 to the dollar nearly 6000 to the English pound. That means disaster of great magnitude. r„, So fiir tllis may 1)0 seen at Merlin. Iherc are few signs of poverty apparent, there is pleasure even 'in the: restaurants, cafes, theatres and public places. The masses and middle class folk have this paper money to spend, and spend it with prodigal'hands. ft. would bo foolish to be thrifty, for what is the use of saving marks'when from one day to another, even from one hour to another, their value drops like- stones bumping down hill? It is better to spend quickly, to buy fast, before prices rise. 1 reached Cologne one night when marks had fallen heavily in exchange rates. The railway station was crowded with humble folk, who had come/ back from country markets laden with foodstuffs, which they had bought before prices rose. Women, girls and young boys staggered down the platforms under heavy burdens of potatoes. meat, cheese, pots, pans, wood and' stuff for tires. liv Berlin there was a wild rutfli to the big stores before prices were marked up again. They were marked up quickly. Foreigners, who swarm Merlin, are international vultures who prey on tho diseased body of the European nations; rich tourists from America find Berlin a happy hunting ground. Increased prices, which hit Germans hard, mean nothing to them, for even if doubled and trebled they are still ridiculous in foreign exchange. The other night I gave, a dinner party at a good hotel to five friends. We had 1 soup, fish, meat, ices, coffee, and two bottles o-f Rhino wine. Tho little affair cost two dollars, wit!) a handsome tip to the waiter. Taxi drivers multiply the figures on their elocks fifty times in a few days. It will be eighty times, but even then one can drive a mite for fifty cents. Railway travelling costs next to nothing for foreigners whose money is good. I went to Wannsoc. a beautiful lake eight miles from Berlin. It cost me, second class, four cents. American ladies sir Berlin are buying fur coats, art treasures, trinkets of all kinds at half and a. third the price in New York, although they are charged three times as much as Germans. But what about, these prices for the Germans themselves? They are enormous, in spile of tho rapid printing of paper money. A small roll of bread, ten marks; a, cheap suit of clothes, 8000 or 10.000 marks. The workingman now gets an average wage of 1,500 to 2,000 marks weekly. How is he going to buy milk for his children, clothes for himself and family? It is not easy arithmetic, but Somehow or other he works if out and leaves himself a margin for amusement. .Middle class folk these summer days are out in a swarm in flicpleasure gardens like the Tiergarten in Merlin or the woods and lakes at Potsdam, Grunewald and Wannsee. The women are pretty and neatly dressed, the children are. beautiful to see; they are. certainly well fed and happy. There is afeo visible wealth in Germany. The streets are crowded with splendid automobiles. The new rich are yachting, as I saw them, in a chain of lakes upon whose banks they have rural villas l and lovely flower gardens. What poverty exists in Germany is hidden. People living on dividends and small •fortunes before the Avar are now ruined because of the downfall of the. mark. Young professionals, intellectuals, and writers of all kinds have to stint and scrape. 1 went home with one: he told me. his class isi stricken. That no doubt is true, but broadly speaking, 1 believe thet'c is less distress at the moment in Germany than in England, Nevertheless ruin stares Germany in the eyes and draws close. The ground is slipping beneath the highly organised and complicated industrial state. When the crash comes it will be colossal. For Germany is not self-sup-porting and cannot be. She must import raw material in order to export manufactured goods, and the time has already come when she; cannot buy those imports with paper money. She must buy great quantities of food and fuel. She can do so only at a ruinous price. Intellectually she is already shut up in a cage. Her professors, writers and students cannot buy foreign books. Even newspapers cannot afford to pay for news if it means keeping foreign correspondents abroad. It is impossible for her to pay the reparations unless the mark rises in international value. It is impossible for her to pay her wage bill—which will be vastly 111ereased, because workmen will demand a new scale to meet new prices during the next few weeks without another vast issue of paper money, which will instantly fling the mark lurther to the depths. 1 saw what happened in Austria. The Germans are going the same way. If she all the way, it is not only Germany ruined, but the greater part of Europe. What can she do to save
herself? Only one thing, and that is vtry dangerous. Sho must stop printing" money and gradually deflate her rurrencv. Other nations which havo done so", like Czecho-Slovakia, Switzerland, Holland, Italy and England, havo sUwlilv improved tiieir rate of exchange". Isv reducing tilt circulation of notes by 20 per cent., Czecho-Slo-vakia improved her exchange value by ,-,() per cent. That is a tremendous lesson to Germany. Mut the risks also are tremendous. Directly Germany cuts down her note i-sues her people will find it hard to gel enough paper money. Wages will have to go down before prices go down. Industrial activity will be restricted for lack of capitai. There will be suffering, lint though the remedy is severe and full of peril for the social stale of Germany it is better than certain ruin which otherwise will overtake her. A dangerous adventure is better than inevitable death to the nation as well as individuals. That is Germany's alternative.
Permanent link to this item
https://paperspast.natlib.govt.nz/newspapers/DUNST19221106.2.37
Bibliographic details
Dunstan Times, Issue 3142, 6 November 1922, Page 7
Word Count
1,388GERMAN INFLATION INVOLVES RUIN. Dunstan Times, Issue 3142, 6 November 1922, Page 7
Using This Item
Allied Press Ltd is the copyright owner for the Dunstan Times. You can reproduce in-copyright material from this newspaper for non-commercial use under a Creative Commons New Zealand BY-NC-SA licence. This newspaper is not available for commercial use without the consent of Allied Press Ltd. For advice on reproduction of out-of-copyright material from this newspaper, please refer to the Copyright guide.