GERMANY AND REPARATIONS.

Otago Daily Times, Issue 21244, 27 January 1931, Page 8

GERMANY AND REPARATIONS.

It is to be apprehended that there is a solid substratum of fact upon which rests the conclusion that the Young Plan of Reparations is pressing very hardly upon Germany and that the country’s large excess of exports over imports for the past year gives an erroneous impression of her economic outlook. A country which exports commodities to an extent that leaves a balance of £90,000,000 over the value of the imports would seem, on the face of things, to be enjoying a very fair measure of commercial prosperity. But the figures may be misleading. The German press has been laying emphasis upon the consideration that many of the exported commodities, such as coal and iron, have been uneconomic, in the sense that they have been disposed of at prices that are said to be below the cost of production. Moreover, a correspondent of the Economist points out that German exports consist largely of finished goods made out of imported raw materials, the cost of which forms a considerable proportion of the value of the finished products. When all this is taken into account, it is not very difficult to appreciate the argument that the extent of the balance of exports over imports for the past year does not necessarily justify the assump-' tion that Germany is fully capable of meeting her reparation payments. It is clear that she must export in excess of her imports in order to meet her reparation obligations, and since it has been calculated that the surplus of exports oyer imports must, exclusive of gold movement, be 2.4 milliards of marks in order to balance the repara-tions-account it would seem, indeed, that the excess of exports that was reported for the past year does not leave Germany much, so to speak, for herself. The country is actually in a rather desperate plight. The Government is facing a heavy deficit which it is meeting with a bold px-ogramme "of retrenchment and of reduction not only of official salaries but of salaries, wages, and prices right through the economic structure;. the local authorities are seriously embarrassed; there is a business depression •of i grave severity; and it was reported by cable last week that the unemployed number four and a-half millions —more than twice the number in Great Britain. The eventual effect of the retrenchment that has been, and is being, practised must be to reduce the purchasing power and the standard of living, and in this respect, as the correspondent in the Economist observes, the reparalion problem leaves the purely economic sphere- and becomes lai’gely political and psychological. That was, it is suggested, perhaps the principal significance of the elections last year and of the support that was given to the Hitler party. “As long as the workers believed that reparation could be paid out of the rich man’s pocket, they did not trouble about the question. Now that their own pockets are being touched, they' naturally lend a ready ear to extremist agitators. The difficulty of reducing the standard of living, or even of merely reducing money wages, in a modern democratic State is obviously very much enhanced when agitators are able to point to ‘ tribute ’ to the foreigner as one of the primary causes,” In circumstances such as have been described, it is impossible to regal’d as unworthy of notice, and consequently to dismiss, the view that the Young Plan may not be disturbed if the sacrifices that are demanded of the German people prove sufficient to solve the problems that are involved, but that’if further sacrifices are required an application for a revision of the plan inay be looked for at an early date.