Perth Amboy evening news., 1923-12-26
HASKIN,S
LETTER


the monetary unit of the German
people, has sunk. 1t has become
of So little value that the lower de-
nominations of the currency-such
as mere hundreds and thousands
have been wrapped up into packages
and used as blocks for children to
play with. One German mark used
to be worth nearly as much as the
American quarter; now there is
nothing so small or cheap hat one
mark could buy it. In the ordinary
! purchases of articles of necessity the
| prices must be quoted in hundreds,
/ even thousands of marks.
Such a situation could not last
indefinitely, especially since it has
been getting progressively worse
| each month. The German people,
faced with the necessity of doing
something to stabilize their curren-
cy, have invented a new medium,
the rentenmark. 1t represents the
latest experiment in national finance.
A few weeks ago the German gov
eminent Issued a decree establishing
a new bank of issue, known as the
Rentenbank. 1t has already begun
operations but the plan still Is re-
garded as in the experimental stage.
TIE capital of the bank is 3,2O0,00O,-
900 rentenmark. The tenmark
Is the new unit. 1t has the value
| of 1-27OO kilo of pure gold or at the
| rate of 270O reNtenmark to one kilo
| of gold. A kilo or kilogram weighs
about 20 pounds.
The capital of The Rentenbank is
being raised by compulsory levies
- -..~arH.V - fhn Earn1Rn ma
ton. To be recognized as having
value and stability all paper cur
rency must have value back of 1t.
The reason that American paper
currency is stable is that the people
know that gold is piled up In the
Treasury to make it good. The
trouble with the German mark was
that the people learned that there
was practically no gold reserve back
! of it. Therefore the first move In
establishing this new currency was
To put value back of 1t. No gold was
available, so the government decree
automatically placed a sort OF mort
gageon practically all of the real
| estate and other actual property IN
the country, to the extent OF -FOUR
per CEN of its value.
One-half of the capital Is con-
trlbuted in this way by the holders
of agricultural land which has come
to be regarded as the most
of all securities in Germany. Holders
of city property have been exempted
because, by government regulation,
rents have been kept on a very low
basis. This has reduced the COM
narrative value of the city property
and. therefore, it was considered
unfair and unnecessary to include
such holdings.
Factories and such industrial
properties, whether in city or coun-
trv. however, contribute to the ex-
tent of four per cent of their value
The owners OF these properties turn
over bonds which are mortgages
upon their holdings to the 1tenteh-
hank. These run five years and pay
six per CEN interest.
Marks Issued Against Mortgages
With these mortgages or liens on
both The agricultural and Industrial
property of the country as a basis
of value, The Rentenbank Is issuing
rentenmark. The holder of a rem
tenmark IS the owner to the extent
of a very small fractional proportion
of the general mortgage on the
physical property of the whole couhc
try. In the same way, the holder o.
a 81 bill in American money is
owner to hat extent OF the gold
piled in the Treasury.
Under the decree, the government
is to receive the sum of 1900, 600 900
| rentenmark from the new bank IN
| the form of a loan to help pay the
| expenses of the state. or this sum-
3OO. OOO, 600 ientenmark bear no IN
terest. The decree makes the new
currency receivable for all debts TO
the government such as taxes, but
the rentenmark has not been specl1l-
| callv declared a legal tender. Pre-
sumably, II the experiment works
successfully, it will be so declared.
The German government regards
the rentenmarK as an intermediate
step toward absolute return to the
gold standard and is creating a
special commission to study the
problem further. 1t IS hoped ina
the existence of the rentenmark will
| stabilize German bushes while the
new currency reform plan is being
p~erfected. AS an additional stabi-
| lizing measure, the R~eichsbank has
been authorized to issue circulating
notes secured by any holdings oil
| British pounds, American dollars or
gold which may happen to come
into its possession. AS the dollars
and pounds are on a gold
basis they are regarded as safe e
curity for circulating notes.
The new rentenmark is an effort
to give the public confidence in the
circulating medium. If they have
confidence in the claims of the new
establishment that the new paper
money actually is ecured by the
real property of the nation and II
the notes are accepted at face value,
Germany will have made a long
stride back toward financial solldity.
1t will not be long before 1t will be
known whether the experiment is
working. If the rentenmark once
starts to depreciate, it probably will
be difficult to stop it following the
path of the old German mark. The
next month or two will tell the story.
Originated with Franklin
The new German currency is of
especial interest to Americans in
view of the fact that 1t appears to
scheme invented by Benjamin
Franklin. In the early days of
Pennsylvania history, before the n
of the American Revolution, h
finances of the Pennsylvania Pro-
Franklin, then a young man, con-
ceived the idea of basing IN issue
ON the land values of the province.
Bills of credit were issued to
farmers and others who paid six
per cent interest to the government
for the use Of the credit. The in
$500 1IAaAA I,,slA aKnr SfnAA