PROSPECTS FOR STABLE MONEY

Evening Star, Issue 18258, 24 April 1923, Page 10

PROSPECTS FOR STABLE MONEY

PRESENT INTERNATIONAL POLICY FATAL. ADDRESS BY ARCHDEACON WOODTHORPE. Addresing a W.E.A. tutorial class on Thursday night, Archdeacon Woodthorpe devoted seme time to a study of the prospects for stable money in Europe. Inflation in Europe at tho present time (he said) is a reflection of budgetary difficulties. The bankers are not responsible for this; tho money is printed to meet Government obligati ms, which under present conditions cannot be met in any other way. If Government, revenues from taxation or from loans are not sufficient to meet current obligations, G.ere is no other alternative to tho .ssue of piper money. The only remedy for this situation is to balance budgets. The issue of paper money in Central Europe is appalling. The outstanding German note circulation has been as follows: —1.9.13, 2.000 million marks; end of 1918, 22,000 million marks; end of 1919, 35,000 million marks: end of 1920, 67.000 million marks; end of 1921, 114,000 million marks. In March, 1922, tho increase was 12.000 million marks; in July, 20,000 million marks; in August, 48,000 million marks; in September, 78,000 million marks; in October, 153,000 million marks. The rate of increase at tho present time is in excess of 60,000 million marks per week, which means 240,000 million marks per month, or 3,000,000 million marks per year. Great Britain has declared in no uncertain terms her intention of paying principal and interest in full. She has already balanced her budget. Good management and much sacrifice arc necessary in the future. Sir R. M’Kenna expressed the opinion that England, in spite of her sales of securities during the war, still owned sufficient foreign securities to cover Her debt to the United Stales two or three times over. The proverb is true, at least in spirit, that “England pays her debts,” It is this very spirit which for ICO years has made the pound sterling a standard of value wherever business is transacted. England and the United States have taken the lead, each in its own way, in meeting their financial problems. The future is dear as far as they are concerned. Tho position ot Franco and Germany is quite different. Both have unbalanced budgets; but, while Germany meets tho deficiency through tho issue of Reichshank notes, France meets it by the sale of bonds to her citizens. The French financial and fiscal situation is a complicated one, but tho annual net increase of indebtedness of the French Government is as follows :—1921, 27 billion francs; 1922, 26 billion francs; and 1923, 28 billion francs. On June 30, 1922, the French domestic debt stood at 282 billions. Within tho next three 60 billions more is to bo expended on the devastated areas. In 1925 France will have a total domestic debt of 365 billions. At 5 per cent. —the yield on French bonds has recently been as high as per cent. —the interest charges on this total would be over 18 billion francs—almost equal to the total taxation revenue of 1921 and 1922. A similar estimate has been made by Edmond Thery, editor of ‘ L’Econornisto European.’ ’ The expenditures for 1925 are estimated at 33,8 billion francs. It is generally understood that until the budget is balanced the prospect for financial and price stability in France is not good. Examine now tho prospect in Germany. If tho German budget, can be balanced within the next few years it will depend upon : (1) Tho willingness of the Alilcs to grant Germany a complete moratorium on reparation payments, both in cash and in kind, for such a period as will permit tho budget to bo balanced and trade to bo restored; (2) Germany must obtain the credits with which to purchase the raw materials and foodstuffs from abroad, so as to restore German productive power, and also upon her ability to expand her exports relatively to her imports ; (3) she must eliminate the subsidies which have been so heavy a drain on the budget; (4) a weak and unstable Government must be strengthened to levy and collect a large increase in taxes; and (5) it will depend upon the maintenance of social order and upon the return to the oldtime habits of thrift, self-reliance, and commercial morality. The attempt in Europe to stabilise prices is impossible under the present international policy.