Evening star., 1917-03-22
FINANCIAL BURDENS
STAGGER GERMANY
National Debt Now About One
Fourth of Country's En-
tire Wealth.
BANKERS FACE PROBLEM

,orresroud.nes er he Associatsl Press
FERN March 4.-The issue OF Ger
rlany's sixth war loan has again raised
the question as 10 the sources of tho
empires sinews OF war. II IL mystery
which even expert bankers are tIEaple
satisfactorily 70 explain. The financial
experts point out that the GeIa=ac 9co-
rio are living mach more economically
than ever before. while their earnings
hzve greatly increased. and also that
no capital formerly used in carrying
on rhe foreign trade of the country,
sue tracked from its original use by
The British blockade, has been invested
capitai which was locked up in raw
materials in warehouses and factories
was released when the stocks were
turned into finished goods after the
suItbrcat Of the Var and Sold at un-
usually large profits.
after giving these explanations the
ftuanCiers freely admit that they are
far from meeting the situation. W hiie
tho factors mentioned figured largely
Ir the earlier war loans II Is con-
tended that by now they must nave
spent their force
The TWO facts which cannot be
lodged are that nearly the entire able
bodied population has been withdrawn
from production and has become
huge burden on the economic powers
If the country and second that the
foreign trade, the source OF enormous
nroft before the war, has practically
ceased to exist.
In the face of these adverse facts Ger
many raised last year two war loans
which called for subscriptions of fully
IS 900 00o goo, an amount far in excess OF
what the German people were able TO
invest in securities in even the best year
before the war.
Investment Increase Seven-Fold.
In a book on Gernanys economic
Growth, by DR.. Helferich in 1913. the
present vice chancellor of the empire
estimated the total annual increase OF
the earned wealth of the German peo-
,,Ie for the years Immediately preced-
ing the war at 81. 00.000,00O = s2,9oc,-
OOO. 600
He showed that out of this total the
maximum amount invested in home ana
foreign securities for any single year
was only a little over St0U,oVeooo- 1et
The total of last years loan was seven
fold greater than this maximum. In
other words. the Germans are now un-
der the stress of the greatest war III
history. investing seven times as much
money as in their most prosperous
years OF peace.
According to DR.. Helferich again, the
gross income OF his own people Just
before the war was about S10,0OO,O0o,-
600. but most of this was consumed each
year.
gate earnings must now be much less
than $4,000. .00o. .0e9 il the financial eA-
perts agree that the most rigid economy
ON the part of the people could hardly
have been the decisive factor IN de-
terrnining. the-- success of the loans.
This is especially the case in view or
the sharp increase in the cost of liv-
ing. which must neeessariiy cause
ers to the new bonds.
The attempt to explain the big loans
as due to credit, opera ttens rs sslso am, :
cult to accept, as far as the visible
evidence goes. The so-called loan banks
which were organized at the outbrea k
of the WARRIOR the purpose of facfli-
tating the futation of war loans by
lending upon securities as collateral
have had at no time outstanding loans
in excess of $500. 5000 Moreover. a
large part of this total was represent
ed by operations not connected with
the loan. Indeed. only small per
centage of the war bonds had been
bought with money borrowed at the
loan banks
Bank Loans Not Undu1y Expanded.
The expansion of the discounts ana
the note circulation of the Refchsbank,
although that was due in part to the
loans, has not been of such volume as
to be the determining factor. In the
press of countries hostile TO Germany
It is often alleged that the loans We're
taken up by the big banks, or with
money borrowed from them. This state
ment is energetically denied by the
banks themselves. They claim. on the
other hand. that they are regularly
bound to sell out. within a reasonable
time. whatever bonds they subscribe
for in their own name.
They also point out that 4 is not
tqeir practice manual reports as proof
their practice to lend their resources
for the purpose indicated and they Of
fer their annual reports as proof
hat they have not been expanding
their loans uuduly.
Germans are, however, more deeply
Interested just now in financial prob
lens of the future than in finding eX-
plantations for past successes. The
.;ipld growth Of the national debt, with
tho certain prospect Of further big
expansion. is undoubtedly the source Of
The Gravest anxiety among thoughtful
fnanciers and economists.
The war expenditures up TO the present
time are estimated at probably in excess
uf Sfi 600. 900 600. and are expected to
reach 80" a00, o0o 900 by the end Of the
Year Il The war continues that long.