THE New Zealand Herald AND DAILY SOUTHERN CROSS. FRIDAY. JANUARY 28, 1921. GERMANY REVIVING.

New Zealand Herald, Volume LVIII, Issue 17691, 28 January 1921, Page 4

THE New Zealand Herald AND DAILY SOUTHERN CROSS. FRIDAY. JANUARY 28, 1921. GERMANY REVIVING.

In their attitude to reparation, France and Belgium stand very muck where the British Government stood between the signing of the armistice and the general election. "Search Germany's pockets," Mr. Lloyd George then said, and French newspapers, unkindly forgetting his passion for rhetoric, now throw the words back at him and ask him to assist in obtaining the uttermost farthing. Their critical attitude embodies a suspicion, very prevalent is France, that on the reparation question the British Government has weakened considerably. Unless Mr. Lloyd George strangely misrepresents the real opinion of his countrymen, time will allay that suspicion, but it must be confessed that some of. his policies have been calculated to make France nervous. The British proposal to supersede the Reparations Commission, for example, was unfortunate, because it meant placing on the shoulders of politicians calculations and determinations best made by financiers and economists. It has now been abandoned, and Britain has accepted the French contention that the Reparations Commission should carry out the task, entrusted to it by the Treaty of Versailles, of determining what Germany can pay and how and when she can pay. This point having been disposed of, it will be easier for the French people to accept the assurance that Britain is as anxious as they are to obtain full reparation from Germany, and that the only possible point of controversy is as to the best means of realising that aim, and the wisdom of the particular steps. ! Britain will support every reasonable proposal France may make, and when the French Minister for Finance demands that the German railways and post office should be made self-supporting, and that German taxation should be brought up to the French level, he is on common ground. When he suggests that the Allies should control the German Budget he is in the region of controversy, and cannot fairly expect British assent until less exacting and dangerous measures have been tried and failed.

Since every question of reparation is so intimately associated with the ability of Germany to pay, it is pertinent to survey briefly the economic condition of the country aa disclosed by the national balance-sheet and by the comments of British correspondents in Berlin. If it is borne in mind that the war left Germany a bankrupt counfay and that her solvency can only be re-established slowly, the indications •will be found not wholly discouraging. To take the worst features first: The funded debt, winch was about £250,000,000 lin July, 1914, was £4,500,000,000 on | November 1, 1920, and the floating ! debtj which was £20,000,000 in 1914, was £7,800,000,000 on November 1, 1920, while the total debt is now approaching £16,500,000,000. The Budget still shows a deficit of £2,400,000,000, which means that Germany's debt is increasing all the time. This amply justifies the French demand for more heroic taxation, because it is obvious that until the Budget is balanced and Germany ceases inflating her currency there can be no real improvement in her position; The finances of Germany are so hopelessly involved that if the Allies were to consider only her present balancesheet they would v have no option but to pronounce her bankrupt. They obviously never intended to do this, and it will be the duty of the Reparations Commission to make full allowance for her latent wealth and her recuperative capacity. While there is much to be said against the French inclination to leave the reparation question open indefinitely, it is significant that the most responsible financial opinion in Germany is against an immediate fixation of the indemnity. German financiers fear that the total would be so large as to shatter whatever element of confidence remains in their country. They are satisfied with being able in the meantime to pay interest on the national debt, even if the debt is increasing, and maintain the coal deliveries to the Allies. It would appear that the Allies cannot do much more just now than insist upon the imposition of heavier taxation and upon the abatement of administrative extravagance which is still rampant throughout Germany.

The most hopeful signs in Germany to-day are intangible. The people are waking out of the stupor of defeat, and habits of industry are reasserting themselves. Crime is said to be decreasing. There is still a considerable nervous tension, the workers fearing a monarchical ooup and the middle classes fearing the Bolshevik agitators, who are more active in Germany than in any

other country of Europe. Industry, too, is embarrassed by a long-drawn controversy over socialisation, particularly of coalmining, but the Socialist parties openly admit that " full socialisation" at the present time would ruin Germany, and nationalisation makes no progress; indeed, there is a strong movement to denationalise the railways. The conditions of living in the German cities are not easy, prices havingrisen to ten or fourteen times and wages to only six or seven times the former figures. The agricultural labourer is much better off, farming being still highly profitable. The importance of this will be realised when it is remembered that agriculture is the largest German industry. The factories are slowly resuming operations. Manufacturers are looking to foreign markets rather than to their own, knowing that the economic conditions of Germany will severely limit consumption. There is still a shortage of raw materials, but it may fairly be said that German industry is reviving and that the nation is settling down to work. That is as much as could fairly be expected within two years, and it should encourage the Reparations Commission to study German resources very exhaustively before coming to a final decision.