The Waikato Times With which is Incorporated The Waikato Argus. MONDAY, NOVEMBER 26, 1923. LOAN FOR GERMANY.

Waikato Times, Volume 96, Issue 15853, 26 November 1923, Page 4

The Waikato Times With which is Incorporated The Waikato Argus. MONDAY, NOVEMBER 26, 1923. LOAN FOR GERMANY.

There is a report from a German newspaper that negotiations are proceeding between a bank in Berlin and a group of British, Dutch and American bankers about a loan of £70,000,000 to the Stresemann Government in Germany. This would be good news if it •were true, but we cannot believe for one moment that there is any basis for the rumour. It is said that the advance will be made on condition that the political situation remains unchanged, and no one can guarantee this. Seventy millions is a large sum even in these days of inflation. It will not be lent without good security, for if it is to be lost the bankers who advance the money are ruined, and with them many others would be ruined likewise. Yet no one can pretend that German security is good. In the first place there is the constant threat which France makes to over-run the country. What she has already done in this direction lias put it out of the power of Germany to pay enything at and any further action of the same sort, will make mailers worse. But even if France realised that she had made a mistake and agreed to re-

Train from further attacks, there is still a danger from internal commotions. The Communists have not quite abandoned hope of being able to seize the reins, although there seems little prospect of their being successful. The Nationalist threat is a much more serious matter. It is obvious that they cherish hopes of destroying the Republic and rcsioring absolute government. in some shape, though it may not be in that of monarchy. If they came to power there is no' certainty that they would recognise a debt contracted by a Republican Government. These are the considerations which would make a loan to Germany anything but a safe investment. They are not, however, the only difficulties in the way. The sum is a large one. Britain’s share would have to be about £30,000,000, and America’s the same. Britain has not saved more than one hundred million sterling in any year since the Armistice, and it would be difficult, to obtain such a large proportion of the surplus cash for any one project, even if it were more attractive. America has probably saved more, but she lends very little money outside of the country, and is not likely to break her rule in this instance. There would be great trouble in inducing the public to take up the loan. But supposing that these difficulties ware overcome, what good is the loan to do. Jt would have to be paid away forthwith to the Allies. The French share would be a little over £36,000,000, and she is demanding over £170,000,000 per annum. This loan could not be repeated for several months, but to provide what France requires would involve five such loans in’the year. If they were not raised and paid over France would consider herself entitled t,o march into the country, and then the security would disappear. In truth the idea of raising a loan for Germany beyond a small amount to aid the resumption of trade is fantastic. It would serve no purpose if it could be done, and under present conditions it is impossible.

Few people trouble to give attention to figures when they run into hundreds of millions. It is necessary t,o bring them into relation with other figures to give them necessary meaning. If Britain since the Armistice has been able to save not more than £100,000,000 per annum, is it likely that Germany can save more. There is a good deal said about the stupendous fortune of a few leaders of industry, and no doubt they are very wealthy, very much more so than before the war. Their wealth, however, is due to the operations of inflation, which has reduced the burden of their liabilities. A man who had property worth £IOO,OOO, with a mortgage of £BO,OOO, had but a small interest in the annual return. If, however, the rise in prices increased his return a hundred-fold, while the interest on his mortgage remained stationary, he would be a very wealthy man. His wealth, however, consists exactly of what his fellow citizens have lost in high prices. The wealth of Germany as a whole is but a small fraction of what it was, though some profiteers may have managed to make something in the general welter. Germany’s capacity to pay is very much less than it was, and arguments’ that she ought to make good the damage she did are beside the question. She certainly ought to do so, but if it be impossible the moral question will not bring it about. The only way reparations can be made is by having a surplus in the Budget and devoting it to this purpose. Issuing paper has created the confusion that now e-xists. France is pursuing the same course, and will also suffer, though we can hardly fancy her coming to the same condition. Britain has pursued deflation, and balanced her Budget. The process has caused much suffering, which was unavoidable. France and Germany have to go through the same process', with all kinds of troubles greatly increased, and the same may be said of every nation on the Continent. For four years the world devoted itself to the dissipation of wealth, and fancied that the effects could be disguised by some manipulation of the currency. Such action has its invariable result in raising prices, and causing disorganisation and suffering. The rumour of a loan proceeds from the hope that some relief would be caused thereby. It is impossible to raise the money, and would he useless if it could be done. If Germany is to pay anything, it can as well be done by half-yearly instalments. Wc do not anticipate that much will be paid. If France insists on payment at an early date, such payments would be made by selling marks, and the whole tragedy which we have lately been watching would be repeated. The statesmen who drew up the plan of reparations were living in a Fool’s Paradise. No wonder that Clemenccau attached little importance to the whole idea.