The Waikato Times With which is Incorporated The Waikato Argus. TUESDAY, SEPTEMBER 5, 1922. POSTPONED PAYMENTS

Waikato Times, Volume 96, Issue 15035, 5 September 1922, Page 4

The Waikato Times With which is Incorporated The Waikato Argus. TUESDAY, SEPTEMBER 5, 1922. POSTPONED PAYMENTS

The Reparations., Commission have given their decision on the question of granting a moratorium to Germany until the end of the year for payments due under the settlement. Britain wished to grant the moratorium, but France and Belgium refused to d 6 so, while Italy did not vote. They then decided unanimously to allow payment until the end of the year in German Treasury bills, thus coming back to the original proposal of the British delegate in another shape. German marks arc merely promises to pay, and German Treasury bills are promises in another shape. 11 is possible that France may attacii sonic importance to (he gesture of refusal, or may lake some pleasure in crossing the wishes of the British delegate, but on Lho main question it is evident that his judgment is correct, and that it is impossible for Germany to make further payments for a time. The Treasury bills are to run until the end of the year, so that early in January we may look forward to further conferences. In the meantime the German mark is becoming the subject of wild speculation, which may rank in the future Willi the South Sea Bubble, but as people are willing to pay money for marks they may be wilding to discount Treasury bills. As, however, these will be of considerable dimensions, dealings with them will be limited to banks and financial houses, who will regard (hem somewhat differently from the man in Hie slreet, who acts like the yokel at the fair who buys a

gold Watch for seven-and-sixpence, and finds later that it is brass and worthless. The regrettable part of the decision is the postponement of any definite result.- Neither Oermany nor France can know what their financial position is to be until a sum is fixed for reparations, and a sum which can be paid. We have pointed out more than once the risk of losing everything by grasping at too much. The financial experts are agreed that if Germany is given some breathing space to recover from the effeots of war, and from the heavy drain of reparations which she has already made, she will be capable of paying considerable sums. The existing Government have shown themselves willing to do so* but it is not likely that they will stand if they are constantly threatened with direct action j by France. No otheV Government could do more, or is even likely to try and do as much. If, therefore, France is anxious to obtain payment, her best course is to exercise some patience, and she practically .admits this by agreeing to accept Treasury bills for the instalment due In August. She at, the same time cancels the benefit that might arise from giving time, by the threats she makes of the action she will take if payment is not made. Unless some confidence can be felt business will not revive. So far as internal trade is concerned, Germany is showing all the symptoms which are associated with a rapid rise in prices. Every man who has a stock of goods finds in the morning that it is worth more than when he went to bed, fnd at first the general impression is that he and his neighbours are doing well. After a time he finds that the increase in his profits does not leave him as well off as before, for he has to pay the increased prices as well as to receive them. The middle classes and the professional people find their incomes totally inadequate to meet the Wild changes that have taken place. Wageearners are constantly demanding and constantly receiving increased wages, but they are always a lap behind the prices. Much Is said about the crazy printing of marks, of which thousands of millions are turned out daily, but those who point out the inevitable result of such finance give no indication of what other course they would recommend. Germany has made considerable payments to the Allies this year,, and that required the printing of immense numbers. She has to oarry on the government of the country at a time when services and goods cost four hundred times as much as usual, and that calls for quantities of paper money. She made up her Budget when the exchange was 2000 marks to the £, and four months later it is 8000 marks to the £. Her revenue will, therefore, be utterly inadequate to meet expenses without considering external payments. She may endeavour to raise fresh taxes, but that talkes time. Imports have sunk to a small matter, and therefore Customs revenue will be,small. So far as external trade France has had her way, and for a time has ruined Germany, although internal trade will go on with some measure of success. Within the last few days we have been advised by .cable that Germany has'" cancelled her orders for yarn in Bradford and for cotton in New Orleans. No doubt those who refuse to recognise facts will say this is all part of the German plan to escape payment. With such people it is impossible to argue, but they may take note of the statement from Ottawa that American bankers have given up the hope of ever collecting the Allied war debts. It is those who refuse to see the facts that are driving Europe to a general bankruptcy, for it will not be Germany only that is unable to do trade abroad. Six months ago Mr J. M. Keynes considered it impossible for the countries of Eastern Europe to establish a gold standard or to pay their bank notes even at a discount, of 75 per cent. Conditions have grown' much worse during the six months. The present arrangement is not settling the question or preparing the way for any improvement. It is only postponing the trouble for four months, and when it comes to be considered once more the position will be Worse, and not better. If the Reparations Commission had granted a reasonable moratorium some good would have been done. On the main question, the total amount of the reparations, they are unable to do anything. They fixed an amount, which then became part of the Versailles settlement. If France would agree it might be changed, but that is the only method In which it can be done legally. No doubt mankind will find some way of escaping from the dilemma, and will not consent to be ruined by adherence to a formula of its own making, but in the meantime our leaders and politicians have brought us into a peculiarly dangerous and disagreeable position.