GERMANY'S CREDIT

Dominion, Volume 9, Issue 2652, 24 December 1915, Page 13

GERMANY'S CREDIT

HOW IT IS BOLSTERED ENEMY'S METHODS AND OURS. Mr. Edward' P. Bell, London correspondent of the "Chicago Daily News," has sent his journal tho following exclusive interview with Mr. Jtunciman, President of tho Board of Trade: — "Let me point out," ho said, "how trivial 'strikes' have been since the outbreak of tho ivar. Never in the last twenty years have tliero been fewer labour disputes; there never las been such a small percentage leading to stoppage of work. "Only two important trades have been affected by strikes—shipbuilding on the Clyde, where a settlement satisfactory to all parties speedily was achieved, and the strike of the South Wales miners. Small sectional disputes at individual works and collieries always have happened. ■ They cause us no anxiety here, for labour is more fully in harmony with national policy now than ever before in modern times. "In particular, in the iron and' steel industry and in coal-mining the returns show an improved 'get' per man month after month. They are working longer hours and more regularly than ever Before, and all is done of their own free will—no conscription or compulsion. The enthusiasm and adaptability of British labour has been amazing." And how about the financial position ? "Woll," answered' the statesman, "compare it with Germany's. In the 'Kolnische Zeitung' in September the naive statement is made that it is easier to raise money on securities than to withdraw large deposits from the savings and other banks. This paper went on to show how 400 marks (£2O) will buy 1600 marks (£80) loan, thereby forcing a loan on the subscriber of 1200 marks (£6O). The present German financial plan is 'borrow, borrow, borrow.' What will tho ultimate result beP Nothing short of the absorption of. the whole German wealth in war'loans. Peril of German Credit. "The only hope of salvation suggests ed by Germany's Finance Minister is that Germany's vanquished enemies must pay the cost. This solution may bo inadequate, evon if Germany had a chance of winning; if slio does not win, what then? Persons having borrowed ■ largely from the Darlehnskasseri (lending banks) will find themselves with heavy liabilities and will no doubt endeavour to reduc'b these by selling German war loan, and if , German business men are to re-establish their oversea trade they will have, to provide themBelves with' working capital by selling their war loan holdings when tho war is over, especially as they will be forced then to pay more fully in what they buy abroad, and they will have to work with far less credit. , Moreover, the price, n'liich is artificially maintained by specially constructed! syndicates at present, must drop to a discount immediately the support is withdrawn. "Will you explain the difference be-! tween the German and British loans?" . "Germany has to support her loans after issue by artificial means. Britain could have done exactly the same. When our first loan was floated, if we had established a powerful syndicate iind forced the price to a premium, we could by thus rigging the market have floated a second loan on better terms for. our Exchequer. We rather chose methods open and straightforward. The loan is issued ; it takes care of itself without official assistance; its price is regulated by supply and demand; and everyone, including neutrals, knows exactly the truo state of the market, which is disclosed day by day. This system has in it no elements of trickery. London the Cold Market. "Lot me also remind you that London is Still the free gold market of tho - world. Tlio Bank of England note is covered by gold to'the . extent of 200 per cent. As far as we can ascertain the German note is covered by about 43 per cent." ■ "How do you account for tho depreciation of the pound sterling in New York?" 1 inquired. •'What is the explanation of the depredation of _ the German mark (one shilling)?" rejoined Mr. Uunciman. "I have before me a chart of the fluctuations of the exchange in Now York since the war began. You will see that, the mark is at a discount of 14J- per cent., while the pound is at a discount of 5 per cent. (now.the rates of discount are 3 per cent, against Britain and 19 per cent, against Germany). This contrast is tho moro remarkable when you remember that Germany has made very small and diminishing purchases in America, whereas our purchases in America have been gigantic. "Germany* boasts that she will emerge from the war practically free from foreign obligations. Her partisans might frankly' add that this will be a seriius matter for German finance, for she is consuming all her present supplies of materials, and that being unable to replenish during the war she will ho forced to purchase enormous quantities at the end of tho war in order'to restore and carry on her industries. If her exchange is at 14 ner cent, depreciation today. what will it be thenp" "In what doeß Britain's financial strength lie?" "It lies in the fact that she is all the time earning income by production for herself and her foreign customers and by carrying across the seas for vast numbers of foreign merchants in British vessels, so that by preserving her industrial and commercial activities during the war sho has found increases in her taxation-a burden comparatively easy to carrv. From tho first days of September. 1914, our oxport figures continuously have advanced from £26,074,101 Inst September, ■to £32.308,432 in Sentember this year, British credit is built upon the "firm rock-of profitable production, and Britain's producing power'is enabling her. to dispense with all dodges awT tricks resorted to by her weaker foe" for obscuring tho truo nosit.ion and postponing the day of reckoning. We not only finance • ourselves, but with tho co-op-eration of France supnort the Russian Exchequer in Russia's foreign purchases. and provide the Belgian -ntl Serbian Government.': with the funds necessary to enable them to preserve their national existence." We are told that khaki "exemption"' armlets aro to bo issued for those men who cannot servo in the naval and military forces (states a London writer). Tho Minister of Munitions is also issuing a special badge to workers employed by the Admiralty, the War Office, and the Ministry of Munitions. The latter .badge is .oval in shape, and about an inch and a half in width by three-quar-ters of an inch in diameter; it is made of white metal gilt, with a rim on which are inscribed the words: "On War Service, 1915." In the centre aro the Ordnance Arms—three cannon balls above three cannon. The whole is surmounted by a Ho.val crown. "Badges issued by private persons, under authority wo aro informed, will all bo withdrawn after a cortain date, which will shortly bo announced in tho Press." We shall all wolcomo that dato. Every lout who lounges about the pavements instead of drilling has been sportins; a badge of some description, until the mark has come into a disfavour, which it will tak(> ill) the official sanction of tho now ones to destroy.# ,