GERMAN FINANCE.

Lyttelton Times, Volume CXVII, Issue 17095, 18 February 1916, Page 6

GERMAN FINANCE.

Tnn announcement that the fourth German war loan of ten milliards of marks, or five hundred millions sterling. will shortly bo opened was to be expected, in view of the fact that the Government in December asked for a war credit for that amount. In introducing the vote Dr Helfforich stated that the cost of the war remained approximately at one hundred millions sterling a month, but he indicated that the expenses might be expected to increase. He might have added that he had also to consider the needs of three allies who were on the verge of bankruptcy, and that as Austria, Bulgaria and Turkey could not tight without money and’ munitions the drain on the financial resources of the chief partner in the Central combination was bound to grow. Germany will get the money for which she is asking, and although it may he more , difficult to gather the next instalment of the war cost she will get that also- Her internal finances can he adjusted, if need be, by the simple process of confiscation. It- is stated that'Austria js confiscating all the gold held privately, but in this respect she is simply copying a plan already adopted by Germany, although confiscation is scarcely the correct term for the process, at any rate at this stage. What happened in Germany was that the Government was anxious to get the whole stock of gold into its own hands, and’ all the banks were directed to require from their customers a written assurance that they had no gold locked away, and to refuse the ordinary banking facilities to those who declined to make the statement. The move was significant, partly as an indication of the intention to expand the paper currency, but still more as a proof that the Government was anxious regarding the foreign exchange and wanted to be i„ a position to act if occasion required. The question is always being asked how long Germany can continue to finance the war-, and a satisfactory reptf is difficult to obtain. The “Economist, which has gone into the subject carefully, holds the view that a country which Is self-sustaining could theoretically carry on war until nearly all the wealth and capital: resources of the people had been exhausted. It would then either have to clear the position by an act of confiscation or would fund the debt until the financial conditions recovered sufficiently to allow it to pay interest. In the end the elaborate German financial system would break down hopelessly, but the embarrassment would not become, acute until trading with foreign countries had to be resumed. Arguing 011 this basis, the “Economist" contends that the close blockade of Germany is actually to the disadvantage of the Allies, and it, quotes the course of foreign exchange to show that ’ the German troubles increase in proportion to the trade that the country is able, to carry on with neutral States. Whether this is a sound view or not, it lias certainly influenced British policy, and it may supply the key to the arrangements that Britain lias been making with neutral Powers, against which, by the way. a. vigorous agitation is now in progress in London. The journal’s ultimate conclusion is that while the position of the enemy’s finance is now precarious and must , shortly become hopeless, it does not warrant the belief that the German Government is yet encountering serious difficulty in carrying on the war. As a. sign of the times, however, it may bo mentioned that all in-

dustries showing a profit have been directed to retain 60 per cent of their net earnings in preparation, for the imposition of new taxation.