Der Deutsche correspondent. [volume] (Baltimore, Md.) 1841-1918, 1916-10-05
GERMAN WAR FINANCE.
By Professor Moritz Julius Bonn,
President of the Commercial Uni
versity of the City of Munich.
Continuation
3.
Continuation
FRANCE COULD NOT HELP
HERSELF.

Der, 1915, she had borrowed 100000
100000 francs-7.3 billion francs
were borrowed from the bank, 8.35
billion francs were borrowed by
short-term treasury bills at home and
l.l65 billion francs by such means
abroad. Fifty-seven per cent. OF all
Frances borrowings were short-term
credits. Things are not better in
England. Three different types of
permanent loans brought in 4.6 bill
lion dollars-1.41 billion dollars
have been secured by exchequer
bonds which mature in a few years.
Up to June "a. 1916, $40 billion dol
lars treasury bills were outstanding
If war expenditure certificates and
war savings certificates (S72,000,-
000) are added to the permanent
debt, 80 per cent. of all loans were
raised as floating debts, only 46 per
cent. are permanently secured. The
Chancellor of the Exchequer no doubt
has got the money for the treasury
bills issued, but he has got 1t only
for a short time. He has to renew
the bills when they fall due, or he
has to fund" them. When he
proudly published the figures of Eng
lands achievements in contracting
floating debts, his troubles were only
beginning.
No doubt, there is more variety
about British and French war loan
issues than about the German loans
All sorts of different investors may
be interested in them. The outstand-
ing fact is that large percentage
of the Allied loans are not placed at
all, but are merely hanging over the
market The bulk of the German
loans, on the other hand, has reached
what might be called the ultimate
consumer. The German loans are
popular loans. The first three loans
have been subscribed by 7,250,000
subscribers. The fourth loan was
subscribed by about 100000 peo-
pie, about FIVE times as many as had
subscribed to the first loan Three
million three hundred and fifty thou
sand individual subscriptions were
below 800 marks ($125); far more
than so per cent. of the holders Of
the three loans are people who have
invested less than $3.50. A large
share of the subscriptions, fully 20
per cent. OF the total subscriptions of
the first three loans, have come from
the deposits of the savings banks.
which are the banks Of the small
people. The average subscription to
the great English loan was $4,000,
the average subscription to the
French loan was $685. the average
subscription to the first German loan
was $3.50, and the average subscrip-
iion to the last German loan was
$3.50.
NO SPECULATION.
People who take up such small
blocks OF loan do not buy for
rise. They look upon It as a per-
manent investment They transfer
their money from the savings banks
to that, to them new, sort OF invest
ment, the government bond. The
savings banks have facilitated the
Investments by permitting their Gus
toners to withdraw their deposits for
such purpose without insisting on
their customary right Of receiving
notification OF the intended with
drawal one to three months ahead.
When the payments on the loans fall
due the deposits of the savings banks
are temporarily depleted, but they
soon recover Two years before the
war the paid-in deposits of the saw
J y -
just before the third loan was taken
up they had risen to 20,000,000,O 900
marks. The German loans have be-
come the favorite Investment of the
small people Financial ties have
been created between them and their
government as have never existed be-
fore. The nation is not divided be-
tween the capitalistic classes, who
hf, Il u. Il
who have to pay interest by way OF
taxation. The people are creditors
and debtors as well. Whilst the bulk
Of the German loans is in the hands
Of the investors, the loans OF Great
Britain are floating in the market
SO far Great Britain has borrowed
a little more than Germany. Both
countries average about 100000
100000, If the floating debts are i'm
cluded The heavier load per head,
however, falls on Great Britain For
Great Britain has 46,000,000 inhab-
itants, whilst Germany has $4,000
600. This means load of $217 per
head In England, and of $147 in Ger
many or the s217 borrowed by
England $84 are not yet properly
secured; they are floating, whilst of
the S147 subscribed in Germany over
$120 are funded" In France the
danger of this state Of affairs has
been realized. Frantic efforts have
been made to popularze the loans
and to put them on a broad basis.
These efforts have not been very
successful The 100000 subscrib-
ers of the British loans do not COM
pare favorably with the 100000
subscribers to the4German loans. All
sorts OF new financial expedients (war
expenditure certificates, war savings
certificates) have been resorted to.
Subscriptions as small as five shil-
lings were accepted, and in that case
the interest was 5 per cent. instead
Of A Y per cent. IT is rather sugges-
tive that democratic finance as
means Of placing huge loans on a
permanent basis has been successful
in Germany only.
THE ENGLISH CONTRAST.
The success Of Germany in placing
her loans in the hands OF permanent