GERMAN WAR LOANS.

Wairarapa Daily Times, Volume LXIX, Issue 14463, 21 December 1915, Page 2

GERMAN WAR LOANS.

NATIONAL CREDIT BAD. FLOOD OF PAPEE CURRENCY. (AH English financial expert, writing in the Daily Chronicle, paints a dark picture of the national finance of Germany. The German method of raising money means, this writer declares, that Germany, as a nation, is consuming itself.) Tho German War Loans having proven to be only moderately successful in their various instalments, and with the prospect of much greater difficulty ahead in regard to the new loau ; the Bureau for the Enlightenment of Neutral Countries has undertaken tho task of showing why there must be success. The bureau has recently published statements which form an interesting > comment on the national psychology of Germany. Although more than 400 banks have failed, we are assured that German linance is sounder than ever, and that "the success of the war loans exceeded all expectations, and does great credit to the solidarity and elasticity of the German national economy. " The sum. raised in tho second war loan, indeed, is a formidable one, reaching the amount of 9.06 milliards of marks, say £460,000,000, achieved by reason of patriotism and heavy pressure, and tho world was no doubt impressed by the size of the loan. Behind all war loans, however, there must be a solid national credit, not only what may lie callod an internal credit, the credit of the nation with the people of tho nation, but also international credit, the credit of a nation with the world in general, and international credit is based upon international trade. Before the war Germany was arriving at a considerable trade importance. Her foreign trade could not have been less than £900,000,000 sterling. This has been reduced to a vanishing point by j reason of the blockade, and with it has j gone the possibility of raising a significant foreign loan. Germany's Credit. , Germany's credit is bad. Austria's credit is worse. Germany's exchange is at a discount of 17-1S per cent in America, and her paper currency at home at a discount of 14 per cent, the people realising, however bravo and patriotic they may be, that there is a real danger of national bankruptcy. Her bills of exchange are not received in some neutral banks abroad, and her liabilities of call are covered only by 31 to '65 per cent metal. However, we cannot ignore the fact that Germany may yet raise a considerable amount by confiscation. In Berlin this is being increasingly resorted to, where the local income tax has been raised by .125 per cent. Carried much farther, Germany will find herself in the case of the litigant who has squandered the damages awarded in order to gain the verdict, even in the remote possibility of victory. To this possibility, however, Gorman apologists are wilfully blind. Arthur yon Gwinner, ignoring tho fact that German fleets have been driven off the seas, points out, in the "Tagliehe Rundschau," that when war was declared Germany was in a state of enonomic pause following the economic crisis of 1907, and had accumulated great financial strength. Forgetting that this was done by realising foreign assets and incurring foreign liabilities, yon Gwinner states that Germany can afford to' forego her foreign trade, as "only one-fifth or one-fourth of Germany's commerce is foreign trade," and "the German national economy is based on internal, trade. " This, of course, is not true, but it is a comforting thing to say, especially for neutrals. The truth lies in tho other direction. For more than a generation Germany's whole endeavour has boeu to organise herself in competition against all comers_ for tho world's trade, an effort which met with success in the past, but now, by reason of tho war, ended in dismal impotence. " In the last 30 years Germany's special imports and exports grew from a total of less than 300 millions to ap- i proximately 900 millions. The year August 1919 - August 191-5 saw this en- ! ormous figure shrink to one practically negligible. There is no doubt that all the belligerent, countries have found a commercial loss because of the war, I but Germany most of all. All this bears ! heavily upon the loan. With credit going, there followed a realisation of I securities. Income diminished. Save i for a slight purchase of war loan by j Germans abroad, who found it cheaper jon the foreign markets, the source of revenue for war is absolutely internal. Germany is consuming herself. How ! long before she is emaciated remains j to bo seen.