The New York herald., 1921-07-03
BERLIN STOCK GAINS
SEEN AS ARTIFICIAL
Stability Is Not Looked For
Until Budget Demands
Are Met.
BOOST BY SPECTATORS
German Outlook Is Good,
Though, With Cheap Labor
and Low Priced Coal.
BOOST BY SPECTATORS
Special Cable to THE New York HERALD.
Copyright, 1921, bv THE New YoRK HERALD

Special Cable to THE New YORK HERALD.
Copyright, 1921, bv THE New YoRK HERALD
New York Herald Bureau,
Berlin, July ..
The striking rise in German stock
quotations in the last ten days has
given the superficial impression OF
German business vigor which is sur
rounded by stagnating industry in
other countries. This sudden boom is,
following the fever of imitation rather
than a healthy color. Real stability
is impossible until the Government
can meet the budget obligations with
out flooding the market with moro
paper marks.
The present German exchange ac-
tivity instead of signifying vigorous
activity in the German business world
toward stabilizing the mark is a mad
rush away from the paper mark to-
ward foreign securities and money and
German securities which seem least
likely to be burdened by new taxa ton
There are hopeful indications. how
ever, in the present Stock Exchange
effervescence. German industry is bear
ing up much better under the general
depreciation than is the case In coun-
tries with a higher exchange. Owing
10 cheap labor and cheap coal certain
industries can underbid foreign firms
and consequently have obtained con-
tracts. This is true especially Of loco
motive works. The works Of Egestorff
and Krupps, for example, have large
orders, and the stock of the former Is
quoted at ten times the par value.
To Utilize Concentration.
The new taxation projects will force
maximum Of Industrial economy
through concentration. German capital
is flowing to sound industrial securities
despite the probable taxation because
the Germans are convinced that the Gov
ernment will not overtax these, thereby
killing the goose that can still lay the
golden eggs.
Then there are many unwholesome in
dications behind the present Stock Ex-
change activity. The rapid rise In many
securities is plainly due to the gambling
of spectators who expect every indus
trial modification to be followed by new
dividend payments or share issues when
often the policy now Is to retrench
rather than expand.
There is heavy buying Of foreign
and securities which give prom
ise of more stability than the mark.
Many Germans who seek to dispose of
marks find speculation on the Stock
Exchange the most attractive way of
t.<x ftv,I
Exchange operations the cheapest form
of business transaction to-day because
the intended Government plan to place
a heavy taxation on ex-
change operations has been temporar-
lily sidetracked.
Expert DenOunces Move.
One German financial expert told
THE NEW YORK HERALD correspondent
that he saw In the present exchange
activity an unwholesome indication of
efforts by the Germans to evade the
consequences Of budget deficit.
Even the Finance Minister" he said.
seems TO be partly fascinated by the
sound Of his note printing press. In his
recent Essen speech Chancellor Wirth
spoke OF the 5000. 10000 marks taxa
ton returns during the last year as a
great achievement without mentioning
the significance OF the fact that these
are paper marks and are more than Off
set by larger deficit.
IL is evident that working the print
ing presses overtime can double the
nominal tax returns. but II also some-
thing more than doubles the debit. Real
economic health can come only when We
meet our budget without swamping the
market with more paper"