HOW THE WAR IS FINANCED.

Taihape Daily Times, Volume 8, Issue 36, 12 February 1916, Page 3

HOW THE WAR IS FINANCED.

GERMAN ATTEMPT TO BELITTLE BRITAIN'S POSITION.

WAR COSTING ENGLAND TWICE AS MUCH AS GERMANY.

LONDON. February 9. -' The German Imperial Treasurer, Dr. Helfferich. replying to Sir Edward H. Holden, asserts that England 's exports have been crippled auel reduced to half, while her imports have increasec* until th e balance of trade is against England to the extent of £500,000 instead of £150,000. He says that 1'" war is costing Britain 2/ per day per head of the population, and Germany 1/ per day per head. In analysing the financial situation. Sir Edward H. Holden, member of the House cf Commons for the- Heywoocl division of Lancashire, and ehairmer of the City and Midland Bank, Ltd. said that London was still the borrowing and gold centre of the world. The pound sterling never had to carry such a load as at present. It had naturally declined in value in accordance with the law of supply and demand, but while the exchange value in New Y> had depreciated by 1.99 per cent., ir Holland by 10.3, in Spain' by .6, and ir Scandinavia by 3.9 per cent., if hed enormously appreciated elsewhere. The pound was above par in Paris by 10. f per cent., and in Italy by 25.4. The correspondent of the New York Tribune recently obtained an interview with Mr. Edwin Montagu, M.P. Financial Secretary to the Treasury. with reference to the statements regarding the British financial position recently made in th e Reichstag by Dr. Helffc-rieh, the German Imperial Secretary of the Treasury. Mr. Montagu said: —

"In the /machinery and organisation of war Germany lias been living on her accumulated stocks of munitions. We have been building up curs. Our grea*: efforts are only just beginning to bear fruit, and have had as vet but a trifling influence on the military situation. We 1 started, compared with Germany, virtually without an army and without arsenals. Dr. Helfferich : s misguided enough to 7enture upon a comparison between the foreign ex-

change position of England ami Germany. I need not remind Americans how the exchage between London and New York fell for a fftw days at the end of August tc a discount of betwo-n 6 and 7 per cent. Since then, with the help of the loan which was floated in America by England and France, and by the use of ordinary economic methods, the-exchange has 1 een restore! and kept steady at a figure which is roughly equivalent to -the gold export point, allowance being made for (he high cost of insurance, freight, etc.. at the present time.

"What is Germany's position hi regard to foreign exchange? On October 1 depreciation of the mark in the terms of dollars was about 12 per

cent.; now'it is 19 to 20 per cent, below par, while Germany's exchange in Amsterdam is more than 2fi per cent, below par. W e keep a chart in the Treasury showing the statistical position of the various exchanges since the war began, and we have continually to extend the chart in order to prevent the descending line which represents reichsmark from disappearing below the bottom edge of the chart. Germany, with hardly any payments to make outside Europe, has nevertheless

to see her exchange falling away to vanishing point. She has realised all her available assets in the shape of negotiable foreign securities, and ever since the outbreak of war she suspended specie payments. What is the explanation of this fall in the wine o" the mark? One only is possible, the manufacture and abuse of pap ?r credit. The mark has lost all relation to the gold standard. Dr. Helfferich told hov the first German war loan was placer" at 971, the second at 98-1, and the third at 99. I dare say Dr. Helfferich can arrange if h 0 likes that the next German war loan shall' be brought out at 993, leaving room for the fifth at par. But not even in Germany can the raising of 10 billion dollars in war loans positively improve public credit. The explanation of these loans is partly, of course, that there is no sort of freedom about the market for war loans in Germany. The bourses are entirely under Gevernment control, and. in fnct. if not in form, there are minimi;?" prices fixed below which no ruie is r. 1 lowed Cor, indeed, dare r , ttcrnr>t , i + sell the war loan, however much he may want to. But there are sora. 1 othrrespects in which Dr. HelflfVrich h- n ~ stronger ground.' Germany hns J great sum from the smnTl investor. T ■ atrree that our machinery for r -'"■'-• i th c small investor is capable cf fci-

provement, and the committee of wliieli I am chairman is at the present moment busy investigating the possibilities of this still untapped source of wealth.''