HUNGARY NSOLVENT

Nelson Evening Mail, 22 May 1917, Page 5

HUNGARY NSOLVENT

cannot' ?ay loan interest, "coming catastrophe." Some-.startling "revelations regarding the .hopeless condition of Hungary's finances have been made in a newspaper article, says the .Buda Pesth correspondent of the London Morning Post. The author is Dr. Ede Palyi, the prominent economist,-whose books on after-war 'economic conditions the Customs • Uhion-.with German have created the .'greatest interest in the Central Empires, -and wha is'one of the most ardent sup- - porters of close, economic relations with *. Germ'any.> *, J>r Palyi declares that "if the State ' were to seize the whole of the agricultural products of the country after the ,war -from the producer 90 million kroner (£3,600,000) would still be wanting to cover the interest the State has to pay on ,theW*r loans!" He states that the whole '-ot the agricultural produce of * Hungary-in 1914 realised less than • £J12Q,000,000, -wbile~ industrial production, including- minerals of all ta " realised only something like £7Q,600,000 a year -before 'the war. He argues that the war has cost up to the present date £1,000,000,000, and that a sum of equal amount will be necessary before, the war is over to cover tho expenses of the war. The interest the State will have < to pay on this money • will £1£0,000,000, whereas the*<whole national fcroductiorrddes not exceed £190,000,000. Dr Palyi proposes that speciaf Ireasury bills should be issued in opder to improve the- foreign exchange- after the war, for during the war it is impossible to improve it,.there not being any gods available to use as exchange for imported goods, "and because we cannot pay m gold for imports from neutral countries." He says that he entered into communication with a neutral Government, proposing that the Hungarian Government would take up a loan of ow million kroner (£20,000,000) in gold which would remain in the neutral country and be used as a deposit there for goods ordered for Hungary. The Vienna Common -Minister for Finance was quite willing to consider the proposal. It seems however, that M. Teleszky, tho Hungarian Minister for Finance, refused to discuss the question. The main point is that the AustroHungarian exchange stands at present at '6O per beloiv its nominal value, that the Monarchy is flooded with notes, • and that there is no gold reserve .to cover one-fifth of the notes issued. Tt is also clear that not even a miracle can save the Monarchy, especially Hun•rary from total-financial ruin and bankruptcy if the war is to last another year, or even should it end within a fortnight, for production does not cover the needs of the State alone. If the wage-earners were to pay 50 per cent income tax and the farmers 50 per cent of their produce in taxes, and, in addition, the industrial products /were requisitioned in their entirety, even then the needs of the State would not be covered. It is quite clear that there is no other alternative but that the State sholl decline to-pay interest on the war loan after the war for a period of from 10 to lb years - This is well known m financial circles, and thus it was that the magnates refused to take too great a, risk with *etra'rd to the recent"war.oan, which- did not even Teach £40,000,000. . The next war loan, late in the spring, wil lbe the prelude to the coming finan- ' cial' catastrophe. - '