The New York herald., 1921-11-21
Germany's Situation.
Effect Of the Depreciation Of the
Mark on International Trade.

| To THE NEW YORK HERALD: The eyes
of the business and economic world are
or at least should be, centred on Ger
many. where situation Is developing
which in all human probability will be
far reaching in it's consequences This
situation may possibly be the result Of
fortuitous concatenation OF circum-
stances. but the very fact that nearly
all the breaks" are in favor Of the
Germans and against the outside world
would at least tend to show that there
is also included an element Of design.
1t will be recalled that the old Ger
man Empire was not invaded and that
her industries were neither crippled nor
destroyed. Her people have always been
submissive to authority and have al
ways been led by capable leaders, whom
they blindly follow. with the natural re-
suit that team work has there reached
it's highest development. and the national
Instincts have in no wise changed under
the administration OF the republican
Government.
Before 1914 there was vast military
and naval establishment which occupied
the time and energies OF millions Of the
most virile section of the nation-not
only were they unproductively employed
but 1t was necessary that they be sup
ported by the labor and productive
energy of other elements of the popula-
ton. But the Treaty OF Versailles
changed all this. demolished the mill
tary machine and turned the energy OF
these millions perforce into productive
channels, and at the same time they
ceased to be a dead weight on the ma
ton at large, thus diverting the cner-
gies of other millions into similar pro-
ductive channels.
Under tho old regime there was a
large element of the German population
the so-called middle class--which to
a large extent lived on its income, but
the extreme depreciation of the mark
by decreasing the purchasing power Of
this income has practically eliminated
this class and forced 1t into lines of
productive activity as the very price of
existence. The same general cause has
decin,ated tho creditor class and
worked greatly to the advantage OF the
debtor In that the latter has been en-
abled to liquidate the face value OF his
debt in much deprecated marks, while
az the same time and for the same rea-
son the value Of his production or his
poverty, as expressed In marks. In
creased as tho latter decreased on the
foreign and domestic exchanges. Tho
utilization and manipulation OF natural
and economic laws by the rulers OF
Germany In putting the people to work
has been mastery In the extreme.
The monetary situation In Germany
presents a phase which Ia unique In the
history OF the world and TO all intents
and purposes there are now two none
tary standards. the internal or moder-
ntely deprecated mark, and the ex-
ternal mark, which sells for but one
SEVENTEEN OF its gold equivalent on the
exchanges Of the world. This is largely
the result of the reparations payments,
a powerful lever by which the exchanges
can be depressed or manipulated almost
at will.
The depreciation of the mark, In so
far as imports are concerned. operates
as the most effective tariff wall that the
mind Of ruGn has ever conceived while
on the other hand the differential de-
probation on tho foreign and domestic
exchanges operates powerfully to slim
ulatc exports
1t has been said that the situation
will eventually cure itself when the ne
cnssity shall confront Germany of COM
peting in the open markets Of the world