The Washington herald., 1922-08-07

and even in 1871.
The hope Of adapting the aver
age cost price to the probable fea-
ture level of stabilization has been
given up. The one outstanding
feature of the situation is the ut
Yer unwillingness OF foreigners to
purchase German marks at all.
The FOOT OF the recent CURRENCY
panic lies In Germany itself. Dur.
Ing the last week in June the re-
discounting of Treasury bills by the
Reichsbank was manipulated by
German bankers to an extent far
beyond the requirements for LIQUID
money. In that single week they
onered treasury bills to the value
OF 100000 marks for rediscount.
To the sum must be added l,zoo.-
ooo.ooe in such bills which the i'm .
perial treasury discounted directly
with the banks to supply its own
needs for money. In the very
week. however. in which this was
done German bankers Increased
their deposits with the Reichsbank
to the extent of 5000. 100000 ma rks.
This proves that 20 per cent OF the
panic-like rediscounting was made
without any necessity whatever.
BuyinG Foreign Money.
The wish Of the German people
to obtain dollars, pounds. Swiss
francs. and Dutch florins is a good
sign. indicating that the economic
life CT Germany IL better than its
currency system, and that individ-
uals are seeking to eliminate a de-
based currency from their business
transactions. Germany is follow
ing the example OF Austria, where
II Is stated that the bankers can
supply a larger quantity of Swiss
money on short notice than can n
similar number of bankers in
Switzerland. When leading Ger
man Manufacturers are strong ad-
vocatos Of depressing the paper
mark further, they are not actuated
by blind hatred of their enemies OF
yesterday. as Is sometimes alleged,
but by the conviction that the mark
must literally be driven down to
point where IL becomes too
worthless to circulate further.
Here in Switzerland we have
many opportunities to observe the
capacity Of Germany and Austria
for absorbing good Swiss money.
The domestic circulation of Swiss
bank notes has declined very rap
idly within the last seven months
and yet the amount of issues re-
ported by the National Bank as
outstanding has changed very lit
tie. The explanation 10 that Swiss
money Is being boarded in Austria
and Germany.
Loans to Sound-Money Countries.
This transfer of sound money to
Germany means that the latter
is really granting large loans to
Switzerland, Holland. Great Britain
and even the United States, free of
all interest to the debtors. Some
day the foreign holders of Swiss
currency. for example. will appear
in our markets as creditors. Be-
fore the war Germany was indebt-
ed to Switzerland, but she has now
got rid OF her debts and become
towards us a creditor nation. Ger
man assets in Swiss banks and
rency are estimated by competent
economists as a billion of gold
francs. In its present condition
Germany cannot enjoy the advan-
tages of this situation, and this ap-
plies. perhaps in the case of all
important countries that were for
merly neutral.
These considerations prove the
blunder which the allied diplomats
made at Paris and at the later con-
ferences in linking up the repara-
tions problem with the German
budget. There Is no chance for
Germany to balance its budget SO
long as the paper mark is in ex-
istence. Only its elimination by
bringing In good money boarded
abroad by Germans, to supplant
II. can help the situation. That is
of course impossible. The German
people will not make sacrifices for
a government which in the eyes of
a considerable portion Of them IL
the tool of their recent enemies.
Real Reason for Marks Fail.
The mistake of linking up the
reparations question with the tax
collecting machinery Of the Ger
man government is the real reason
for the depreciation Of the mark.
The efforts of individuals to take
steps to save themselves from dis
aster are bound to take forms that
are opposed to the national inter-
ests. As various events show that
the governments strongest back
ers are German Socialist workmen.
investors became uneasy, and the
process Of unloading marks in ex-
change for better currency Is ac-
celerated.
Whether 1t Is too late to emanci-
pate the reparations problem from
the troubles OF the German treas
ury we here in Switzerland are not
in a position to decide. We be-
lieve, however. that the creation Of
a non-political concern with head
quarters in q neutral country along
the model of q company created
for Turkey would put the repara-
tions problem on a business basis.
Such q concern could handle the
export and import duties and d.
vorce the reparations payments
from the treasury.