The Pensacola journal. (Pensacola, Fla.) 1898-1985, 1921-02-08
Prominent Finaneicr Says Worle
Markets Will Show If Repara-
tons Sum Is Too Great
BY HARRY 3. HUNT.

! WASHINGTON, Feb. It's the
German reparation agreement reached
| by the allies within Germany's ability
to pay, and if so, what will be the
effect on economic conditions general
/ ly of having the amount of repara-
lions and the terms of payment def
nitely fixed?"
| Bernard NJ. Baruch, economic adj
visor of the American Peace Mission
to Paris when the treaty was drafted,
and one of the American members on
| the reparations commission didn't
| give any snapshot answer. He did
! quite bit of figuring and pat through
several telephone calls before he an
swered.
His figuring was done to translate
| into American dollars the amount of
indemnity the allies now agree Ger
many must pay and to determine how
great a capital charge would have to
be set aside by German industry in
order to amortize the 226,000,000,000
gold marks in the next ~ years.
J His telephone calls summoned to his
aid expert statisticians and also put
him in touch with officials from whom
he obtained details of the agreement
which have not been carried by press
dispatches.
We'll" he finally announced, from
the facts in hand, 1 would say that
the total amount of the reparations
looks pretty stiff.
Merely because Germany may ac-
cept 1t, and because the allies say it
business men generally throughout the
world will so regard it.
1.-THE real story of whether the re-
HE
excessive, will be told within the next
few days I'm the worlds markets.
THAT will be the real and only
dependable guage.
IF it is a sum within Germany's
ability to pay. and if she accepts this
arrangement in good faith, and not
simply because she has TO, and, fur
thor, if it meets the approval of bus
mess men and financiers. there is
sure to be an Improvement in world
wide economic conditions.
There has already been a rise in
exchange in anticipation that the set
Element would be reasonable. There
would be a further rise. with ten
dency over a period of time slowly to
approach normal.
This would increase the credit ia
cillties of all nations involved and
improve their buying capacity and
their ability TO exchange commodi-
ties with one another. 1t would tend
to increase the wealth of the world.
and, therefore, increase the ability to
lessen the percentage of taxation be-
cause of the increased taxable vol
ume."
The big load Germany must carry in
meeting the reparation payments de-
manded, Baruch points out lis not pri-
marily the amount of cash she must
pay out.
Capital sum equal to the debt Amer
lea incurred in the war, at per cent.
interest over AZ years. would Just
about equal the total OF the cash in
demnity.
But by stripping Germany of her
shipping. by imposing a IL IL per
cent. tax against the total of her ex-
ports, by requiring that she deliver
to France large quantities of coal,
and by similar limitations on her in
dustrial expansion, the difficulties Of
making payment are multiplied many
fold.
"a capital sum of sS3,5SO, 900. 600, 900
gold marks" said Baruch, turning
through memoranda brought him by |
his statisticians, eff placed on inter !
est at per cent. for ~ years, would
amount to 100000, 100000 marks, the
amount of the cash indemnity
That amounts. in round figures to !
21 billion dollars. Germany already |
has paid about $500, 100000. That |
makes a total capital investment of /
a little less than $4,000, 600, 00O-or ,
approximately the amount of bonds |
&c, ~ fv11 Il
ing the loans to the allies"
us there any dependable basis on
which to estimate the amount that |
will be produced by the twelve and |
one-half per cent. tax on exports?"
Baruch was asked.
mo dependable basis" he replied
"Of course, If her exports returned
to the pre-war normal, or thereabouts.
it would mean perhaps a billion and !
a quarter or billion and a half
marks annually.
This tax, of course affords a tar
if protection against goods exported
from Germany. This becomes, how
ever, a tax on the American consumer
of goods.
Germany collects it, but it goes into
the treasury of the allies, not into
the treasury of the United States, as
would n similar protective tariff i'm
posed by us against German manufac-
turers. This tax will have the effect
Of increasing prices and lessening ex-
ports
The wisdom of this action may be
open to criticism because Of the ten
dency it would have to lessen the VOL
ume of German business and to make
the amount Understandable.
incidentally it might he pointed
out that America stands in a differ
emit position from any of her associ-
ltes in the war under this export tar
iff provision. The tariff must be paid
by America on German-made goodsi
purchased and the money goes to the
allies. England or France, however,
purchasing the same goods, pays the
tariff OF course, but gets it back in
the form of reparation payments from
Germany.
IF Germany accepts voluntarily