The Daily News. MONDAY, JANUARY 11, 1915. ECONOMIC EXHAUSTION.

Taranaki Daily News, Volume LVII, Issue 182, 11 January 1915, Page 4

The Daily News. MONDAY, JANUARY 11, 1915. ECONOMIC EXHAUSTION.

The question of where the financial strain attendant on the war will be most felt is one that is exercising the minds of the expert economists in England and Germany. Were all the data available necessary to form ail accurate basis of calculation, the process of estimating the duration oi the war from an econo- 1 mic exhaustion point of view would not be a matter of very great difficulty, but though we know Britain's position both as to cost and resources, there is not much reliable information as to that of Austria or Germany. This much, however, is patent: Economic exhaustion is likely to tell more heavily on Germany and Austria, for the reason that they, in proportion to their wealth, are spending more than the Allies. Long before the war broke out both Hungary and Austria were faced by heavy deficits, and they have been borrowing at high rat"s of interest to meet the strain on revenue caused by an excessive expenditure 011 armaments, with the result that japer money has come to be their only resource. On the other lmnd, Germany l as for years been building up her financial position, partly at the expense! of the Allies, so that the public finances of Germany were comparatively sound, though the liquid reserves of the banks were not strong. It must not be forgotten that Germany's trade is dependent on credit, so that the banks were heavily involved in loans to factories, merchants, and snip-owners, and as the war struck German trade all of a heap, besides absorbing the workers into the army, thereby paralysing industrial concerns, the effect was akin to that of burning the candle at both ends. It lias been stated that Britain's war expenditure may be set down at about £1 a day per man, and if that of Germany and 'Austria is at the same ratio, then for every million that it costs Britain it would probably cost Germany six millions. Then it must be remembered that Germany's ordinary revenue has boen largely derived from Customs, and that tile, stoppage of iier import and export trade must have caused that source of income to dwindle down to zero, while British trade has expanded largely. ilerr Loliinami, the president df the Bremen Chamber of Commerce, has, however, put Germany's financial position in quite a different lignt. He points out that Germany's import trade having ceased, and recl-ouing the decreased purchasing power of neutral European States, the diminution ill sales I y tin; overseas countries, outside British possessions, to Continental Europe must be,at least JIGUO.OOO.'IDO ill one J ear of the war. lie admits that Germany will have her share of suffering under this economic catastrophe, but ha contends that, thanks o the precautions of flic banks and the merchants, as well a-, to the united will of the people, Germany will emerge from tne "trojij/theiied, while English financial supremacy will collapse He does not believe that

Britain can finance uer Allies, and he Miicludes that she will lie in a far worse position than Germany for carrying on the war over a long period. Against this optimistic opinion must be placed the fact that Germany cannot borrow in neutral markets. Tile Vnitcd States refuses to lend to belligerents, and. outside America tlieie is no money obtainable, for all the other neutral eoimtries are a(. a loss to find e means of meeting their own requirements. This renders it compulsory for Germany to raise money at home. Her patriotic loan is said to have realised two hundred and thirty millions sterling, but every succeeding demand will be met with increasing difficulty, while Germany wTll be so flooded with paper money that the Government sill be. compelled to pay out its gold reserve, and this may continue until the actual destruction of wealth becomes so great that the people can or will no longer live under the strain. AH sorts of devices have been resorted to by the German authorities to impose on the confidence of the people, but as soon as the true position of affairs i$ understood, and distress becomes aoute, as it must under the present strain, there will be a day of reckoning, apart from the successful operation of the Allies' forces. The sooner that oay arrives, the sooner will the war be over, for it will be next to an impossibility for Germany to stand th l economic strain for any lengthy period. As to Britain's position, there is no question that she will be able to fight to a finish, and the nations of the earth will reap the reward in a lasting peace.