The Washington times. [volume] (Washington [D.C.]) 1902-1939, 1916-08-18
BRITISH AND GERMAN ECONOMIC
.... POWER

which an American banking syndi-
cate is advancing $250,000, 900 to the
British government has renewed in
tcrest in the contrast between the
financial methods Of the allies and
the Teutonic powers. Yesterday, the
British pound sterling, whose par
of exchange is $4.s665; was quoted
at $4.7575; at the same time the
German mark. par Of exchange 1913
cents, was quoted at 10 cents. '...
To put it in another way, that sum
Of British money which in time of
absolute financial equilibrium would
be worth $4.s665 in American
money, is now worth $4:7576; but
that sum of German money which
nominally should be, worth $4.S666,
is, in fact, only worth $3.50.
The British pound has fallen 1919
cents, while the normal German
equivalent Of the pound has fallen
$1.2665. '-.
Why has German money fallen so
precipitately, while British money
is almost at its normal parity?
Because, broadly, Germany has
been manufacturing paper money
and refusing to permit her gold to be
circulated. She has laid no new
taxes in order to carry on the war;
Britain has increased taxation ire
mendously,,'a and British financial re-
sources have been sufficient to pay
them. Germany has been borrow
ing, to pay the extraordinary costs
Of the war;; Britain has been in
large part paying as she went along.
Germany has suspended specie
payment; Britain not only has con-
tinued it, but has been able to con-
tinue London as free gold market.
the central gold market Of the world.
Before the war the British gov
ernment's budget produced just
about a billion dollars q year. AS
soon as Parliament could get around
to it, additional taxes Of about $780,
100000 were imposed. Later, a
round $50O,0O0,O00 was added to
this; so that the amount raised from
taxation was increased by about
$3.50, 100000 per annum. Still fur
Their burdens have since been added
to these, so that at present Britain
is raising, by taxation, about a bill
lion a year in addition to the billion
she was Dising before the war be-
gan.
Germany, on the other hand, un-
able to increase taxes lest it should
bring a crisis in the country, has had
to borrow, borrow, borrow. It has
been the British theory to keep the
currency sound above all else; to
protect England's position as head
quarters of the worlds finance; to
pay the bills as they were incurred,
so far as possible.
On the other hand Germany has
been compelled to hoard her gold
against the day when, after the war,
international commercial relations
should be restored, and international
debts would have to be paid in gold
When that day comes, the German
people will fully realize for the first
time the extent to which their money
has deprecated. Probably her cur.
rency will fall to new low levels
, when the attempt Is made to remove
the dam against gold movement, anc
resume a normal relation to the fisca
world.
Why is it that Britain can double
her taxes and pay them with com
parative ease, while Germany does
not dare increase taxes?
It is because Britain Is "doine
business as usual" Germany is cut
off from the world trade. She cannot
sell abroad because the allies nava
power has made other arrangements
1t is an astonishing fact that Brit
ish exports have actually increased
since the war started. The Boar
of Trade figures show that in Sep
TENDER. 1914, the country's exports
were $13O,OO0,0O0. In December
1915, fifteen months later, they wer,
about $170,OO0,000. For the full
year 1915 British exports wer
81, 1920, O00,0 900. These represents
the producing capacity of a countr,
that by that time had four million
men under arms, and two milliol
more working to keep them supplie
with war necessaries.
But these figures, startling a
they are, do not tell all the story o
British economic power; of it's ca
pacity to go on earning money wit
which to- pay the war bills. Will
British exports actually increased /
, IIQI6 Rritish ;p,norfa ;ucpoosal I;