Evening star., 1924-07-17
GERMAN CREDIT
] DEMAND IS KEEN
Rentenmark, StabiIizing In
fIuence, Increases Produc-
ton and Confidence,
BY DR.. OTTO Won GLAsENApP.

Correspondence of The Star and the Chicago
Daily News.
BERLIN. Germany, July 17,-As AL
most every one is aware, the want of
credit in Germany is extraordinarily
great. The demand for credit at the
Reichsbank, for instance. increased
the account for discounts and ad-
Tances from the first of the year to
the beginning of May by 1.429.0OO. 900
gold marks "a gold mark is equiva-
lent to 23.S cents), raising the account
from 100000 to 2,020,000,000. The
intensity of the demand may be
judged also from the rates that have
to be paid for credits in the open
market. Thus latterly the price for
monthly call money has been from 3
to per cent per month. i. e.. up to
so per cent per annuum.
The causes for the unusual increase
In the demand for credit consist chief
ly in widely extended dissipation of
liquid reserve and working capital,
due to the depreciation of the mark
to one-trilliOnth of its original value.
This hit not only the banks, in which
deposits sustained severe collapse,
but all departments of general busi-
ness. Even businesses that were in
position to maintain, or even to in
crease tnelr holdlnSS OF securities,
saw their current trading capital
melting away. To keep their con-
Germs going they are compelled in
consequence to apply for advances
and mostly advances at any price.
More Goods Manufactured.
Another influence that bears on the
demand for credit is the revival of
business that has been noticeable
since the sterilization of. the mark
began. AS the value of the mark has
maintained itself more or less at the
same level since the Introduction of
the renten-mark. there can be no
doubt that labor has been more in
tense and the production of manu-
factured goods has been increased. The
increased demand for credit thus oc-
casioned is consequently thoroughly
sound. At the same time there is no
denying the fact that there have been
unsound demands from some GUS
TONER'S
The satisfaction of the desire for
credit is accomplished from various
sources. In the strict economic sense,
credits should be procured only from
accumulated surplus profits at home,
or from credit accounts opened In for-
eign countries. When fresh values in
goods have been built up by increased
production, it is up to the bank of
emission to finance and facilitate the
disposal of such goods by the dis
counting of bills.
cerned, distinction must be made
between credits given by the foreign
lender to the home borrower, whom
he knows in the ordinary course or
business and credits supplied by MD
dlemen of industrial finance. In the
latter category are chiefly included
the banks, and above all. at the pres
ent time, the German Gold Discount
Bank (Deutsche Golddiskont Bank.
Germany's Losses of Gold.
The existence of the latter is due
to the economic necessity or attract
ing foreign capital for the further de-
velopment of German trade, as Ger
many's losses in capital have been
losses in gold. and cannot be made
good straightway by the supply of
home credit for payments which nave
unavoidably to be made abroad. The
difficulty of Germany's position In
this respect is shown by the course
of the balance of trade, which for
the first quarter of the current year
shows a debit of ever 600,000,o00 gold
marks.
The Golddiskont Bank has a trading
capital of f10,000,o00; it has limited
power to issue notes up to total OF
$4,000. 900, and has obtained Important
rediscounting facilities in England
and the United States. Credits are
put through by giving the home ex-
porter in exchange for his English
or American sterling or dollar ac-
eign bill security which, he requires
for such export business as produces
short term payments in gold: Re-
payment Of the credits must pc Sc
cured absolutely by receipt of pay
ment up to value on exchange SO
far credits have been given In TINS
way to a total in round numbers or
100 600 900 gold marks, and the re-
suit has been seen already in a
marked relief to the foreign exchange
situation in Germany.
Building Reserves of Cash.
In the supply of credits at home the
business has run it's course as fol-
lows: AS an actual fact, a revival of
thrift at home, with a corresponding
increase of deposits in the banks and
savings banks, is on record since the
stabilization of the mark. Mention
should be made also of the insurance
premiums, whose total had been
greatly reduced in consequence OF the
General diminuution of capital prop
erty. but which is now being mobi-