GERMANY AND THE INDEMNITY.

Star (Christchurch), Issue 17182, 27 October 1923, Page 5

GERMANY AND THE INDEMNITY.

TO THE EDITOR. Sir, —Tn your leading article on Thursday night entitled “ Germany .Reaps the Whirlwind.’’ you state: “ She (i.e. Germany) found money to carry on the war to batter Europe into a hopeless cripple . . . It is only when monev has to he found for the Allies that the German howl of agony is raised.” The use of the word ‘‘money” in this connection is, I think, likely to be misunderstood by* many of your readers. The loose use of the terms “money” and “wealth” is common and leads to confused thinking. Much of this confusion is due to the fact that many people appear to regard money and wealth as synonymous terms. But it is an elementary economic fact that money is not wealth. In a book on economics wealth is described as “ what peoplo want to satisfv their- needs directly or indirectly, and have to spend time and effort in getting.” Money in itself cannot j satisfy the needy of any one. To a man on a desert island a loaf of bread would be useful to satisfy his hunger ; it would be “ wealth ” ; all tho money in the world would he useless. Money lias no value in itself. Its value lies in the amount of wealth it will purchase/ These arc simple economic facts but they do not seem to be clearly understood. As a matter of fact Germany did not find money to carry on the war. But she did find wealth, or resources. The war had not been going long before Germany was pretty effectively blockaded, with the result that there were few countries i n the world from which she could draw supplies of necessities. Germany therefore had to draw largelj* on her own wealth ox resources. But Germany did not need to find money to do this. So long as Germany could from her own resources feed. clothe and house her civilian population and soldiers, supply her army with all the j necessities for the prosecution of war, j and at the same time, of course niainj tain her army as a sufficient numerical i strength, then so long could she con- , tinue the war. Or in other words, so ( long as Germany's resources lasted it | would not have mattered if she did not i have a scrap of gold in the country, j The prosecution of the war would not | have been affected thereby. Of course, j some form of money or medium of exj ‘"hang© is necessary for the conduct of j the business of any country. But any ; recognised medium of exchange does. He have found out since tho war that we can carry o n quite well without gold. The point*l wish to make is that Germany did not have to “ find ” money to prosecute the war. No doubt, in common with other countries, she withdrew the gold from circulation and “ made ” paper money for a medium of exchange. Perhaps she used the gold she had to obtain supplies from the few countries which were open to her. but in the main she used her own wealth or resources “to hatter Europe into a hopeless cripple.” Now th© question naturally arises That if Germany could find wealth to do this why cannot she find wealth to pay the indemnity demanded by the Allies? On the surface the answer would appear to lie that there is no reason why Germany should not pay the indemnity except- that she does not want to pay. But is this the case? I ill venture to put- another question. Suppose Germ anv were eager and willing to pay the indemnity what form c-ould the indemnity take to make it acceptable to all the Allies? I take it that, more of you r readers think that it is intended that the indemnity should be paid in actual cash. It is, I think, generally recognised that for economic reasons, the indemnity must be paid in goods. But if Germany is to supply the goods then her people must set to work to produce them, or in other words Germany must be set on her feetagain as an industrial nation. France, however, does not want to re-establish her hold enemy industrially butstill she wants her to pav the indemnity. As Mr A anderlip. the American banker, said. “The French burn to milk the cow but insist first that its throat be

AVith your permission T should like to quote a few extracts from a book entitled “The Fruits of Victory,” by Xorman Angell. Norman AngeU is probably known to most people as the author-' of “The Great illusion.” When this book was published it was received with a storm of ridicule and criticism, but many of the statements made in the book, which was published some -rears before the war have since the war proved true. Thirefore I consider that Norman Angell’s opinions are entitled to respect at least. Referring to the question of collecting the indemnity, Norman Angell savs m his book “ Tho Fruits of Victory ” : • • • - the main problem of an indemnity is to secure wealth in cxpo.table form winch will not disorganise the victor’s trade. Vet so obscured does the plainest fart become in the murky atmosphere of war tim© that in many of the elaborate studies emanating from Westminster and R-.rU to ‘What German v Can Pav’ tiffs phase of the problem is not- even touched upon. Wo get- calculations as to Germany’s total wealth in railroads pubic buildings, houses, as though’ these things could be picked up and transported to France or Belgium We are told that the Allies should collect , rcT ?" u ? , of tl,a railroads: tho Daily Mad wants us to ‘take’ the income of Herr Stinnes : all without a word as to the form in which this wealth is to leave Germans-. 4re we prepared to take the things made in the factories of Herr Stinnes or of other Germans? If not, what do we propose that Germany shall give s Paper marks increased in quantity- until they reach just the value of the paper they are printed on? Even to secure coal, we must, as we have seen give in return food. . . Obviously the feasibility of an indemnity- is much more a matter of our will than of Germany s, Cor ,t depends on what shall be the size if Germany’s trade. Clearly w expand that if we want to. We might give her a preference!” Here is another extract from “The Fruits of Victory ” France found herself at the end of the Mr in tl desper ate financial position and in dire ; need of all the help winch could come I . m t,lf ‘ enemy towards the restoraj tion of her devastated areas. She prej Rented demands for reparations runi ning to vast, unprecedented sums. So i be it. Germany then was to be permitj ted to return to active and productive j ™rk, to be permitted to have the iron and other raw materials necessary for ! the production of Hie agricultural j machinery, the building material and - her sorts of goods France wanted. . Not the least in the world. Germany I was to produce this great mass of j wealth, but her factories-were to remain closed, her rolling stock was to j be taken from her, she was to have i neither food nor raw materials. 1 The experience of France in the af - k tempt to exact coal by the use of mill-

t-arv pressure throws a good deal of light upon what is really annexed when a victor takes over the territory conquestion if getting the coal when it has been annexed. ‘lf we need coal.’ wrote a Paris journalist plaintively during the Spa Conference, ‘ why in heaven’s name don’t we go and take it..’ The implication being that it could he ‘ taken ’ without payment, for nothing. But even if France were to occupy the Ruhr (“ The Fruits if Victory ” was written before th© occupation of tlie Ruhr) and to administer the mines, the plant would have to be put in order, rolling stock provided, railroads restored and, as France has alreadv learned, miners fed and clothed and housed. If Germany is compelled to provide those things—mining machinery, rolling stock, rails, miners’ houses and clothing and food we ax*e confronted with pretty muchthe same dilemna as 'we encounter in compelling tho payment of an indemnity. A Germany that can buv foreign food is a Germany of restored credit. A Germany that* can furnish rolling stock, rails mining machinery, clothing and housing for miners is a Germany restored to general economic health and potentially powerful. That Germany France fears to create.” On© more extract from Norman Angell’s hook and I shall bring this letter to a close: “ Despite the lessons of the year which followed the signing of the Treaty one mav doubt whether even now the nature of wealth and monev has come home to tlie Chauvinists of the Entente countries. The dc- , maud that we should at one and the same time forbid Germany to sell so , much as a pen-knife in the markets of the world, and vet compel her to pay us a tribute which could only b© paid by virtue of a foreign- trade greater than any which she has been able to all v n © xclusive demands Tna.de in our own Parliament and Press.”— I I am, etc.. LTVE AND LET LIVE.