Evening star., 1922-06-19
GERMAN ABILITY TO PAY
PREPARATIONS DOUBTED
Peace Treaty Has Taken Third of Pre- War
Capital and 2, 500, 900 Men-Food Inapor-
tations Serious Financial Drain. 81

part, il not the larger part. of these
was bought in America when the
mark was comparatively high, on
the expectation that Germany would
surely come back" Partly Germany
got the money by pawning silver
from the reichsbank reserve: partly
by the purchase Cfor paper marks)
of gold IN German hands; partly by
the forced sale of government de-
posits abroad; partly by surrender
the reichsbank. and partly by a small
foreign loan on government credit.
These operations cannot be repeat
ed on a large scale. There are not
many suckers left who will buy paper
marks on speculation. There are no
sums of money to a government al
ready on the financial rocks and un-
able to pledge a single material Sc
curity (since everything is already
pledged as security to the allies under
the treaty of Versailles). The gov
ernment dare not make further raids
on the reichsbank reserve.
No More Cash Available.
Cash reparations. then. have hither-
to been paid partly by foreigners
and partly by the alienation of Ger
many's capital But not at all from
Germany's current income. 1t is pos
sible to go further and point out
that Germany would have needed even
this to balance her home account had
she not been selling cheap goods
abroad. In this sense Americans and
others have again been paying Ger
many's reparation bills. Indeed, 1t
would hardly be wrong to say that
the Germans are the only people who
have not paid reparations.
But ia it not possible for Germany
to cut down her imports and use the
money thus saved to pay reparations?
In other words, should not Germany
be compelled to reduce her standard
of living?
Here we leave economics and enter
the field Of social psychology and eco
nomics. Mr.. Rathenau asserts that
Germany's imports have consisted ex-
clusively of necessities, raw materials
and food-save for those luxuries
which the allies have forced Germany
TO buy Yet one may argue that the
sponsibility for the war. should be
obliged to live like the Hindoo peas
ant on a few grains of rice day, if
necessary to pay their just debts.
But how far this process could be
pushed before leading to a disastrous
question not to be answered by
statistics. The means of coercion,
too. are still q puzzle to the allies. All
we know is that the standard of liv-
ing 1or tHe MASSES IS HidteliSly pe-
low the pre-war figure and that peo-
pie will fight rather than have their
standard Of living cut very far. My
impression Is that IL the standard of
the working class were forced much
lower there would be trouble.
The capital tax and the forced loan
are being discussed or attempted. But
It is already clear that few people are
able to make their payments in cash.
They must either borrow the money
on security. leading to further inf1a-
ton, or they must deliver negotiable
paper. which must be sold in the open
market abroad before the allies can
realize on it. Informal inquiries
have shown that foreign investors are
not likely to purchase many such Sc
curities at one time, especially in
view Of Germany's uncertain future.
But could not Germany pay her
debts straight out Of her capital? To