The New York herald., 1922-07-26


industries quickly would lose their fict-
tious advantage caused by the fall of
the mark; and IL the mark declines fur
ther, banks will be unable to give in
dustry the credits it needs. which will
bring production to a halt Unemploy-
ment will ensue, with rising prices. sim
Tar to what has happened in Austria.
The decline of the mark was orderly
until 1t recently fell to 500 to the dol
lar; and there Is little promise that the
difficulties thus created will not increase
Formerly there was some compensa-
ton In increased business, but now
there is a shortage Of credit. The banks
funds in the form OF deposits do not
rise, and as result Germany Is in the
grip of an exceedingly tight money mar
ket which is becoming tighter. Indus
tries producing for the domestic market
are beginning to close down.
"Momentarly German exports are
somewhat stimulated. but the stimulus
will be short lived Germany faces a
period of increasing unemployment and
increasing prices. and social disorder
threatens.
Chancellor Wirths remarkable flair
for politics has permitted him to wealth
er the immediate crisis. and adjourn
Parliament: but with the reassembly
a growing opposition by labor. with
attendant political and financial insta-
bility.
1T was still possible to save the
German situation in June by the scheme
then proposed for German loan, partly
to provide for anticipation of the in
demnity payment, over two or three
years. and partly to stabilize the mark.
But now a taxation program is being
txxk~ l.
being made to balance the budget
Frances Position.
"An international loan was not pos
sible without reasonable adjustment of
reparation demands. but France would
not permit them to be discussed. The
French obstinacy is understandable ir
view of the French firancial position.
Under the illusion of hoped for indemni-
ties France spent $4,000, 100000 francs
for reparation and charged 1t against
the illusory entry Expenditure recover
able Thus France Is left with more
than $4,000, 900, 900 fran-s in short time
treasury paper afioa.. The French
ordinary and extraordinary budgets
show enormous deficits. which must be
met with French borrowings. That is
why France cannot be reasonable. THAI
Is now there Is created an lmpaSSe,
whence German financiers see no
escape.
I'VE In America already have lent
Europe in the last year half billion
dollars. If conditions were right we
should grant a great credit. But condi-
tions cannot be made right until indem-
mites are reasonably adjusted.
1.-The REIMBURSEMENT Of allied in
debtedness to our Government would not
cure the situation. and / am firmly con-
WINGED that we should take no step in
that direction No more should Europe
be. permitted to escape her obligations
with wave OF the hand. European
countries should make formal recogni-
ton Of their debts. and extend them
selves by every possible economy to pay
what they can.
| France cannot counterbalance her
| indebtedness to America with a doubtful
and indefinite claim against Germany
Once recognized as debts owed, what
America may decide to do about them
| is then another question. Then, in the
| problem of the utilization of the money
repaid, world construction should re-
ceive serious consideration"