EUROPEAN SITUATION

Hokitika Guardian, 22 June 1920, Page 3

EUROPEAN SITUATION

WELLINGTON, June 18. At tho meeting of the proprietors of the Bank of New Zealand held here today, Mr Harold Benucliampf chairman) in dealing with the European situation, said^

y Although the armistice was signed as s far back as November 11th, 1918, and s the Peace Treaty ratified some time ago, r the cloud of war still hangs over a large - part of Europe, and the natural spirit of restlessness, engendered by and consc- ! quent upon the strain of the five years of i war, has not yet died down. Manufacture in the greater part of the Continent ■ is almost at e..standstill owing to the imi possibility of securing raw materials. Further, the disorganisation of Governments and the exchanges, as well as the difficulty of transport, resulting from a long and arduous struggle, delay and hamper the resumption of international trade. Europe is heavily in debt, taxation is high and oppressive, commodities are scarce and dear, the cost of living is excessive, and .hunger and starvation • are affecting many millions of people. The position is intolerable and cannot Inst much longer. There is, however, a ray of hope in the fact that sorely stricken Belgium has made a serious and to a large extent successful effort to repair the ravages of war. The inflatedpaper currency of the country has been reduced to 300,000,000 francs, and the public debt has been reduced. The pro- i yluetion of coal is now equal to the pre- i war standard and tho industrial produc- 1 tion generally is ranging from 35 to 60 1 pee cent of that of i Ol 3. j War Debts and the Position of the 1 United States of America.—The inter- < ally indebtedness (that is to say, indebt- j ; edness between the Governments of the - Allied and associated countries) incurred ! > for the purposes of the war, may prove 'I of interest. The sums involved are < shown approximately in the table follow- < ingi

Assuming that loans from one Ally are not. set off against loans to another, the total volume of inter-ally indebtedness is approximately £3,985,009,000. The United States i s a lender only. The United Kingdom has lent- about twice as much as she has borrowed. France hn s borrowed about three times as much ns she has lent, and the other Allies have been borrowers only. If the United Kingdom were paid half the amount she lias lent, she could easily pay her indebtedness to the United States, hut her debtors are quite unable to make repayment; hence, Britain must, out of her own resources endeavour to meet the situation. The United States is in the favour-

able position of drawing tribute from all the others, and, her trade balance being heavily in her favour, the Ameri_ can exchange has moved correspondingly heavily against Britain. It must be borne in mind that, while Britain was pouring out for the Allied cause her blood and treasure'without stint, the United States of America, already the richest country in the world, was standing aloof, adding enormously to her own wealth by supplying food and munitions to the combatants. It is therefore no .cause for shame to Britain, but rather o source of honest pride, that the gold standard is temporarily ineffective, because it is direct testimony to the supreme effort put forth by her in the cause of the .world’s civilisation. But if tlie exhausted nations of Europe are to recover, and business with them lie placed on a satisfactory footing with a prospect of ultimate restoration of nor. mal exchanges, it is necessary that they should be helped to produce goods. This • means that they must be supplied with raw materials, and in some cases, mach..inery, and to do this involves supplying them with large credit. The only country ip a position to afford this credit to the necessary extent is the United Sates ,she having suffered less by the. war than any other country. At one time it seemed probable’ that the States would nobly underake the part, in the healing of the wounds of humanity and the reconstruction of shattered civilization, that circumstances had placed it in her power to perform; but unfortunately, of late, a feeling of indifference seems to have developed and there appears now to he ah actual indisposition to afford any help. Mr Henry P. Davidson, Chairman of the League of Red Cross Societies, recently urged the vital necessity for Congress to appropriate 500 million dollars for use in Central and Eastern Europe to prevent the complete economic, political, moral and physical collapse which was imminent. The views of official America were recently expressed by Mr Glass, the Secretary of the Treasury in a statement made just prior to resigning his office to take his seat in the United States Senate. He declared that the Governments of the world must now get out of banking and trade, and that loans of Government to Government not only involve additional taxes or borrow, ings by the lending Government, but also a continuance by the borrowing Government of control over private activities, which only postpones sound solutions of the problems. The Treasury was convinced that tlie credits required for tlie economic restoration and revival of trade must lie supplied through! private channels, and that, as a necessary contribution to that end, the Governments of the world must assist in the restoration of confidence, stability ■ and freedom of commerce by the adopt-

