The Washington herald., 1921-02-20
GERMANY MUST
SECURE BALANCE
BY HUGE EXPORT
Ability to Pay Indemnity
Rests With Government
Supervision.
ALLIES HOPEFUL
do Not Believe That German
Financial Conditions Are
Beyond Repair.
Especial to Business Section Of The Wash.
ington Herald.)

Especial to Business Section of The Wash.
ington Herald
NEW YORK, Feb. l9. - In
the discussion Of Germany's abil-
ity to pay the reparations in ac-
Cordance with the plan agreed upon
in Paris, it has been frequently
pointed out that in order to pay,
Germany must obtain a credit bal
ance by supplying a surplus of eX-
ports, commodities and labor As
samtng that she can secure credit
balance it is still necessary for the
German government to find the
means of taking possession of this
credit since the reparations are not
incumbent on the manufacturers
and exporters but on the govern
ment. The Germans will at London,
as they did at Spa, doubtless make
great deal OF the fact that they
cannot pay an indemnity on ac-
count OF the existing debit balance
and Furthermore that their govern
ment has not sufficient resources to
take over the credit II it existed.
Not Permanent.
There are a number of reasons
Why the allies are not inclined to
believe that the financial condition
Of Germany is as hopeless as Ger
man experts would have it appear.
In the tlrst place. even the Germans
do not maintain that the present re-
lation between export and import
Will be permanent, though it is gen.
orally recognized that a favorable
change is not possible as long as
the present economic condition eX-
lists 1t is the contention of the al
lies that this condition is not due
so much to the exhaustion OF Ger
man resources as to the inadeQuacy
uf the German fiscal and financial
policy both past and present and
that the amount of the indemnity
should be based not on present con-
ditiOns but on German productive
capacity after conditions have been
stabilized and upon the reduction Of
rOn-essential imports.
Exceeded Debt.
The financial condition Of Ger
many before the war was very pros
Ferrous. The funded public debt of
Germany per capita was 392 francs;
that Of Great Britain, 335; France,
7N7-J: and Italy. "y4.5. In the case
Of Germany, however. the value Of
the property belonging to the En-
pire and the States exceeded the
amount Of their debt. a condition
which existed in no other country.
The taxes paid by the Germans
amounted to a tax per capita of 50
francs while the british paid 153
francs and the French l23 francs
the financial condition Of Germany
was considera bly, better than that of
France in many respects. The war
was fought outside Germanys from
tiers Germany was comparatively
independent Of foreign countries
for war materials and general sup
plies. Her manufacturers and agri-
rUIturists made huge profits, but
instead Of meeting war expenses.
at least in part. by taxation, the
government rolled on the hope that
all expenses would be eventually
paid by its vanUuishcd enemies and
issued loans This policy was ar
IDENTIFY supported by German tinan-
cirrs including HcIfrerich. who sub
se0uentIy became Finance Minister
9nd who ridiculcC the British taxa
tiOn pOHCy And although the pres
Cnt budgets are heavily hurdenCd by
Davments of interest which amount
TO one third of the ordinary budget
this does not, as far as the nation
is concerned, constitute expenGi-
turP but merely a readjUstment Of
revenue. The government is. as
matter Of fact distributing with
one hand as interest what il has
collected with the other as taxes.
This coupled with the fact that in
spite Of a formidable increase tie
Germans have not taxed themselves
as heavily as have the British and
French, is held by the allies 10
show that the German financial St
uatiOn. though serious, is not in
capable OF improvement. -German
Industry must become more and
more a transforming industry and
a part Of the annual savings in
stead Of being invested at home
or abroad must be collected
bv the government in the form
Of taxes and used for the payment
or reparations.
Must Economic.
Before these payments can be ef-
fective however. German industry
must overcome. the difficulties that
bcsot it. and economic conditions
must become stabilized. This i'm
plies process of readjUstment
which will require many years.
In tho negotiations thus far the
Germans have endeayored to secure
settlement on the basis of present
conditions and the allies have in
sisted that the indemnity be based
ON conditions which should obtain
when German industry RECEIVERS.
The following table shows the
Dresent taxes. foreign and dOmes-
tic debts and estimated wealth per
capita Of Germany and France.
GERMANY. per capita:
Pres.nt taxes $50 marks tSll.52 current
ratsC: foreign debt JG.3s marks tslS. Al at
par1; domestic debt. $3.50 marks 1888. -
current rateD; wealth, SS.5O2-o2 marks
Cs1 500 current ruteI-
France, per capita Fc,
Present. taxes, 5TI francs ts4l.bl current
-.tsI. foreign debt. SILL francs lSl56.4
at parO: domestic debt. 4,4I3 francs ISS24.A
current rlte); wealth, 3l,ll524 francs
(S2 25S current rateD.