GERMANY'S CREDIT A THREATENING DIFFICULTY

Evening Post, Volume LXXXIX, Issue 57, 9 March 1915, Page 4

GERMANY'S CREDIT A THREATENING DIFFICULTY

CAN SHE WEATHER IT? (FROM OUR OWN CORRESPONDS.) LONDON, 19th January, A British., economist of high standing has called my attention to an interview published in a British paper with a wellknown Dutch banker in Paris, M. Valdorp, who has had the beet means of ascertaining the financial condition of Germany, and has made a study of her machinery of credit. The interview indicates very emphatically the straits to which Germany has already been reduced to find money for the all-consum-ing campaign which she is maintaining. M. Valdorp dismisses at their right value the statements which have been circulated by the Reichsbank as part of the German international press campaign, and he proceeds coldly to analyse the foundations of the bank's own. reserves. The notorious German wat chest, he sa,ys, which was kept with »ueh dramatic circumstance in the tower at Spandau, etood at pea-haps £10,000,000, which amount was paid into the Reiclisbank when war broke out. Then the Lander Kaese issued notes of 10 and 20 marks, thus allowing a further gold currency to flow into the R-eichsbank. But even this did not satiate the greedy demand for gold, and every apeciee of thinly-veiled compulsion has beeti brought to bear on the German subject to induce him to send much of his gold into the hands of the State. By compelling people to take notes for their gold the bank ha* probably brought in. M. Valdorp says, about £16,000,000. The Customs officials have acted in concert, but owing to the great shrinkage of imports^ they could not do much. Even private soldiers have been compelled to pax their gold into the bank, and of course the pillage and war in* demnities levied on the conquered provinces have helped the good work. Meanwhile the_ armies of the Huns pay for their requisitions in paper. WHAT IT AMOUNTS TO. There are two main constituents of the gold supply. There is in the first place the genuine reserve of the Reichsbank, and there is secondly the money in the coffers of the companies and private individuals, and of the State Departments. M. Valdorp says the Reichsbank's own statement shows a note issue of £221,000,000, without counting State bonds and public banks' paper. The present value of the commercial paper held by the bank m probably not more than 47 per cent, of the balance-sheet value. According to the Frankfurter Zeitung the gold reserves of Germany are £165,000,000, which, after deducting the Reichsbank reserves, leaves only £60,000,000 in free ' circulation. On the assumption that half of the latter can be squeezed into the coffers of the Reichsbank, there is a gold reserve of £136,000,000. ' Against this Are the growing obligations of the bank ia note issue and accepted paper. The war expenses of Germany, which are placed at £250,000,000 per quarter, are 1 approximately covered by the issue of paper money, with some deduction for the realisation of securities abroad, probably at the rate of £22,500,000 during the last three months. This means that every three months the bank must issue paper money to the tune of £225,000,000, so that the Reichsbank note issne will by June amount to £680,000,000. This position M. Valdorp considers absolutely startling; the reserve cover ot the' bank will by that time have diminished from 47 to 20 per cent, of the engagements. Meantime the actual exchange rate for German money is 10 per cent., which has to be averaged over only the balance of 53 per cent., and so works out at something like 18 per cent. ! PUBLIC FEELING IN GERMANY. Another Dutch observer, who is frequently in Germany, the editor of the Dutch Socialist paper Het Yolk, gives a comforting account of the chastened pnbh'c Spirit of Germany as compared with the early da.ys of the war. "It can be said with certainty," he writes, "that the Chauvinism and jubilation over victories prevalent during the first months of war have .now disappeared. There is no loud talking in the third-class compartments of the trains. One may now sit for hours :n the trains without hearing a word from fellow passengers." When the great reports of victory come from either frontier there is "not a single outburst of rejoicing." The papers are read* quietly or even with complaints that the news is unsatisfying and not to the point. In a country situated as Germany is only one sort of news can be to the ' point, and that is news of real progress and considerable victories.