The New York herald., 1922-10-05


lars had made many carefua calcula-
tions of this kind. But what We have
to investigate Is not Germ,any's ca
pacity to produce wealth but her
capacity to pay foreign debt.
Production Not EnoAxh.
'I cannot help thinking that we have
here the source of the error into which
the Versailles experts seem to have
fallen. Nobody has ever doubted Ger
many's immense power to produce. but
production by itself is not enough. She
must find market for her exports. and
the problem thus becomes oneI of deter
mining the possible extension 9f German
export trade Nor is this the end. We
must remember that an increAse In her
exports will only provide funds for rep
arations II there Is no corresponding in
crease In imports. Payment fbr her in
dispensable imports must be the first
charge upon the proceeds OF her foreign
sales. and 1t is only the ba lance. the
exportable surplus. which is available
for reparations.
"In speaking of a nations exportable
surplus we must not forget that other
factors may contribute to ii besides the
balance Of exports over imports. Inter-
est received from foreign Investments
and payment for external services. such
as shipping, may be contributofy factors.
Before the war Germany possessed a
very considerable exportable surplus de-
rived from all three sources, but mainly
from the interest on her foreign Invest
ments which were probably worth not
less than $500. 100000. Ae regards
the surplus from the sale OF her products
and payment for services II is safe to
wanted. experts. on dre,smasng. Room -,
say that 1t never exceeded S1O0,OOO.0O0
a year. But what is her position to-day?
Most of her foreign investments have
gone. Some were sold during the war,
others have been seized as enemy prop
erty by the Governments of the allied
and associated Powers. and most OF
what remain have lost their value. as in
the case of the Russian Investments.
Her shipping has been largely, confis-
Gated, and she has been deprived OF
some Of her most productive areas-Al<
sace-Lorraine. the Saar Basin, and the
Polish provinces. All the sources whence
an exportable surplus might have been
drawn have been greatly impaired II not
wholly destroyed. At no time was Ger
many's exportable surplus sufficient to
enable her to make the annual payments
demanded under the London ultinatum
it is entirely out Of the question that she
could do so to-day.
"But let us get little nearer to the
problem of Germanys present capacity
to pay from the surplus sale OF her
production. According to a recent state
ment by the Chancellor OF the Exche-
quer in the House of Comfnons she has
paid money and delivered property al
together to the value of about $1,000
100000. OF this amount $1.645. 600. 900
represented the value Of ships, coal,
other payments in Kind property in ce-
ded territories and local payments to
armies of occupation, The amount In
cash has been only $4,000, 900.
Ard yet, with this comparatively
small cash payment, observe what has
happened. The mark has declined to
less than one-seventieth of the value 1t
had when the obligation to pay was I'M
posed upon Germany by the Treaty of
Versailles The means OF payment has
been found by the sale of marks. After
this experience 1t is difficult to believe
that Germany has any surplus at the
present time from the export Of her
products.
! There is n further consideration In
support of this conclusion. 1t is beyond
question that In the last three years Ger
many has made every effort to develop
her external trade. The German work
man, whose industry and efficiency are
generally admitted, has been fully en-
ployed and the factories have been ac-
lively at work all over the country. The
decline in the mark, which at every
stage has been much greater In the ex-
ternal than in the internal value has af-
| forded a very considerable advantage to
| the German exporter, so much SO, IN
| deed, that there is hardly anywhere a
manufacturer producing goods for ex-
| port, who does not complain of German
| competition. Nevertheless. the German
trade figures show that the exports, long
after the immediate deficiency In essen
| tial foreign commodities due to the war
was made good. are still barely equal
to the imports. The conclusion seems ir-
resistible that Germany has no present
capacity to obtain a surplus from the ex-
port of goods.
Effect Of Enforced Payment.
"I am no: sangiine enough to believe
| that those who think they can extract
from Germany enough money to enable
them to meet the internal liabilities,
which they themselves have incurred In
restoring devastated Arrears, will be sat-
isfied with the statement l have just
made. At the recent reparation confer
ence Of the allied Powers held In Lon
don proposals were made of punitive
measures to be taken with the object of
compelling Germany to make immediate
cash payments. policy which could
only have been advanced under the
conviction that Germany really could
pay. For my part I do not believe that
| Il Is within her power to do so. but
let us suppose for a moment that she
can. We have then to consider what
the effect of this enforced payment
would be upon international trade. and
whether Il would be to the advantage
! either Of Germany's creditors rs whole
or of the rest of the world
'If Germany could pay what is de-
manded of her, the only method or OBJ
tanning the money would be by increas-
ing her exports. Now what are these
exports to be? She is essentially man
ufacturing nation. Her foreign sale OF
raw mate rials is comparatively small.
food. and in consequence of the loss of
n large part OF her mineral lands she Is
compelled to import both iron ore and
coal for the supply OF her factories and
furnaces An increased exportable sur
plus could only be obtained by extending
her sale of manufactured goods. To do
this In the teeth or the competition of
other manufacturing nations she must
work longer hours for less wages she
must cut profits. she must reduce her
imports to the Indispensable minimum
But her competitors will not consent to
stand idle while they lose their trade.
They will find themselves faced with
growing unemployment and heavy trade
tnyoog 80 far German QOOde seek