New-York tribune., 1919-05-04
Reich shank Has
Vast Turnover i'm
Meaningless Money
Volume Of Business III 1918
Increased o5 Per Cent,
Chiefly From Inflated
War Borrowings of Cov't
By William c. Dreher

interesting Information regarding Ger
] man financial movements in the final
4 vesr of the war. We learn from the
raport that the total volume of busi-
1 ness at the bank in 1918 was 3,342,920.-
eSp.S00 marks, which denotes an in
crease Of nearly SO per cent over the
turnover of 1917. 1t is hardly worth
while to try to convert this huge sum
into dollars. for this flood Of money
was, like the world at its creation.
without form and void For those
whom it may interest. however, it may
he said that ii would amount, at the
normal rate Of exchange before the
war. to S796 900 100000, a sum equal
= 81 Germany's wealth as estimated for
1918.
It may puzzle the American reader
to try to discover how such an enor-
nous sum of even deprecated paper
money could be handled in u single
/ yesr Light is thrown upon the prob
/ lem by examining the sources from
which the banks earnings came. Out
Of its total of S14,272 900 marks gross
profits not less than 7S6 900 came
from "bills, checks and imperial oo-
Ggations." The last item in this list
embracing government operations in
treasury bills and their sale to the
ordinary credit banks, the flotation Of
the two big war loans, which involved
many booking operations-is whore
the largest part of the earnings were
taken in.
The report itself says that opera
tIons in commercial bills remained
within narrow bounds, while the cred
Ats extended to the empire took by
\
of outstanding paper in the three
marks at the end Of the year, against
an average of 16,519 100000 for the
Nwhole year The note circulation of
She Reichsbank itself at the end of
the wear was 22,167 100000 marks, or
lust a little less than twice as much
As at the beginning of the year. Be
sides these notes, however, there was q
circulation of 1o,242000,00 marks in
notes of the Darlehenskassen Qoan
banks at the end of the year, as
against 6,244,000,000 marks at the end
OF 1917 Thus the paper money in
circulation on December 81, 1918,
showed a total of 32,429 100000 marks,
against 1871 100000 year before.
The following passage from the re-
port will prove of interest to American
financial readers:
"The steady and growing demand for
currency was met by the Reichsbank
till far into the second half Of 1913,
just as easily as the demand for credit.
1.-THE uncommon payments upon the war
| loans never influenced the bank in any
striking way. but the continued dear
ness and scarcity of commodities ex-
erted stronger influence than before.
/ The fact could not be mistaken that
1.-THE sharper competition for the re-
lduced quantity OF raw materials, goods
land manufactures made it seem neces-
,}sary or advantageous to many persons
Vim private or business life to keep on
3hand larger cash reserves.
7 an spite Of the generally recognized
efforts TO promote the making of pay
sments without the use of currency,
large sums continued to be accumu
lated, and thus withdrawn from the /
circulation and from the Reichsbank. /
in consequence Of the peculiar develop /
nent OF economic life in war, and es-
'pecially in consequence OF the increases /
and disarrangements Of incomes and (
prices, the sums just mentioned were /
neomparably greater than in peace.
"The retardation Of the circulation (
continued TO be q fact Of growing i'm
portance. 1t may be attributed to var
i ous cause.-the boarding c. paper
money to conceal and make possible /
clandestine trading and for making 1
preparation for the expected return !
4of peace; and also the boarding !
no means OF less importance of /
fear Of sharper taxation g. e. Of bank /
deposits.
in the further course of the year
there was q Complele change in the /
IL
life. DEVELOPMENT was more and more /
checked through the harsh armistice
conditions. the rehabilitation Of the
army and the transfer of industries 10
peace work The situation was soon
disturbed by the fact that production /
Twas in part wholly prevented by /
Vstrikes, unwllingness to work and (
Ihoundiess wage increases demanded by /
sforkmen and employees. as we'll as by I
I lack of initiative on the part OF en-
<ployers.
This changed situation found ex-
Epresslon in the money market in a
Essrong reserve on the part Of lenders and /
capitalists where long term advances /
9wsre asked for Hence the satisfaction .
Sof the heavy demands for credit by the .
{empire, especially IN connection with .
ELne demobiiZation, devolved upon the
Il hitherto had been the case. The unccr-
kfs'nties Of the situation caused conf
Elence IN the credit Of the empire to be
8considerably shaken both at home and f
aofoad, 80 that not only was the sale
NJ treasury bills rendered difficult and
eae opening u new credits in neutral
countries prevented, but also that war
E.osns and other credits hitherto ex-
sshoeo 70 the empire we're got rid OF
upon large scale.
IN order no longer 70 stand in the way
soi me desire Of the federal states and
|En'uhcipalitles for greater freedom Of
kase.on In the capital market, the i'm
$.ts.iai hnance administration abolished
sns maT2et embargo that had been
os'h'Ained since the outbreak Of the
20 @sf ~ ~ laVor Of she war loan operations
:. lhe empire, leaving the states TO
meet their necessities tenaporarilv f
! lbilIsl ''' - "''i0"'"s treasury
- me calls for currency increascd to
s,..,a s,ane&pected oztent during the last
fSs,Hs ,rs~.Hs oi me year in conseoucncc of
~.,ny confidence in the future devel
] lyf'as lyfs.' az o. our political and economic
v,;a aee demands made themselves felt
ors ,..a senensary force and exceeded All .
| 'as'Dns. Wide circles Of the poou-
| of ~, ~, mpffoTer, adopted the practice
ss.9taraihg currency TO an ever in
1fsr'.1g extent, or else were cornpeIled
eb.n.zn oa&inogs causes 10 do 30. Mer-
slarys.s" ~ sfa manufacturers, smaller and
tn eap'taiista, especially since about
lsttI, xsshalnR n Oct3ber, withdrew
! bsnk. sp2sl's from the banks, sayinYs
H. zavs @"n cooperative banks, in order
"~'s w thor eash''