Der Deutsche correspondent. [volume] (Baltimore, Md.) 1841-1918, 1916-10-07
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GERMAN WAR FINANCE.
By Professor Moritz Julius Bonn,
President Of the Commercial Uni
yersity Of the City of Munich.
(Continuation.)
BLOCKADEO FINANCE.

BLOCkADED FINANCE
1t has been estimated that the
national wealth of Germany and of
England does not differ very much.
They are variously estimated as be-
tween $4,000, 100000 to $8O,000,-
100000. A yearly war expenditure
Of over $4,000, 100000 to $1,000
100000 would be nearly per cent
to 10 per cent. of the national
wealth.
Again, the national income of both
nations is supposed to be about equal
$40, 900, 100000 to $11, 200, ,000,-
600. If all war expenditure had to
be betrayed from income it would
swallow up so to 70 per cent OF it,
l am inclined to think that peace
calculations of wealth and income
are somewhat upset by, war. War Is
a great destroyer of material. both
directly and indirectly, but war need
not be a destroyer of money income.
No doubt, in Poland money income
was destroyed, with everything else,
when Grand Duke Nicholas burnt
down crops, farms and live stock.
And the money income of the Ger
man ship owners suffers whilst their
ships are laid up. Generally speak
ing, modern war means an enormous
ly increased consumption. AS long
as it lasts, there is war boom in
all districts not occupied by the ar
mics. AS prices rise everywhere. the
purchasing power Of any definite
sum of money is considerably dim
inished. The former proportions of
national wealth and national income
are greatly changed. For nearly all
material goods in the hands of a ma
tion's rise in value.
WHEREIN THEY DIFFER.
SO far there is not much difference
in the position of the two countries,
but the social structure of both ma
tions is different The United King
dom consists of two small islands
with an overcrowded city population.
In England and Wales population is
twice MS dense as in Germany;
agriculture is unimportant, nearly
all Industries are dependent on for
eign supplies OF raw material. A
great part Of England's wealth are
investments abroad and the capital
lied good will of shipping, banking
and trading. A large share of her
income is drawn from these sources.
Her foreign investments are calcu-
lated at 100000, 1000.
Germany draws a much greater
part of her wealth from her own soil
One-third of her people are engaged
in agriculture. She also is q great
investor abroad=her foreign invest
ments are valued at $4,000, 1000, 900.
But broadly speaking, England Is
far more dependent on oversee con-
nections than Germany. She con-
sumes SIS per head from abroad,
Germany only $40. On the other
hand. her assets in foreign countries
are larger: they are 1926 per head
against $131 owned by Germany. AS
England was the great center of the
worlds trade, her floating capital Is
enormous. It has been estimated
that between G300,OO0,000 to $780,
100000 bills on London were matur-
ing at the outbreak of the war
BY NECESSITIES OBLIGED.
II Germany and England had to
finance the war in the same way Ger
many would have been greatly handi-
capped. A much larger share of her
men was immediately withdrawn
from production at the beginning Of
the war. Her investments abroad
are smaller, especially as a large part
Of them was confiscated by England,
whilst another part is not available
for mobilization, as il is located in
Turkey, Austria, Bulgaria, Servia
and Japan. Liquid capital was al
ways scarcer in Germany than in
England. If Germany had been try
ing to go on exporting on the old
scale, whilst she was fighting, the
strain on her economic situation
would have heen intolerable. The
exporting and the importing indus
tries would have been locked up their
capital in their own concerns; they
would have strained every nerve to
go on producing. They could not
have subscribed money for war
loans; for on account of the high cost
Of production their profits would
have been small. Capital and labor,
necessary for war purposes, would
have come forth slowly, just as It
happened in England. Ultimately,
production for export would have
had to be stopped by force. A heavy
demand for imports would have
arisen. They could not have been
paid for in goods or in cash, for Ger
many Is not gold-producing coun-
try. like the British Empire. They
would have had to be paid for by
loans contracted at usurious rates.
Germany would have encountered
the same difficulties with which the
Allies have to grapple only in her
case they would have been ten times
worse If Great britain has TO nav
G per cent. in New York, deposing as
collateral non-British funds, the
rates for a great German loan would
certainly not have been less stiff
ALLIES FOREIGN RESOURCES.
England and her Allies have used
their foreign resources freely. They
have compelled their citizens to sell
their Investments. The proceeds abb
road are used to pay for goods. They
have raised far more than 81 ,0O0.-