GERMAN INDEMNITY.

Star (Christchurch), Issue 16461, 24 June 1921, Page 5

GERMAN INDEMNITY.

PROBABLE EFFECT ON EMPIRE. PROFESSOR CONDLIFF’S VIEWS.

The first of a series of popular lectures under the auspices of the Christchurch Returned Soldiers’ Association was given at tli© Jellicoo TJall last night by Professor J. B. Condliffe, who spoke on the subject of “ The Economics of the German Indemnity.” Mr JC. Orchard, chairman of the Debating Committee of the association, presided, and there was a fair attendance of business men, returned soldiers and others. . •

During the course of hia opening remarks Professor Condliiie said he did not intend to bo drawn into a discussion regarding the justice of exacting an indemnity from Germany. Neither would he deal with the amount of indemnity which should be collected, because he had no definite information as to Germany’s ability to pay. All he would try to do would be to consider — 1 granting that an indemnity should bo paid and granting that the amount was fixed —how the* indemnity should he paid and the effect of the payment on Germany and the Allied countries.

" THE great ILLUSION.” On th© latter point there was a good deal of loose economic thought prevalent, which, he believed, could be traced back to Norman Angell’s book. “The Great Illusion,” or, as ho had heard it facetiously called “ The Great Delusion.” Most people would agree with Norman Angell’a ifiain contention, that it did not pay any nation to embark on a war. However, in writing his book ho had gone too far and had adduced many arguments that would not hold water. This* was particularly true of his argument regarding the payment of an indemnity. Norman Angel 1 had tried to x>rove that an indemnity did more harm to the country that received it than to the country that paid it. He based his contention mainly on wnat happened after the Franco-Prussian war in 1870. France got to work to pay tha indemnity imposed on her, and this set her on her feet economically. Ihe reebipfc of tlie indemnity caused a wild* orgy of speculation in Germany, iollowed by unemployment and distress. After 1870 Germany, suffered a financial crisis, hut so did France after 5 time, and also Great Britain and America, who had taken no part in the war. This world-wide erkus was duo to th© war and not to the indemnity. As all knew' too well the late war was followed by a similar crisis, and we had not yet received the indemnity. Once the justice of exacting reparation was admitted there was no reason why we should not collect an indemnity after having suffered the trouble due to the war. Alter 1870 tlie people of Franco worked hard to pay the indemnity, and he saw no economic reasons why the German people should not work hard now. It had also to be remembered that Germany used the indemnity of 1870 to build railways, change her currency system from silver to gold, and establish a war chest. After the period of depression was over Germany still had these assets, but when the boom times in 1 'ranee ended she had little to show fo? ‘t. Therefore, he did not think 111* ndemnity would injure us more tha . Germany.

SOME DIFFICULTIES

Britain had borrowed a great deal ot JTi.->ney during the war. and the British taxpayer would be heavily burdened to pay this debt off. There whs no economic reason why the German taxpayer should not pay this debt for ns. It v.as just a question of transferring the liability to pay from the British to the Germans. If the burden was transferred to Germany it would benefit the British taxpayer, who would have more money to invest in business and so on. However, as producers ot goods the British would be injured, for the Empire would bo flooded with cheap goods from Germany, and many British workers would be throw.li out of employment./ Of course from the consumer’s point of view it would be an advantage to have these cheap goods provided he had money to paytor them. The real difficulty regarding the indemnity was the conflict between the different groups in a country. f There was a tendency to . look on c, country as a unit with a common interest. But in each country there were different groups, all with Varying and conflicting interests. Tt was hard to determine what would be of benefit to a country as a whole. The question was, would the British as taxpayers and consumers, benefit more from tho ch«°,” german goods than a certain section of them would suffer *fr-om the competition caused by these goods?

PROPOSALS TO DEAL WITH THE GOODS. However, it was not proposed to dump on to the markets of Britain any particular class of goods. France had made Germany supply her with coal for* nothing and the result was that the Welsh coal owners lost a great deal of business. The present mining trouble at Home was due in part to this exaction of coal from Germany. It was not proposed that the indemnity should be collected in any such, way or paid direct to any country. By means of the existing trade machinery, the German goods could be spread all over the world and thus the effect on the producers in the Allied w 0... bo lessened. Further th<s payment of the indemnity was to be spread over fi period of forty-two years with regular instalments of goods over that tipie. O' course these German goods would compete with similar goods pro-

duced in Allied countries, but the indemnity could only he paid in kind and we could not refuse to accept German goods and have an indemnity at the same time. Still it would not be right to assume that because the German goods came in much fewer, British products would be bought. IVe would be getting the German goods for nothing and so wo would have more goods for ourselves. The whole community would benefit from the resulting decrease in taxation, but only a section would experience the trouble of tlie German competition. That was the dilemma, and there was no way out of it. The* plan of Mr Lloyd George and tlie Allied statesmen was Germany should deposit immediately bonds amounting to £7OO 000-000 on which she would hare to pay 5 per cent interest and one per cent sinking fund. Tho OriGch and Allied governments would sell these bonds. For a long period the German Government would have to tax the German people to pay the interest and sinking fund on the bonds. In this way the Goverment would build up funds to its credit and them over from time to time. Plairitly, the whole business means that the German taxpayer would be providing us with money with which to buy German goods. PROP GERMANY UP. Tlie attitude of prance was to keep Germany down utterly, but this was a mistake. If we wanted to get a large indemnity we must help Germany and not knock her down. The great difficulty the Allied statesmen* had to face

was the wretched condition of the German currency, and something would have to bo done. Germany was spending more than she was receiving, and in order to make up the deficit she was creating more money. This made the position worse and kept the cost of living high and depreciated the value of her currency. Great Britain hail balanced her revenue and expenditure wonderfully, but France seemed to bo hanging cn, expecting a big in- j cVmnity. This was a delusion, and it ! she wanted to avoid revolution site j would have to try to balance up by J economy It we wanted to J have an. indemnity and also save j Europe from anarchv wo must prop Germany up It was not a quest:on j whether she deserved to bo propped up, j but the point was if sue was not propped up she might pull us down with her. An international loan had been proposed to save Central Europe from chaos. This looked a good proposition, but there were difficulties and dangers connected with it. Any loan must be a real loan of goods. It would be no use giving credit for that would oqly make the position worse. NEW ZEALAND AND THE INDEMNITY. With regard to the position of New Zealand, he noticed that Mr Massey hoped to get a share of the indemnity t,; help him out of some of his financial difficulties. However, said Professor Condliffe, he did not think this would help the New Zealand taxpayer very much, because the payment was to be spread over so many years. Boyic ot the German bonds might afford temporary relief to this country. .However. the main burden of the Avar would have to rest on us. The in- j demnifcy amounted to £6,800,000.G00 in gold, but this sum would be spread over forty-two years and over many countries. So Great Britain, whose war debt amounted to £8,000,000,000, would not receive a great deal com- j paratively speaking. We could not ! put much of the burden on the German j taxpayer, hut. would have to shoulder \ it ourselves. i--4 Professor Condliffe was accorded ,

hearty vote of thanks for his interest ing and instructive address.