ion of sound fiscal politcies. It is generally considered that, if the United States persist B in this attitude, her action will recoil upon herself in loss of export trade and consequent growth of'uneinployincnt. Already her export trade has begun to decline,, the exports for Anri] being 135,000,000 dollars less than those for March. If this continues

a grave financial crisis there may be anticipated. The rudiments of it are already in evidence in tilts “price-slash-ing’’ that has been forced upon.the merchants and in the restriction of credit by the Banks. It is to bo hoped that a consideration of these possible effects may yet dispose the States to do something substantial towards the relief of European economic necessities. Taper Currencies. National Debts and Taxattion.—The world’s paper currency has increased 000 per cent since the beginning of the war, while the' gold reserve, according to a summary issued by the National ,City Bank of New York, has increased 1 hv only JO per cent. The face value cfHhe paper currency of 30 principal eouiftries. of the world aggregated £1,450'il()0,000 in 1914( £8,000,(100.000 at the date of the Armistice, and £lO, in December, 1919, exclusive of the £(>,800,000,000 of paper issued by the Russian Bolshevik Government. Meantime the Bank deposits and consequent use of cheques as a circulating medium have also increased, and the world National Debts have grown from £8,000,000,000 in 1914 to ’£52,000,000,000 in 1919. In the Allied Group, notes in circulation in July,' l9l4, amounted to £982,440,000, and in December, 1919, to £5,918,200j000, while gold reserves were and £1,014,000,000 at the respective dates. The note issue of the Central Powers in July, 1914, was £239,000,000, and in December, 1919, £3,754,000,000, and gokl holdings resspcctively £119,000,000 and £65,400,000. The note issue of neutrals in July 1914, aggregated £233,200,000, and in December. 1919, £484,200,030, while gold reserves were respectively £103,200,000

and £290,200,000. -After tlx* Napoleonic Wars the National Debt of Great Britain was equal to £45 per head. The average debt per head to-day is £l7B, nearly four times the burden laid upon the country after Napoleon’s defeat. Against this present day indebtedness there are, of course, some assets to be set. To her Allies and the Dominions Britain has lent £1,700,000,000. Of this, however, about .£600,000,000 lias been advanced to Russia, and this may presumably be classed as a doubtful debt; of the balance, she will be fortunate if she recovers 50 per cent. Before the war the British nation was undoubtedly saving money, and every

year had a surplus of. nearly £400,000,000 to invest. The aggregate of its wealth was estimated to be at least £17,000,000,000. Against this Britain has had to raise a national mortgage of £8,000,000,000. It is estimated, therefore, that she has borrowed up to 40 per cent of her accumulated heritage. In a normal year of peace Britain must raise £400,000,000 or more than double her pre-war revenue, for the service of the war debt alone—that is, for interest on the War Loans and the sinking fund of i per cent connected therewith. Facing taxation of, say, £1,000,000,000 annually, Britain is hack again at the Napoleonic standard of taxation.

Loans to By U.S.A. Bv U K. Bv France Total. £ £ £ £ United Kingdom 842,000,000 — ' 842,000,000 France 5.50,000,000 508,000,000 — 1,058,000,000 It .Iv 325,000,000 467,000,000 ‘ . 35,000,000 827,000,000 Russia 38,000,000, 568,000,000 160,000,000 766,000,000 Belgium 80,000,000 98,000,000 90,000,000 268,000,000 Serbia and JugoSlavia 20,000,000 20,000,000 20.000,000 60,000,000 Other Allies 35,000,000 79,000,000 50,000.000 164,000,000 Totals 1,890,000,000 1,740,000,000 355,000,000 3,985,000,000