DAY OF RECKONING.

Sun (Christchurch), Volume III, Issue 873, 27 November 1916, Page 6

DAY OF RECKONING.

WHAT AWAITS GERMANY? THE INDEMNITY AND THE ASSETS According to Herr von Gwinner, of the Deutsche Bank, the total of German indebtedness is now, owing ing to the expenses of the war, about one quarter of the whole wealth of Germany. Even in that gloomy estimate, he is probably putting as good a face on the matter as his banker's conscience allows, comments Francis Gribble in the "Chronicle"; and whether he is doing so or not, the final figures cannot fail to be less favourable than his computation, for these reasons:—• t. The war is not yet over; the costs are continuing to mount up, and nothing is coming in. 2. The valuation of the assets was made before the war, and a good deal will need to be written off for depreciation. 3. Herr von Gwinner's figures ignore the bill which will infallibly be presented for the indemnification of the Allies. How long that bill will be no one can at present, say; and it is not the purpose of the present article to discuss the point. The claims, in any case, will exceed the liquid assets immediately available, so that we may very well content ourselves, for the moment, with the question:—Of what will those assets consist? What is the machinery by which the German Government has realised such assets as it has already put into the war? Can we hope presently to realise an appreciable proportion of the remaining assets for indemnity purposes by the same or similar means? Germany's Assets. The German method of "mobilising the assets/' as they say, has been as follows: A Government bank, created ad hoc, advances money on mortgage to any one who has any sort of security to deposit. The borrower may deposit slock, or share certificates, or the title deeds of his landed estate or his house; or he may pledge the plant in his factory, or give a bill of sale on his furniture. The loan takes the form of paper money printed ad hoc: and this paper is subscribed to the War Loan. The Slate, in this way, is becoming at once the creditor and the debtor of the people. On the one hand it owes them their interest, which it pays them by printing paper and declaring it to be legal tender; on the other hand, it is the universal mortgagee, with a first charge on their possessions. Having established these facts, we begin to see what Germany may be able to do for us on the day of reckoning. It will be useless for us to require Germanv to pay more than an infinitesimal proportion of the indemnity in gold as a single cash transaction, for the total amount of gold in the country (including the £12.),(100,0(1(1 in the Reichsbank) can hardly be more than £200,000,000. It will be equally useless for us to take her paper and trv to negotiate it; for an attempt to do that on the scale required would soon bring the mark to a discount of 100 per cent. It mav be possible to cover a part of the ground by insisting that goods stolen or destroyed in the occupied provinces shall be replaced by similar goods taken from German stores, factories, or private houses; but that arrangement will not carry us very far. For the rest, Germany will have to assume a liability, and put up security for the interest and the gradual amortisation of the debt. That security must take the form of a transfer of the mortgages. The Allies, in a proportion to be agreed among themselves, must become, instead of the German State, the Universal Mortgagees, with a lien on all German property, public and private, real and personal. In so far as the property mortgaged consists of scrip—mining shares, Canadian Pacific shares, and the like —it e;UI, of course, be realised, or, at anv rate, reckoned as a cash payment at the market price. The case of land, houses, railways, canals, industries, etc., is obviously different. Theoretically, these might be put up for sale; but as there would, in practice, be no purchasers, other methods of exploiting them will he preferable. The proper plan will be for the Allies to become mortgagees in possession. In the case of the land and houses, they can either draw the rents or institute some system '>(' purchase, enabling the occupants i buy back the holdings by instalments. In the case of the industries, thev can put in receivers to carry on the business for their benefit, just as debenture holders do in cases of insolvent joint stock companies.

The Real Sufferers. 11 The first charge on the businesses .i will naturally, and, indeed, neces- , | sarilv. be the wages of the employees. IjThev—the working classes of Ger- ; many—will sutler no detriment ; froni the change. Whether they work i for foreign or for German capitalists, | their position will be the same. The I real sufferers will be the present ! shareholders in the industries—the I men, thai is to say. who planned this j war of robbery, and did their best to eliminate their industrial rivals in j France and Belgium. For them there twill be no dividends, no interest on 'debentures, no anything as long as janv portion of the indemnity reI mains outstanding. All the unearned | increment which they at present derive from these, various businesses will go to the mortgagees in possession until such time as the labour j of the German people has liquidated the debt which their Government has 'incurred towards the victims of its ! wanton aggression. | The justice of this proposal is evident. Democratic opinion certainly | will not endure the idea that there i should ever again be a well-to-do , German, bloated with unearned increment, as long as a single citizen of any one of the countries attacked by Germany is suffering, as the result of German crimes, any loss which German money could make

[good. Democratic opinion will, on the contrary, insist that, until sueh compensation has been paid, no Gerj man, from the Hohenzollerns to the ! humblest of their subjects, shall be j allowed to own any property, or to I handle any money that he does not | earn, from day to day, by the sweat lof his brow. So much being axiomatic, the plan here suggested for the realisation of the assets which I we shall be able to take over, by the (continued employment of the labour of the people, has two further ad- : vantages to recommend it. In the first place, it is only an | extension and adaptation of a plan | which the Germans "themselves proI posed for the extortion of an inIdemnity from France. Baron von IZedlitz-Neukirch has put his name to j a project of the kind, demanding j railway concessions, mining concesjsions, and the expropriation, at the cost of the French Government, of all property owners in the districts Ho be annexed; and there is no : cason why we should not apply to ! ..he gander the sauce intended for '•he goose. In the second place, the adoption |of the plan will solve the dillicult i problem of the German boycott—i difficult because there are some Ger- : man products, like potassium salts, [synthetic indigo, and aniline dyes, | which we really want —and will, at [the same time, make German dumpling, unfair German competition, and [the like, impossible. Instead of [boycotting useful commodities, we shall obtain the monopoly of them. Instead of allowing Solingen to com- | pete with Sheffield, Essen with i Liege, Grefeld with Lyons, etc., we ; shall bring all the competing injdustries under a centralised administration, and devote the profits of 'the German branches of those industries to the gradual reparation of I the damage which Germany has done : in this war. | In that way we may hope to "mobilise the assets" for the purposes of peace as effectively as Germany •mobilised them for the purposes of [war. It will, no doubt, be a very long business; but, in the end, as j the Germans are industrious workers, we may hope that the labour of I the people will pay even the large 1 indemnity which justice requires us i to impose upon them. In the meantime, however, we [must be mortgagees in possession; [and we must remain in possession I until we are bought out on our own | terms.