The Waikato Times With which is incorporated The Waikato Argus. MONDAY, AUGUST 11, 1919. PEACEFUL PENETRATION

Waikato Times, Volume 91, Issue 14134, 11 August 1919, Page 4

The Waikato Times With which is incorporated The Waikato Argus. MONDAY, AUGUST 11, 1919. PEACEFUL PENETRATION

The eight "great"- German banks, which are closely linked with each oilier and with the Government, have played a largo part for many years in their nation's policy of "peaceful penetration " of other countries. It is not likely that they will lightly abandon efforts in that direction now that the war is over. This is the view taken by Mr A. D. McLaren, who writes in the

"Quarterly Review" on this particular aspect of the German menace. He points out, in the first place, that these banks work along five main lines, (i) They establish abroad branches, or daughter institutions, for the German industrial firm; (2) they found altogether new industries: (3) they seek an interest in existing foreign concerns; (1) they use their own capital, and the capital of the country concerned, for the monopolistic exploitation of an industry; (5) they use their loans to advance German industry. What were apparently native concerns in Italy, Russia and elsewhere were often found to be purely German. The intrusion into existing concerns was shown by the great hold obtained on the. Australian metal market. Behind the activities of Aron Hirsch und Sohn, of Halberstadt and Frankfort-on-the-Main, stood the great German bank, whose agents each specialised in some particular district. The Deutsche Bank held 1G,T97 shares, and the Diskontogesselleschaft 10,280, out of a total holding of 1,289,195 shares in the Mount Lyell Company. In the Oroya Links Limited the Dresdner, Deutsche (London branch), and Diskontogesselleschaft are said to hold respectively 16,590, 11,749, and 8923 shares out of a total of 1,500,000 shares. In the Amalgamated Zinc Limited the Diskonto held 4750 shares and the Deutsche 2310 out of 500,000/" The South African field was also thoroughly exploited. As to their monopolistic methods, the German banks have sought to get into exclusively German hands the control of the petroleum supply in every part of the world except the United States. An example of their way of using their loans to advance German industry is the Diskonto's stipulation that the rails for certain Russian railways should be delivered by the Dortmunder Union, and those for the Venezuelan Government by Krupp. The banks are a solid cogwheel in the system of national economics, which regards the State as an association, based on military and industrial power. Their apparent independence but real co-operation is placed in contrast with the British banks' "competition for paper"—that is for the business of negotiating bills —and with their general lack of cohesion. The interlocking of industrial and bank directorates, and the reciprocal influence exerted by banks and industrial combines, have given enormous power both within Germany and abroad. The banks' combination of "bank policy" and "industrial policy" (while the British institutions keep to banking operations in the strict sense) has given them great success in "penetrating" other countries. Germany's progress in technical education and the application of science to industry has aided this infiltration. The heart of the British Empire was invaded, as well as the Dominions. A report of the Deutsche Bank refers to the "very satisfactory results" yielded by the London branch. London was used as a financial centre to expand German overseas trade—often with British colonies. With regard to Russia, German traders made it their business to know the country bette r than the. natives did, and gradually banks and industrial Arms combined to extend the German grip often through houses that seemed purely Russian. France and Spain were also "peacefully" invaded. The money of the Italian

people was used by the Germans, through their "Banca Commercials," to control Italy's industrial development. Working along different lines, they used British money to further German commercial interests. "Bills drawn by them and discounted by their own banks were sent to London and there converted into ready money. The annual profits which the Deutsche Bank made out of London in acceptances alone were probably not less than £200,000. On the outbreak of war the huge sums of acceptance which had been issued, and for which these London branches were responsible, presented a problem to the Government and the commercial community which they could not soivc on the spur of the moment. According to the balance sheets for December 31, 1913, the three German banks having branches in London show the following figures for acceptances and bills payable in circulation: Deutsche, £11,203,940; Dresdner, £14,305,770; Diskonto, £12,547,050. Moreover, in the Knglish version of its report for the same year the Deutsche refers in a footnote In the

significant item, '■Contingent liability

on guarantees given on account of customers, £7,1 .ir>,o.'!.">. Hence this bank's acceptance anil guarantees exceeded twenty-one millions sterling. Evidence is cited to show that information concerning wll known British firms is conveyed by these banks to the remotest parts of Hie world. The banks are concerned with political matters, and with war. GreaS Gorman writers on hanking frequently declare "financial preparedness for war" to be one of the primary duties nf all banks. Illustrations of the methods of the bunks are found in the "complete scheme" for revering Asiatic Turkey with railways, and ultimately gaining control of the territory. German bank-

ers worked in the same way to. obtain

railway concessions in Northern China, and even used British finance to help their schemes. At the outbreak of war German financial influence was strong on British corporations in China and elsewhere in the Far East. At the trial of the traitor 8010 in Paris, cheques with the endorsement of the Deutsche Bank were produced before the courtmartial. Through the Banca Commericiale the Germans are stated to have obtained a strong grip on the Italian Senate, the Knights of the Annunciation and ex-Ministers. They financed elections, maintained representatives in Albania, Constantinople, and Brazil, and did other evil work. Anti-British sentiment was fostered by the banks in South Africa. Card indexes kept in London were used to help close German knowledge of British firms and individuals. A large number of the cards referred to London stockbrokers and the Stock Exchange. Many other impressive facts are given. When the article was written it was rumoured in the City of London that the Deutsche, Diskonlo and Dresdner banks were to be allowed to resume business in London, and to be reinforced by the Darmstadler. In that case "the four renowned D's will be fastened permanently on to the heart of British finance"—a fact which the writer regards as affording a truly deplorable outlook.