THE POWER OF MONEY.

Taranaki Daily News, Volume LIV, Issue 111, 31 October 1911, Page 4

THE POWER OF MONEY.

In his now famous work, "The Great Illusion," Mr. Norman Angell shows that the financial interdependence of the great modern countries makes it impossible for any one of them to suffer without the others being hit. Never has this been more effectively demonstrated than during the time Europe was on tenterhooks regarding the. outcome of the Moroccan negotiations. The t country to suffer most was the country that was making trouble—Germany. I German industries work a good deal on paper, being financed by the, banks, and a big, proportion of the credits come J from France. Apprehensions as to the possibility of war led to the French financial houses withdrawing much of their credits, and this created a stringency in Germany at once, being added to by the fear which immediately possessed German investors that the . Government would commandeer- their funds for war purposes. A run on the banks followed, and the industries and big commercial houses were hit hard, some indeed being ruined. This is a concrete illustration of the new order 0; tilings—of a financial world so nervously interdependent in all its parts that a mere scare about Morocco brings about a heavy fall in the securities of a great country, and, in a lesser degree, lowering tlie -securities of other countries, for British and colonial securities did not escape. There was a severe shrinkage during the "Black Week" of values on the London Stock Exchange: The chief sufferer was the Canadian Pacific Railway, whose shares had been much favored by speculative investors in Berlin. "Money is showing its power," cemmiented the London Daily Mail. "The panic in Berlin has had its repercussion in London, New York, and Paris, but in these money markets the effect has not been so severe, nor has such evidence of instability manifested itself. German industry is highly organised, and, as Mr. Norman Angell has stated, some 95 per cent, of it is carried on with borrowed funds. Indeed, so extensive is the use of credit that many of the great: German businesses are practically in the j position of speculators 'trading on a mar-1 gin.' The 'funds which they use in normal times are mainly provided by Eng-1 land and France, the two great dealers in international credit. Hence, when the German Government, by producing a feeling of alarm and unrest, leads the British and: French dealers in credit to stop their loans, the first victims are the German business men. A great commercial crisis will hardly conduce to the popularity of the German Government in the fast approaching 'elections, and 1 will lead the German business world to endorse the view of the great Socialist demonstration of a week ago at Berlin, that for Germany to make a war on the Morocco issue would he unpardonable."