GERMAN FINANCE

Poverty Bay Herald, Volume LXIII, Issue 19024, 26 May 1936, Page 3

GERMAN FINANCE

DEVALUING THE MARK DR. S(J IT AC,TIT'S VIEWS LONDON, April 25. The views of Dr. Sohacht, Herr Hitler’s economic, adviser on currency problems, are summarised iu a, booklet- just issued in Berlin by Dr. Rudolph Eicke, a well-known writer on economics. "It would be more than reckless,” writes Dr. Schacht’s spokesman, ‘‘for Germany, a country lacking in raw materials and with reduced reserves of gold ami foreign exchange, to enter into compelition. by devaluing her currency, with nations which have at their disposal infinitely greater economic and currency reserves. Lacking, as she does, sufficient, funds in her central bank, Germany. if she devalued the mark, would still he unable to dispense with a strict foreign exchange control. Yet that is just what devaluation is supposed to render unnecessary. We cannot count for certain. on an influx of capital such as followed devaluation in some other countries.

"Any considerable rise in exports leading to an increase in foreign exchange reserve is not to be expected with any assurance as a result, of devaluation. Success would only be possible, in the case of German exports destined for free markets. Our chief customers are, however, iu Europe, and the restrictions imposed on our exports, by clearings. quotas, and other measures adopted abroad would hardly he removed by devaluation. The. favourable effect- on export prices which is usually connected with devaluation cannot come about where impassable harriers have been erected by means of import bans, high tariff walls, strict foreign exchange control, boycott measures and the like. It is also, difficult to judge whether devaluation might not lead to reprisals and the closing, of free markets. There is, therefore,' not the slightest guarantee that German exports could bo increased to any considerable extent as ii result ol devaluation. ' ‘‘There would also be serious internal results of an economic and political nature. A devaluation inevitably leads to a rise in Hie price of imported articles. German importers would have to spend •more reichsmarks to pay for imports worth the same amount in foreign exchange. A devaluation bv o 0 per cent would at tine blow double, the import costs in reichsmarks. Thus tin? whole internal structure of prices would be disordered. German foreign debts. 80 per cent of which are payable in foreign exchange, would increase from their present level of about £-1.000.000.C00 to more than £1.650.000.000. The burden of interest and amortisation services for foreign debts, which now amounts yearly to C83.CC0.000. would rise by some C67.0C0.C00 Germany’s import difficulties ami the pressure of foreign debts would thus be intensified to an intolerable extent. , , . , “Since (be German people hail to endure to the biller end the horrors of an intlation. it lias become extremely charv of ciirvenev experiments. A stable currency is the first and most necessary condition for the financing of the great work-producing programme which has given new life to German industry and employment and bread to many of out compatriots.” , ■■ • -