GERMANY'S RECOVERY

Evening Post, Volume CXIII, Issue 55, 7 March 1927, Page 3

GERMANY'S RECOVERY

AN ECONOMIC MIRACLE

COMPETITION WITH GREAT

BRITAIN

"Germany's recovery in the past two and a half years is a miracle beyond explaining, but it is none the less true to say that the progress made is in excess of that foreseen by many even of the more optimistic observers," states a review of the Midland Bank, of which Mr. Reginald M' Kenna is chairman, reports the , "Daily Telegraph." There is a concluding assertion."that "the recovery so made by Germany i s sufficiently remarkable to rule out any dogmatic statements as to future possibilities. The outlook, however, is not too pleasing, at least on the surface, to the British manufacturer, artisan, and exporter, for Britain's products 'compete to a large extent directly with Germany's. Undoubtedly a period of severe competition is in store for British industry, and there is no more appropriate iiope for the New Year than that the purchasing power cf the world shall be so far increased that markets are available of sufficient, absorbent power to keep both British and German industry- at work to their full capacity." ■' ' In discussing this striking condition of. affairs the review states that "the field' of marvels is not confined to the physical world; wonders occur in economies as impressive as any that come within the ambit of the more, popular sciences.". During 1925 this country exported £-773 million's of British products. Germany £440 millions of German goods. Of Britain's exports of, British products £616 millions consisted of manufactured goods. Germany, apart* altogether from reparation payments, sent out £331 millions of manufacured goods. Germany paid £50,000,000 to reparation creditors in the last annuity year. When the maximum is reached that sum will be raised to £120,000,000. "The figures to say the least,'' adds the review,'' are provocative of earnest thought and perhaps not a little anxiety." ■.: Pointing out that in the second reparation year Germany succeeded in achieving a surplus'on current international account, the review asks, -"Why did German public authorities and business concerns borrow , abroad at long term a net cash amount of about 1750 million marks during the same period?" Several explanations are here put forward by the review, which spates: "All these suggestions help to solve the problem of the continuance of German borrowing abroad, though the balance cannot be apportioned as between the different items', while there may quite well be other auxiliary explanations. ' Assuming, however, that the estimates are correct and that Germany's currency payments in tlic second annuity year were balanced by current receipts, then it follows that" in the year to 31st August a place was found for the payment, entirely without return,, of nearly 1100 million marks to foreign countries on reparation acfiount. .Of this total 416 millions were transferred in foreign currencies, while 656^ millions took the form of payments in kind. The distinction, however, is more formal than real, for whatever shape the payment takes it means that Germany has to supply a largo quantity of goods or services to foreign countries without any counter-balanc-ing receipts. Yet in order to do so imports, particularly of raw materials, must be maintained at a high level, so that exports of "goods and services must be swelled still further.. Conse : qu^ntly, the bare figuro o£ reparation transfers and doliveries is not the full measure of the difference.between Germany's actual current incomings and outgoings and the figures as thsy would be if there' were no reparation debt to be liquidated.

'' Moreover, the 1100 million marks paid in the second reparation year, apparently out of current receipts, is not the maximum figure to be found if tho programme as now laid down is to be fulfilled. During the present year a total sum of 1500 millions is to be paid, in the fourth year 1750 fmillions, and in the fifth 2500 millions. Of these sums by far the greater part has to bo remitted abroad, iii cash or in kind, since the payments strictly, within Germany for armies of occupation'anil similar items amount at present to about 100 million marks. It follows that the German balance of payments has by no means yet reached permanent shape, and that, unless net foreign borrowing is consistently resorted to, much bigger surplus of exports over imports of goods and services.?must be attained in order to make room for the gratuitous transfers on account of reparation. Tho surplus must, indeed, be'more than doubled in the course of two to throe years until £120 millions per annum is available for handing over to reparation creditors. Otherwise the payments, must bo effected out of borrowings, thus merely' removing the onus of creditorship from Governments to private persons."