The New York herald., 1921-08-22

New York Herald Bureau,
Berlin, Aug. 2l
Wild stock speculation and abrupt
fluctuations in the mark have been Ike
bringing Vienna conditions TO Berlin.
On August Is, when the mark had
dropped to 95 to the dollar, the lowest
since January, 1920, the pessimists pre-
dicted a landslide similar TO that in
Austria Such a situation threatened,
but the danger has now been postponed.
Tho feverish state of the German mar.
ket is only partly due. as the German
press says. TO the fact that Germany
must complete the turning over OF her
first billion marks in reparations pay
ments by August 81, but Is Immediately
caused by the Berlin Boerse speculation
and by the Germans themselves. De-
spite tn eneed of the Government 10 keep
til mark high in order to meet the COM
ing payment, the Germans are dumping
their marks and are scrambling 70 pur-
chase foreign currency and securities.
A prominent financier told THE NEW
YORK HERALD correspondent that the
Germans preach solidarity with the
Fatherland, but do not include their
bank accounts In taking this attitude.
The property owning classes are snug
Cling their money abroad and whenever
possible are putting it where 1t will not
taxation. 1t is said. One banker esti-
mates that the industries are now invest
ing 40 per cent. of their profits abroad.
The usual way of doing this is to
obtain the consent OF foreign firm to
act as an agent or branch and to place
the money with IL. A department store
head said that he regards his profits as
having been earned only when he re-
invests the paper marks he receives
for his wares. RE buys raw materials
abroad. and then as an intermediary
and reexports various finished novelties.
But his main concern now Is TO find
rapid means for converting his mark
profit into foreign goods.
Small business men who never specu-
lated before have now developed a pas
sion for II. The barber who shaves you
asks IL the right moment has come for
selling his $100 People with a few
thousand marks stand in line before
the windows of the smaller banks await
ing a chance TO convert them.
The banking business In Germany
has reached gigantic proportions. All
banks have tremendously increased their
personnel since the war. The Darmstadt
Bank for example had seventy employees
before the war. Now it his seven thou
sand. Other banks have expanded until
they have dozen branches. Branches
have been established even in hotels
and shops, but still have not sufficient
facilities to handle the business.
A director OF q large Berlin bank de-
Scribing the run OF August Is said that
on the day before the Government be-
gan again to buy foreign securities IN
the open market to meet the August OBJ
legations. Then the rush OF mark dump
ing began. The terms of the new tax
alton bill also stimplated the investors
who sought TO avoid the new tax on
business transactions.
A slump resulted when spectators
abruptly dropped large quantities Of
marks. The Reichsbank. despite it's own
purchases Of foreign securities. imme-
diately released some OF them in an ef-
fort TO stabilize the mark.
The same mannuyre succeeded in the
past, but this time the counter measure
proved less effective. The rush at the
stock Exchange exceeded all bounds.
Banks were Obliged to announce that
they could net handle orders received
after o'clock In the morning Then
the time was advanced to O'Clock In
the morning.
A director Of one large bank said that
they left piles Of kilograms unopened to
avoid being accused Of favoritism. Des-
pite these efforts TO check the rush clerks
have been forced to work nightly until
IL o'clock.
The Stock Exchange In Berlin IL now
closed on Saturdays. and in other cities
notably Frankfort. the stock exchanges
have been forced to close on other days
as well. Or. Felix Pinner. an econom-
st, regards the run OF German marks and
the desire within the country to get rid OF
marks as unwholesome and dangerous
symptoms. Conditions have now been
somewhat restabilized." he said. but
without the help Of German private capt.
tai. Industry has loaned the Govern
rient foreign securities only when
Obliged 70, and then at excessive terms.
Sacrificing the mark seems 10 bc the
easiest way for Germans 70 escape the
burdens Of the new taxes"
IN. Pinuer fears that the new tax bin
does not provide an effective method FOR
reaching the real wealth Of the country
while putting the burden on the part OF
the population which IL least able 10 pay
taxes. He believes that healthy condi-
tlons cannot be established until prom
erty holders decide to sacrifice now part
OF their capital and earnings. He admits
that in so doing they will diminish their
future holdings, but believes that this
would be less of a misfortune than that
which would follow complete financial
breakdown In the near future similar to
that In Austria