The Guardian And Evening Star, with which is incorporated the West Coast Times. SATURDAY, NOVEMBER 8th., 1924. THE DAWES PLAN IN OPERATION.

Hokitika Guardian, 8 November 1924, Page 2

The Guardian And Evening Star, with which is incorporated the West Coast Times. SATURDAY, NOVEMBER Bth., 1924. THE DAWES PLAN IN OPERATION.

Tm: Da v e.s plan fur the settlement- of ilie German roi.iiraliuiis is regarded as a great f.N|n*rimc“iit. The proposals are being examined closely in America and ae. ording to a linaiieial journal in the States, there is no precedent for the payment of sums of this magnitude . where the payments run one wav and no offsets are available. Tito.se payI incuts are outside of trade, which lias a natural tendency to settle itself. Over and above its regular foreign * trade settlements, (lermany must export goods or services to cover the I obligations of this agreement. There is gloat disagreements among people who Jut vo standing as exports about dermany’s ability to make the payments, and about the jnobable elleets of such payments, if they are made, upon the industries and trade of other countries. Considering first ability of Germany to pay, it is evident that this will depend upon high production by the 'Gorman industries coupled with low consumption by the Cicnnaii people, thus enabling a great industrial product to be exported. Following the analysis farther, it probably means long hours in the industries, or at least the working day which will yield the largest product. The late Hugo Stinnos insisted that Germany must go back to the 10-hour day in older to pay reparations. The 10-licur day was the rule in Germany before the war, and the country had no excess of iuerehaudi.se exports over imports then. Its problem now is to create a very large excess, hence it must produce more and consume less. In order to produce mure and begin at once, longer hours would seem to he the only mire resort. Invention and improved methods are the best way of increasing production, but their results are incalculable, and anyway take time. .Moreover, they require capital accumulations, which will be difficult to make in Germany. Blit besides increasing production it will be necessary to leduvc consumption, or ut least ])!event consumption from increasing to correspond with production, for it is a surplus of production and of exports that is required. In order to bold down consumption it will be necessary that wages shall be as low as compared with the cost of living which may Ih? accomplished either by means of low money-wages or by taxation which raises the prices of everything the people have to buy. Taxation is the method by which the government takes over the share of production which must go for reparations. Briefly stated, these are the conditions which must he imposed in order to create a large surplus of exports over imports. Economists describe them very simply, hut can they he put into effect as easily as they are described? Tlie German government promises to do it. but if the 10-hour day is necessary. can the Government compel tlio workmen to accept it. and if lower wages or a lower standard of living are required in Germany than in neighboring countries, will the masses of the German people, accept them and work as cheerfully and efficiently as in the past? These are crucial questions. It is necessary to consider the possibilities of misunderstanding, of misrepresentation, of social nnil political agitation working upon class suspicions and prejudices. The workmen might he willing to work long hours and accept a lower standard of living if they thought these conditions really necessary. but there will he plenty of people to tell them that such conditions are not necessary—that the employers aro ; making foo]ji of tb?nt, fftid that the i

rich are scheming to gel off without paying. AVho can foretell whut the outcome will hi.*? In case Germany demonstrates her ability to create a surplus of exports over imports sufficient to meet the reparation payments, what will he the attitude of other countries toward such a. volume of German exports and what the effect on business elsewhere? Economists whose opinions arc entitled to respect are aide to dispose of the difficulties which some j>eoplc apprehend, as easily athey show luiw Germany can create her surplus of' exports. Arranged by them on paper there does not seem to he any problem. And yet in the countries adjoining Germany, particularly among business men producing the same kind of commodities which must constiute the chief exports of Germany, no little concern is manifested. Evidently the British industries arc apprehensive of severe competition, for the British Prime .Minister has announced that lie will appoint advisory commitmitteos representing the principal industries to confer with the government. The reason for this apprehension is that the principal industries of Germany are of the same character as the principal industries of Great Britain, and this is true of other eoisntries as well. Germany’s increased exports must be of products like the products of other countries How many such products can the markets take? It is an economic: truism that there is no possibility c;f over-pro-duction, provided production is well balanced. It is all a matter of balanced demands and offsetting exchanges. If it were possible to increase all kinds of production simultaneously, the aggregate might he doubled, provided all kinds came on the market in the light proportions, and there would lie no disorder; the world would simply move up to a higher standard of living. If this is what Germany's increased exports will mean, there is nothing to fear from them; but will the supply of all kinds of goods and services increase ill tiro right proportions and lie absorbed without disturbances This is what business men are not sure about. Oil the other band, it is true that the credits created around the world by the surplus of German experts will be turned over to the Allied countries, const!- . tilting the reparation payments. They will constitute purchasing power to be used by the Allied countries instead of by "the German people. ”\Vh.v then should there be any more disturbance than if there were no reparation payments? The‘whole question turns upon the degree of ahnmnnlity in the situation. It is the ,abnormal developments i that disturb the industrial balance. Are the offerings of the principal German industries—iron, steel, machinery, and the textiles- going to he greatly m excess ol their offerings in the past, and if so what will he the effect upon those particular industries in other conn tries, and what w ill other countries do about it? Also, wlmt will the purchasing power created by these reparations payments he used for. and to what extent will such purchases provide employment for workmen who might lie thrown out of employment in "other industries? AVoikmen do not change employments readily, lint prosperity in one industry tends to make employment in other industries. Kuougli has boon said to show that the situation has many complications, lor it will be affected not only by the legitimate effects but by what the people of different countries think are likely to he the effects, as the United States was influenced to pass the l’ordm.y act and as the British government has been move'll to appoint industrial committees.