WAR SUPPLIES

Otago Daily Times, Issue 22712, 26 October 1935, Page 23

WAR SUPPLIES

ITALY’S GREAT GAMBLE MEETING THE COST (From Our Own Correspondent) (By Air Mail) LONDON, October 5. For the first time since August, 1914, the newspaper bills appeared this week with the single word “ War.” Outwardly, no one,was disturbed. The life of London goes on exactly as before, except that conversation invariably turns to war. That people are anxious—terribly anxious—goes without saying. Signor Mussolini has defied the world, and has threatened so much that the nations are really nervous about what the League of Nations will do. It is learned from high quarters, howeVer, that there is no chance of Britain taking action unless every other member of the League pledges itself to do likewise. Until hostilities had actually broken out no members of the League could talk openly of the form sanctions —if any — should take. Now one may conjecture that the discussion on sanctions will not be hurried. The object of the League, however, will be to stop the war as soon as possible. No one in authority has openly said so, but sanctions may never be necessary, for Italy’s financial credit abroad is so weak that private firms have found it difficult to get their money, and they are less likely in the future to sell to Italy unless, and until, payment is made in realisable form. Financially, Italy claims her position is strong enough to enable her to finance the campaign in East Africa for several months by at first draining her already depleted reserves, and later by inflationary methods. This is probably true, but only so long as access to supplies is still possible. Out of 25 materials essential in maintaining industrial activity, Italy can, from her own resources, supply less than half a dozen. Out of her own resources Italy could assure supplies of material to her expeditionary force for only a few weeks. The Abyssinian adventure has probably been a far greater gamble than is generally recognised, and it is more than possible that it will fail without any crippling efforts from the rest of the world.

Should the League agree unanimously to sanctions, there are still Germany and America to reckon with. The next step would be to approach these nations and ask them what their intentions were. If either or both these nations decided to supply Italy with her needs, sanctions would again be weakened in their effect. It is estimated, however, that 70 per cent, of Italy’s imports comes from nations which make up the League, and nearly 80 per cent, of her exports go to League member States. MEETING THE WAR COST. Signor Mussolini can obtain large sums of money from within. He is, in fact, procuring nine milliards (£150,000,000) in the near future by a novel system —exploiting the fall in Government bonds on the Italian Bourses. Most of the Government bonds are held, in any case, by the banks or by organisations under State direction, so that most of the holders are not in a position to make a free choice. But this process is only a disguised form of inflation (says an eminent authority in the Financial Times), and if carried on too long, it would bleed the nation white. It does not help the Duce to buy from abroad the petrol, coal and munitions which he needs for- his African expedition. These, and the food • supplies which will be needed in enormous quantities, must be bought with gold, foreign exchange, or goods. The Government is requisitioning not only foreign moneys but the foreign securities held by individuals—French Rentes or British Government stocks, industrial shares, etc., which are withdrawn into the Italian war chest. The estimated volume of these acquisitions varies from three or four to eight milliard lire (£133,330,000). These resources are sufficient for immediate needs. If they are exhausted there will he only one other means of payment possible for Italy —to export at any price. She will be forced to develop by any means in her power sales of rayon and other leading export commodities in order to obtain munitions. The cost of production will be of no consequence. Fresh disturbances in world prices will therefore inevitably result. Economic war will go hand in hand with political war. So true it is that there are no precise limits to war. On whatever pretext it is started, it tends to envelop everything.