The Taihape Daily Times AND WAIMARINO ADVOCATE. MONDAY, JANUARY 3, 1916. WAR FINANCE COMPARED.

Taihape Daily Times, Volume 8, Issue 1, 3 January 1916, Page 4

The Taihape Daily Times AND WAIMARINO ADVOCATE.

MONDAY, JANUARY 3, 1916. WAR FINANCE COMPARED.

(With which is incorporated The Taitape Post and Waimarino News.)

Without, any doubt the British Navy has established a blockade of Germany and her allies that must be a not unimportant factor in the war ending victoriously for Britain's arms. Mr. Balfour and ot-her British statesmen have testified to this in no unequivocal language. With respect to the financial position, Mr. Runciman has made that interestingly clear in an interview which he gave to the London correspondent of the Chicago Daily News. B!e first pointed out that Britain had had fewer strikes since the outbreak of war than in the past 20 years, the iron, steel, and coalmining industries showing a much greater output per man month after month since the war started, all of the men's own free will, without compulsion or conscription. With respect to the financial position lie drew attention to an article in tie Kolniehe Zeitung in September, in which the paper states that it is easier to raise money on sesurities than to withdraw large deposits from the banks. The paper went on to show how £2O will buy £BO

loan, thereby forcing a loan on the subscriber of £OO. The present Ger-

borrow, and the ultimate result must be nothing short of the absorption of the whole German wealth in war loans. The only hope of salvation suggested by Germany's Finance Mia- i ister is that Germany's vanquished i enemies must pay the cost. This so'/u----tion may be inadequate, even if Germany had a chance of winning: if she does not win, those persons who -have .borrowed from the banks will find themselves with heavy liabilities which they may possibly reduce by selling war loan, and if German busi-ness-men are to re-establish their overseas trade they will [have to provide themselves with capital by selling their war lean holdings when the war is over, especially as they will be forced then to pay more fully in cash i-for what they buy abroad, and they will have to work with less credit. Mr. Eunciman goes on to say that Germany has to support her loans by artificial means; Britain conld have done exactly the same. If, when our first loan was floated, we had established a powerful syndicate and forced the price to. a premium. Ave could, by thus rigging the market, have floated a seeond loan on better terms, i We rather chose methods open and straightforward. The loan as issued takes care of itself without official assistance; its price is regulated by supply and demand; and everyone, including neutrals, knows exactly the true state of the market, which is disclosed day by day. This system lias no element of trickery. London is still the free gold market of the world. The Bank of England note is covered by gold to the extent of 200 per cent., w T hilo the German not-3 is covered by about 43 per cent. Referring to the depreciation of the pound sterling in New York, Mr. Runcimr..n asks what the depreciation of the German mark (one shilling) is. He says a chart before him of fluctuations in New York, since the war began, shows that the mark is at a discount of over 14 per cent., while the pound is at a discount of 5 per cent. This contrast is more remarkable, he says, when it is remembered that Germany has made very small and diminishing purchases in America, whereas British purchases have been gigantic. Germany that she will emerge from the war practically free from foreign obligations, and her partisans might frankly state that this will be a very serious matter for German finance, for she is consuming all her supplies of materials, and being unable to replenish during the- war she will be forded to purchase enormous quantities at the end of the war to restore and carry on her industries. If her depreciation is 14 per cCnt. now, what will it be then"? Britain's financial strength lies in the fact that she is ail the time earning income by production for herself and her foreign customers, and by carrying cargoes across the seas for foreign merchants in British vessels, so, by preserving her industries and commerce during th-e war she has found increases in her taxation a burden comparatively easy to carry. From September, 1914, to September, 1915, British exports continuously increased from £26,674,101 to £32,308,432. British credit is built upon the firm rock of profitable production, enabling Britain to dispense with ail dodges and tricks resorted to by her weaker foes for obscuring the position and postponing the day of reckoning. Britain not only finances herself but, with the aid of France, supports Russia's foreign purchases, and provides the Belgian and Servian Governments with money to Enable them to preserve their national existence