The Bridgeport times and evening farmer., 1918-04-27
The World of Finance
INANCIAL SITUATION IN GERMANY
 PAUSE OF MUCH ALTON AS TO !. HER METHODS OF REHABILITATION

X matter concerning which sur singly little information has been lilable is the method adopted by rmany in meeting the cost of war, d the probable advantages or de- ;ts of that nations financial course procedure with reference to her llity to continue the struggle and to bet the readjustment which must low it's conclusion. Because of this Lrcity of data, the speech delivered Sir Edward Holden, Chairman of 3 London City and Midland Bank the annual meeting of shareholders January in which he covers the bject in detail stands out even more ominently than the usual statements this distinguished economist and nker.
 Sir Edward stated the lines upon lich Germany had determined to oceed in the event of war were: First: To raise all the paper mon she required, regardless of infila- ,n, through the Reichsbank-i e. National Bank of Germany-and case this proved insufficient through Loan Banks"
 Second: To leave all arrangements rectifying her finances until after war"
 At the outbreak of the war, the irman banking law was that the cash the Reichsbank must be equal to least one-third of the notes issued, d that the bank must hold bills of change equal to the remaining three onths, and generally had to bear rec names. The ordinary Govern ent Treasury Bill was not regarded
 bank cover. In order to provide r expansion of the note issuing pow
 a law was created in August 1914, the issue of Treasury Bills and oviding that such Bills, bearing the gnatures of two members of the ltional Debt Office, and maturing bank cover.
 This provision overeame half of the oblem, but still left open the ques- On of increasing the cash balance fficiently to maintain it's proportion
 one-third of the notes issued. De- ite vigorous efforts to attract gold the Reichsbank, the amount which uld be obtained was insufficient tc ovide anything like that required to Fovide a base for the flood of notes hich it was planned to release.
 Recourse was had, therefore, tc bother law, under which established inks with power to make loans rough the issue of notes, known a. arlehnskassenschenin It was fur. CT provided that these notes, wheI bld by the Reichsbank, were to b. garded as gold, making it possible IT the Reichsbank to issue three arks in it's own notes for every mari bld in Darlesnskassen Notes.
 Here we have in outline the method nployed. It placed almost no limit ion upon the printing presses, anC ade the process of supplying cur sncy practically mechanical oper jon.
 Attention is caIled to the expansion ot only in respect to note issues ut also with reference to deposits he two bringing about, largel trough imitation, an increase in tn anks assets and liabilities iron b6, 47o, 900 to 1,oS4,259, 900. The gol acking for the notes has dropped fror t.7 per cent. to 20.9 per cent. i hree and one-half years, and will pre- lmably continue to decline.
 With the sole exception of the per bd following the outbreak of hostili es, the greatest decline in ratio c old to notes has ocucrred in tn lst six months, and if continued 8 ne same rate, will have reduced tn old cover to 15.5 per cent. by Jun, 91S, and to 11.5 per cent. by De ember, 1918.
 As a measure of comparison, W nay put against these figures or wn requirement of 40 per cent. gol gainst Federal Reserve notes whicl fully utilized, would admitted cad to imitation.
 We have thus far touched only ( he expansion of the Reichsbank, bI Jhat of the Darlehnsltdssen, and joil tock banks? They make loans 1