The Guardian (And Evening Star, with which is incorporated the West Coast Times.) WEDNESDAY, OCTOBER 17th, 1923. GERMANY'S CURRENCY INFLATION.

Hokitika Guardian, 17 October 1923, Page 2

The Guardian (And Evening Star, with which is incorporated the West Coast Times.) WEDNESDAY, OCTOBER 17th, 1923. GERMANY'S CURRENCY INFLATION.

Tin; inflation of Germany’s paper currency Inis gone beyond all hounds, and the financial conditions of the country must he dislocated very seriously. A Loudon financial journal dealing with the subject, proceeds to remark : ‘•While little can usefully be said as to the general outlook until matters have been considered in the light of the French leplv to the British Note on Reparations, Germany appears to be lecognising more dearly the need lor a drastic policy if economic disaster is to be averted. If may be that there is no serious intention, of putting tlio proposals of Dr. Strcxcmann, (lie new Chancellor, into force, or that they will come too late; and in any event Germany cannot recover until a settlement of the Reparations question has been reached. Tbe door appears to be still open for negotiations between Britain and France, hut fuithcr delay is apparently inevitable, and in the meanwhile the economic condition of Germany grows steadily worse. The currency question is only oho of Germany’s troubles, but it is a very important one. In the main it has been brought on by Germany herself, for tlie seeds were sown while the war was --till in progress; the French occupation of the Ruhr merely served to accentuate and aggravate an evil of longstanding. It is such an evil, from Uneconomic standpoint, that it is difficult to sue how, at this -stage, it can lie cured, assuming that Germany lea.ll.v desires to effect a cure. She has now a note circulation exceeding (12,5 billion marks, the last- Roiclisbank return having shown an increase for the* week of nearly 18,'J billion marks. Til a fortnight the amount has doubled itself, and the million mark note, it is said, is rapidly becoming tbe common currency unit. If Germany were really in earnest in her desire to bring about an improvement, the last Reichsbank figures afford a clue to a possible solution of this particular difficulty. At the exchange current al the end of August all the paper marks outstanding have a value in sterling of less limn £3.700.000. for, broadly’ speaking, the depreciation of' the mark lui> been in inverse ratio to the increase ill th> quantity of notes created. Against these notes there is a. holding < f near lv G 00.000,000 marks in gold, the sterling value of which is about £30.000,000. Consequently, the notes are covered by gold fully eight times over. The circa instances, while illustrating the loss of confidence in the paper m ilk, indicates what might he done if the authorities in Germany decided to use this gold for the purpose of redeeming part of the note circulation. The immediate effect of initiating such an operation would he a spectacular recovery in' the exchange, and before long the proves of redeeming- notes with gold would heroine too expensive, because of the appreciation ill the paper mark. The demonstration, however, of nil ability to improve the exchange would probably do .something to restore confidence in the currency, and it would bring down prices as expressed in marks -not necessarily real priceswhile it would probably enable Germany once again to purchase raw materials from abroad. Obviously, however. for such an improvement to he of a. lasting character it would be necessary fur Germany to institute reforms in her economic policy, and, even then, as stated above, an agreement regarding RepaJrafiioiiis would be essential to complete recovery."