“DROP IN BUCKET”

Gisborne Herald, Volume LXVI, Issue 20087, 6 November 1939, Page 12

“DROP IN BUCKET”

GERMAN WAR LOAN VAST EXPENDITURE PRICE INFLATION FEAR IMMENSE TAX BURDEN (F.lfsc. Tel. Copyright—United Press Assn.) (Reed. Nov. 0, 9 a.m.) NEW YORK, Nov. 4.

The Berlin correspondent of the New York Times, Mr. Otto D. Tolisehus, commenting on the official hailing of the over-subscription of the war loan as a demonstration of the soundness of the German capital market, observes that actually the 500,000,000 marks loan, of which 200,000,000 marks was subscribed in advance, is merely a drop in the bucket of the vast German war expenditure.

The loan was supposed to serve for the expansion of railways, but the last rail loan was counted as part of the consolidated loans, and was supposed to retire short-term credit, but did not do so. The present loan marks a return to more ordinary financial methods, following the failure of the plan introduced after the depasture of the former Minister of Economics, Dr. Schacht. “Financial Miracle.’’ The plan was hailed as a financial miracle, but lasted only seven months. The total public debt of 70,000.000,000 marks is certainly greater. It is at present estimated that the total circulation of all currencies is 15,000,000,000 marks, but including Army notes ii. is much higher. It is obvious that the vast circulation will inflate prices. Despite rigid control, prices are beginning to soar where control can be avoided. That the increase is no greater is due to the tremendous taxes, which yield the Reich alone 6.179,000.000 marks.

The second quarter's total tax burden may well pass 30.000,000,000 marks, which is about 40 per cent of the national income.