The Washington herald., 1921-08-14
GERMANY REPORTS
ABILITYTONEET
PREPARATION BILL
Issues Declaration There
Is No Need for For.
eign Aid.
CAMOUFLAGE FAILS
Nation Knows Loans Were
Made by Dummies of Ham,
!. burg and Berlin Banks. :.
CAMOUFLAGE FAILS
(forsign ooTespondsnos Of Ths washingten
Herald and New Ycrk EveninG Pest

(forsign oerrespondsnos Of Ths washingtsn
Herald and New York Evenins Pest.)
GENEVA. Aug. lathe German
Government has undertaken rhe
annual payment OF 1000. 100000 In
gold marks in settlement Of the
reparations claims Unless a coun-
try has a gold output of its own.
II can pay in gold only by purchas-
ing 1t abroad. The Reichsbank. Il
is true. is now buying domestic
gold, at the rate of $40 paper marks
for one twenty-mark gold coin.
but this source will soon be ex-
hausted. The income Of the Ger
man government may be calculated
only in paper currency. and the re-
parations budget of Chancellor Wirth
for 1891 estimates receipts at $1,000
100000 marks (paper basis.) All
future income to meet the gold obli-
cations towards the allies will be
calculated on the assumption that
1t will be possible to stabilize the
paper marks at the ratio OF ten to
one in gold.
This apparent purpose OF the gov
ernmept has been a useful hint TO
spectators in German currency.
With the gold mark worth a quarter
Of a dollar. the stabilized paper mark
would then have value equivalent
to IS cents in American money, pro-
vided, OF course. that the United
States maintains its present gold
covered dollars. On the other hand,
the thirty-two years over which the
payments are to extend constitute
a rather long period, and II Is pos
sible for gold to become somewhat
cheaper in the interim, thus facili-
tating the stabilization.
Speculation Depresses the Marx.
In past weeks the government has
sought to check the buying of foreign
money and thus to arrest the further
depreciation Of the mark. The Ger
man public. however. and oven the
bankers show no inclination to COM
ply with the wishes Of the govern
ment and assist II in its program
Of sterilization. Al present the
actual value OF the German mark
is not a tenth. but a sixteenth OF
its par value in gold. The heavy
purchases OF foreign currency by
the German public has been an i'm
portant contributing factor to this
depreciation, keeping the exchange
rate of the mark constantly under
pressure.
The wholesale buying of foreign
exchange by the German people
started as soon as II became known
that the Reichsbank was in the
market to obtain foreign funds to
pay the first instalments of the
reparations. Only q few weeks age
the Reichsbank was issuing one
declaration after another soIemnly
declaring that Germany's needs
had been fully met and that there
was no further use for foreign cur.
rency to meet the repara ton
claims. Germae bankers, however
knew better. 1t is reported here
and widely believed that thes<
bankers themselves were obtainint
Dutch. English. and American cred.
it's. using foreign agents and DUN
mics, and then advancing loans OF
first collateral to their own gov
ernment
German Bankers Use Dummies.
The government tells a differen'
story of how $4,000 1000. 900 sterling
was obtained from Dutch bankers
but 1t is reported that the state.
ment fooled nobody in Berlin
where it is generally known tha'
the Dutch" were only foreign
agents of Berlin and Hamburg
banking firms. It appears, then
that IT is the Berlin money marke
which is being utilized for obtain
ing funds which foreigners are re
puted to be advancing to the Ger
man government. Credit stringenc,
in that market is therefore to b,
expected, and conditions will con
tinue to remain unstable.
Meanwhile, the continued depre,
citation Of the paper marks upseti
the whole reparations program II
the German budget. As alread,
stated. this budget is devised OF
the assumption that the papel
mark can be stabilized at one
tenth OF the value of the golt
mark. If this consummation is moi
effected, resort may be had to that
saving angel of all European gov.
ernments the printing press-and
this will continue its deadly work
of imitation.