GERMAN SOLVENCY.

Digger (Invercargill RSA), Issue 43, 14 January 1921, Page 5

GERMAN SOLVENCY.

ABILITY TO PAY. The memorandum which the German Government presented to the Allies on the question of solvency is one that could have been foreseen. It follows up in argumentative form the hints and suggestions that have appeared from time to time since the signing of the Peace Treaty that the obligations which the German Government was then compelled to shoulder were too heavy and threatened the Republican State with insolvency for the sins of the Imperial regime. By insinuating douhts into the minds of the Allies it is hoped that concessions may be made. The general purpose of the document in question is thus to create the impression that Germany as an economic unit is disrupted and impoverished by the Treaty and reduced to a nerveless and hopeless position, and that nothing but financial ■chaos confronts her. In this, as in other things, there is room for argument, but there is no harm in bearing in mind that no sooner did Spa loom on the horizon than a remarkable change occurred in the value of the mark. Instead of standing at 360 to the £ against the par of twenty, the rate fell swiftly to about 120, and today German currency exchanges at the rate of about 150 marks to the £. This extraordinary improvement does not agr,ee with the picture now presented, and as the recovery is attributed to heavy purchases of marks by such shrewd speculators as the Dutch and the Americans, . i it would be remarkable if financiers in both these centres could have so misread contemporary signs in Germany. Private advices which reach trading and financial houses in the City speak confidently of Germany's recovery, and this information usually comments upon the more hopeful feeling among the German people and the desire that is universally cncountered to get down to work. If impartial business men in Holland consider it prudent to advance credits to German firms and Dutch financial houses lead the speculation in the mark it may be as well to disregard the too sombre hues painted into the memorandum. — Dubious Assertions. — It does not follow that there is not a limit to Germany's capacity to pay, but the prophet who cares at this stage to predict that Germany cannot pay more than two, three, four or five thousand million sterling is possessed of more courage than prudence. It is true, as stated in the memorandum, that the terms of the Treaty deprived her of valuable assets, that the burden of the indemnity falls upon a Germany shorn of territory which contains valuable ores and agriculture areas, and that her traders are crippled by the loss of these pornts d'appui in former enemy countries and in the colonies. But the reparation clauses of the Treaty were framed in the light of these penalties. It is therefore open to Germany to state what total she can bear — a course which so far seems to have been sadulously avoided. The mere state-

ment that under the Treaty Germany is obliged to pay interest and sinking fund on a total of forty billion gold marks as a beginning, equivalant to a yea.rly charge of almost 2.4 billion marks (£120,000,009), is an assertion the calidity of which can only be proved hy time. It is necessary that Germany should make an effort to repair the damage wantoniy inflicted upon her late enemies. What is now claimed in the petition is that she must b.e freed from those restrictive conditions, so that she may choose the ways and means which could lead to the recovery of her economic life and to the salvation of her finance. Without freedom of economic action, it is stated, and without economic co-operation with other nations, Germany can neither rebuild her economic life nor put financial affairs in order. Without financial order Germany clearly cannot punctually meet her liabilities. But what this may mean precisely will no doubt emerge at the Conference now sitting. If it involves the raising of foreign credits, ifc will present new difficulties to the Allies, yet it is not easy to see how, without a supply of essential raw materials from abroad, Germany can be restored. At the same time there is the fact that while the most productive regions of France have been intentionally devastated far beyond any requirements of civilised warfare, German industries are untouched and her agricultural possibilities are the same as before. This is what has to he brought home to the German mind.