NEARING FINANCIAL COLLAPSE

Dominion, Volume 10, Issue 3118, 23 June 1917, Page 2

NEARING FINANCIAL COLLAPSE

GERMAN DEBT OF ONE HUNDRED BILLION MARKS THE LIMIT

AT EIGHTY BILLION NOW Mr. Oscar Davi=, in the New York "Times," Kays:—"Dr. UeWerich, tho Vice-Chancellor «ml Finance Minister, in a carefully prepared work, places the annual increase of German wealth at ten milliards of marks, or, on the normal exchange, roughly 2,500,000,000 dollars. , - Mr. Haverstein, President of the Reichbank, ono of tho strongest men in Germany and a recognised authority on all financial matters, estftnntes the annual increaso of Germany's wealth at only eight milliards of marks or something Tinder 2,000,000,000 dollars.

"Among Goi'mans Mr. Haverstein is credited with the best part of the work of financing Germany thus far through the present war. They say in Berlin that if it had not been for the skill and foresight of the president of the Reichsbauk, Germany would have hit the rocks some time ago. When I talked with him not eo very long ago in Berlin he drew for me a very clear picture of the condition that would, mean smash for Germany. Then he declared with great emphasis that Germany would never reach that condition. The 6mash stage for Germany, he said, would be reached when the annual interest bill equalled or exceeded her annual excess of production over consumption. In other words, he applied the law of the individual to the nation. He believed a total debt of one hundred milliards of marks—loo,ooo,ooo,000—would brinfc tho German Empire to the point of, collapse. 'But Germany will never reach that point,' he exclaimed. 'Wβ shall win success iong before our debt goes to euch a figure.' "Mr. Haverstein declaied great confidence on this point, but the figures he gave me did not seem to me, at least, to sustain his confidence as powerfully as a good German partisan might desire. He 6et the debt of Germany before tho outbreak of the war at 5,000,000,000 marks.and the funded war debt at 47,000,000,000 marks, or a total of 52,000,000,000 marks. Then he said that tho increase of debt could be reckoned as at least 2,000,000,000 more a month. As the last war loan was closed on September 30 of last year, sis months ago, and as the most that ever was hoped for it was to fund the floating debt that had been put up to that time, it is a matter of easy_ calculation that since that loan was issued a floating debt aggregating nt least 12,000.000.000 marks more has been incurred, and tho probability is that it is considerably beyond that. "On the estimates most favourable to Germany, therefore, it is clear that her debt is now at least sixty-four milliards of marks. Her interest averages 5 per cent., and at that rato her annual interest bill is now about three and a quarter billion marks. That is, Germany is now paying annually, in interest alone, two-thirds as much as her entire debt was before the war. Before the war there was_ great opposition to new undertakings which involved less than the interest on this sum would be, A naval programme which contemplated spending about 250,000,000 marks was spread over several years in deference to this protest against incurring such an enormous increase of debt. But Germany at that time was at the very zenith of her earning power. Her annual production was steadily increasing by marked advances. Her agriculture was very highly developed. Intensive cultivation had been carried to a high degree. In almost all crops German production wasgrenter per unit of cultivation than that of any other of the larger agricultural countries. Germany was earning more then than she over had earned, or than it is likely she will earn again for half a century. . "But now German production is at a minimum—that is, production which may rightfully bo classified as increase of, wealth. Germany is not earning to-day anything like ehe was' three 'years ago: She is spending to-day, in sheer waste, with a prodigality far greater..than was the frugality which marked her efforts More the war. For now the entire attention of tho nation, its «very energy and thought, are devoted to this one problem of waste, and how to mako it greater and faster 'than any of her enemies. It eeems to be the theory that the nation which can waste itself fastest will win the wretched contest in the end.

"So that if these figures are reasonably accurate, and if Germany's debt is only Gl billion marks, and her animal interest bill only throe and ii quarter billion marks, her annual earnings, out of which to pay that interest .bill, have been reduced so much that it is exceedingly doubtful if they are sufficient for that purpose alone. It doesn't moko any difference what subterfuge is attempted to make Hie people think that tho payment is being taken caro of in an easy way, or whether the. interest is paid by 'taxes, current revenues, or hew, in reality it comes right b&ck to that one problem, does Germany now produce enough moro than she is consuming to pay her annual interest? "It may very well be 'that tho' ground for Germany's obvious anxiety for pe;ico is to bo found in this loan situation. For if this report is well founded, Germany's debt to-duy is already at the SO.iIOO.UM.uOO stage, and tho point described by Haverstein, himself as meaning smash is in sight. Under the Hindenburg older for a production of guus, munitions, and other eupplies limited only by Germany's labour and mill capacity, it is evident that the waste will be much more rapid this year than :t was last year under the moro cautions and oonservutivo Falkonhayn."