Manawatu Evening Standard. FRIDAY, JUNE 18, 1920. THE AFTERMATH OF WAR.

Manawatu Standard, Volume XLIII, Issue 1843, 18 June 1920, Page 4

Manawatu Evening Standard. FRIDAY, JUNE 18, 1920. THE AFTERMATH OF WAR.

Reviewing the financial position and outlook in his address to tho shareholders of the Bank of New Zealand today, the chairman of directors, Mr Harold Beauchamp, gave, inter alia, some interesting facts and figures concerning the War debts of tho Allied and Associated Governments of Europe, and the position they occupy in regard to the United States of America. The latter is the only''country which does not appear as a borrower. Prior to America's active participation, in. the war, the British Government was largely financing its Allies, to whom it had loaned altogether- a sum of £1,740,000,000 £568,000,000 to Russia, £508,000,000 to France, £407,000,000 to Italy, £98,000,000 to Belgium, £20,000,000 tc Serbia and Jugo-Slavia, and £79,000,000' to other of the Allies. The United States Government made loans to the several Allies to the extent of £l,890,000,000—that is, £150,000,000 more than the loans made by Great Britain. The greatest advance made was to Britain, which was assisted to the extent of £842,000,000, while France received £550,000,000, Italy £325,000,000, Belgium £80,000,000, and Russia £38,000,000. Serbia and Jugo-Slavia received £20,000,000 and the other Allies £35,000,000. Franco advanced £160,000,000 to Russia, £>/0,U00,000 to Belgium, £35,000,000 to Italy, £20,000,000 to Serbia and Jugo-Slavia, and £50,000,000 to the other Allies. Britain borrowed alone from Amerigo; France made calls li.po'i America and Britain; Italy, Russia, • Belgium, Serbia and Jugo-Slavia, and the other Allies borrowed indiscriminately from America. Britain and France . Britain has lent more than twice as much as shc-.basr borrowed, and could she draw upon the debtor nations for even ball tin advances slip has mad'., her indebtedness to tho United States-could be eas ily 'wiped out. As it is she has to depend upon her own resources, but, a* indicated by tho British Chancellor oi the Exchequer (Mr Austen Chamberlain) last week, she is making a wonderful recovery and will l>e in a position to meet, all her obligations for 1920. including her half of the Anglo French loan advanced by America, am •till have a fair margin to work upor, Che end or the year. In the facts thus narrated we have the reason whj •the rates of exchange aro so nvucl against us in America. As Mr Beauchamp points out, "the United Stateis in the favourable, position of drawing tribute from all her Allies in tin late war," for, "while Britain waf pouring out for the Allied cause hei blood and treasure without stint, tin United States of America, already the richest country in the world, was stand ing aloof, adding enormously to her own wealth by supplying food and munition; to the combatants." If the credit ql Europe is to be re-established, and busi ness there is to be placed on satisfactory lines, Mr Beauchamp demonstrates that she "must be supplied with raw materials, and in some cases, machinery and to do this involves supplying them with large credit." But "the only country in a position to allord this credit to the necessary extent is the United States, she having suffered less bv the war than any other country, fho unfortunate part of ihv business r that, latterlV, "a feeling of indifference seems to have developed" in America which pointedly suggests that there is very little likelihood of real help being found in that direction. So far as the United States Government is concerned, Europe seems destined to be left to work out its own salvation, although, as Mr Henry P. Davidson, chairman of the League'of Red Cross Societies, recently told Congress, unless assistance is forthcoming, Central uinl EnStorn Mr-

ope are faced with'"complete economy political, moral and physical collapse. America's indifference to Enrope s need is one of the greatest tragedies of the i war. ; THE PAPER CURRENCIES. j Of necessity, the war had to bo financed largely upon paper. With all , its wealth, even America could not have : found the gold supplies necessary for its maintenance. While, as a result, "the world's paper currency has increased 600 per cent," "the gold reservo has only increased by 40 per cent." The bank deposits have increased, but "the national debts have grown from £8,000,000,€00 in 1914 to £52,000,000,000 in 1919. In the Allied Group," Mr Beauchamp goes on tosay, "notes in circulation in July, 1914, amounted to £982,440,000, and in December, 1919, to £5,918,200,000, while gold reserves were £752,000,000 and £1,014,200,000 at the respective dates. The note issue of the Central Powers in July. 1914, was £239,400,000, and in December. 1919, £3,754,200,000, and gold holdings respectively £119 ; 000,0OU and £65,400,000. The note issue ot neutrals in July, 1914, aggregated £233,200,000 and in December, 1919, £484,200,000, while gold reserves were respectively £103,200,000 and £2,900,200,000." Contrasting the position ot Britain to-day with the somewhat similar position it occupied after the Napoleonic wars, Mr Beauchamp shows that the national debt, which at the latter period stood at £45 per head, is now £l7B, so that the burden laid upon the country is nearly four times greater than i*t was after Napoleons defeat, but as the population is four times • greater than it was theu, "facing taxation of, say, £1,000,000,000 annually, Britain is merely back again to the Napoleonic standard of taxation. Alter the Napoleonic wars "English prices rose 75 per cent and they took eight years to become normal again. During the American civil war prices rose IUU per cent and took twelve years to become normal." The late war has tremendouslv inflated values, and Mr Beauchamp is of the opinion that it is impossible to forecast how long it will take on this occasion to reach normality," although "it seems obvious^that ' the process of deflation has set in. He goes on to point out that "in America, Japan, and, to a lesser extent, ,in Great ' Britain pjices of commodities have already slumped,. the speculative fever has-rbeen curbed bv the banks restricting credit, and financial crises have resulted." The consequential changes are likolv to have far-reaching eflects. In the 'matter of regulating prices, while Government intervention and control may, as a temporary measure, prove helpful, "it is fairly certain that no permanent relief can be secured m that way, the generally accepted view » among- people qualified to judge being ' that the less Government interference with trade and 'industry the better. , The one cure for the evils which afflict the world as a result of the war, is found in the gospel of work, supplemented bv a more careful expenditure » of both public and private means. Extravagant modes of living and reckless expenditure must be checked before we can look for a return to normal condi- • tions Mr Beauchamp puts the position, well in defining the following. aB tho primary remedies for the existing solution :—(1) The exercise of the strictest economy in public and private expenditure; (2) honest effort to increase production to the utmost possiblo extent; (3) encouragement and development of every class of industry and uncompromising discouragement ot all speculation ; (4) deflation of the world s currencies, which will to a large extent result from the application of the three remedies first mentioned.