GERMAN REPARATIONS

Otago Daily Times, Issue 18465, 28 January 1922, Page 15

GERMAN REPARATIONS

m- *» HOW PAYMENT OOULD BE MADE. MANUFACTURERS’ VIEWS. (Feom Oub Own Correspondent.) LONDON. November 30. At the annual General meeting of the Federation of British Industries the vexed question of German repaxatidhs payment was discussed at considerable length. The matter has been under consideration _ by a sub-committee of the federation since last July. This body is in full agreement that Germany should pay to_ the extent of her capacity, but they point out that the indemnity will inevitably bo paid in goods or services. They therefore think that it' is of the highest importance that the character and amount of the flow, of goods to meet, tho payments should be adjusted to suit tho needs and favour the development of Allied industry, and that tho payment should be spread over a far longer period than is provided for in the present agreement. This is how tho present agreement could be revised to achieve these objects:—Arrangements might be made by which actual claims on industrial and other enterprises in Germany might be substituted for tho present payments between Governments. For example, all German industrial enterprises might bo required to create a special class of first preference shares as a first charge of the business. Tho holders of real property might, at tho same time, be required to create similar first charges up to a fixed proportion of the value of their propo’rty. Similar mortgages or first preference shares should be created and secured*on such undertakings as tho German railways and canals, shipping lines, etc., and possibly even on the German banks and large commercial undertakings. These securities should then bo handed oyer by the German Government to the Allied Governments, who could dispose of them, if they so desired, to individuals. It is pointed out that a scheme somewhat of this nature has actually been discussed in responsible quarters in Germany. ' ADVANTAGES OF THE SCHEME. Thp advantages, the committee says, are: — (1) It would provide to some extent an automatic adjustment of the annual burden to Germany’s capacity to pay. (2) By converting a debt which must be paid within a limited period into a permanent obligation it would remove the necessity of making annual provision for sinking Jund in respect of the debts so converted. (3) It should give the Allies a _ measure of control over German industries sufficient to enable them to exerejse considerable influence over the development and direction of German trade. (4) It would provide far better security for ultimate payment by converting an arrangement between Governments into a great number of smaller obligations between individuals, German, Allied, and neutral, so interwoven with the texture of the German financial anjl commercial systems that repudiation- would .bo impossible, and very much the same position would be reproduced as if Germany had been an undeveloped country which had been developed by tho aid of foreign capital and was continuing to pay interests on that capital. CONSTRUCTIONAL WORKS IN ALLIED COUNTRIES. Reference is then made to a particular method of making payments which the committee feels has not received the consideration it deserves. This is the execution of constructional works in Allied countries or in other countries under Allied direction, These works should naturally bo of such a character as would be calculated ■ to increase the productive capacity of the world. In order to avoid placing any work in Germany which could be performed in Allied countries they should be of such a nature that it would be impossible, or at least highly improbable, that they oould be carried out by ordinary means in tho immediate future. Subject to limitations and safeguards to prevent “peaceful penetration” by Germany it would appear that such works must be a more useful and less harmful method of employing German energy than in the indiscriminate export of goods which compete with Allied industry. INDUSTRY SQUEEZED DRY. Sir Peter Hylands, in discussing what he called the unfortunate financial policy of the Government, said: “The Government had squeezed industry financially dry, and by the operation of tho income tax based on"-the three years’ average profits many companies will be hard pressed to meet their commitments except by inroads into their capital Nothing could be more calculated to hamper demand and depress trade. 1 am satisfied that the outlook is serious, and in the absence of worlds wide trade revival, of which at the present time there appears but small prospect, the "Chancellor of the Exchequer would be well advised to retrace the unfortunate step os far as possible and to lighten the burden upon industry at all costs. Taxation must be paid out of production, and with the nation’s productions far below the normal level, the taxable capacity of the nation is more than proportionately reduced." Dealing with tho question of the payment of the German indemnity ho said no one in the federation desired to cancel tli© German reparations. The only other alternative waa to accept payment in goods, which, if uncontrolled, would cause limitless competition with goods manufactured in this country. They oould, on the other hand, seek to control the form of the goods accepted, and he suggested that German activities ought to bo diverted to the opening up of the resources of other countries where there were great commercial possibilities. As to tho suggestion that for the present obligations between Governments there should be substituted claims on German industries, ho said one object of this scheme would bo to reduce the annual payment that Germany would bo required to make, ahd to that extent reduce the difficulties we had to meet. In the event of uncontrolled exports the position would ho that tho more we reduced our prices the lower German prices would fall. He asked them not to damn the suggestions put forward by the committee too meticulously on the ground that they referred to work which our manufacturers oould undertake. If this alternative was not faced we should hove to meet relentless German competition. SUPER POWER STATIONS. In addition to the proposals made in the report for the construction of public works by Germany, Sir Peter added the., Channel tunnel and super power stations. If the tunnel could be built, he said, eo as to cost nothing, and if no interest had to bo paid on the > capital it would soon bo remunerative. So far as super-power stations were concerned, in existing circumstances, it was inconceivable that the _ ndbessary millions of money could bo obtained, yet the problem had been rendered urgent by tho high cost of coal and high transport charges, and be was prepared to say that it would be in tho interest© of this country for tho Government to lay down in every industrial centre of this country a super-power station, and mkke it an expense of Germany. Thera was no prospect in existing conditions of this scheme being otherwise carried out. If tho same policy were followed by France and other Allied countries he thought thgy could say that the orders placed in Germany would make a very large hole in the amount of indemnity which she woufcl have to pay. INADEQUATE TAXATION. Mr Godfrey Isaacs said German competition was duo to tho fact that the Germans wore working harder, and she also had a great advantage in exchange. Tho latter was the groat problem. They had no right to complain on tho first ground, but they had a right to complain on tho latter ground. One of the reasons of the collapse in exchange was that _ the German people were investing in foreign securities. Tho German people, although they lost tho war, were not paying for it. The Allies were paying for it, and only when every man in Germany was paying a proper share of taxation for tho payment of indemnities and reparations would tho exchange improve. Tho mark stood at the figure at which_ it was only because of tho determination of the Gorman Government that it should ho there. GERMAN OPINION. Referring to tho federation’s scheme, the Lokal Anzeiger observes that tho British manufacturers’ aim is to secure payment of reparations in tho form of raw' material coal, timber, minerals, potash, etc.—reserving for themselves tho exploitation of this material in industry, and tho whole profit to bo earned thereby. Other journals protest against tho idea of granting to the foreigner a mortgage on those values which constitute the sources of Germany’s economic strength. The Berliner Tageblatt, m a reasoned survey of tho British proposals, points out that tho grant of mortgages to foreign creditors would bo an endurable way for Germany to meet her obligations. The writer, however, protests that a share in tho control which industrialists seem to require is quite inadmisaable, chiefly on the ground that British influence in Gcr-

man production would be guided by Britain’s opposition to dumpal German exports. On the other hand, ho sees in the proposal to accept goods or raw material classified according ' to British needs welcome evidence that British commercial opinion is abandoning the demand for money repayments in favour of payments in hind. Most important of all is the proposal that German intelligence and labour should be employed in great undertakings in bast and Central Europe, including the reopening of Russia.