Evening star., 1924-05-18
RENTENMARK PROVES
BIG AID IN GERMANY
Creation and Sterilization Is Rare
/ Triumph of Financial
y Genius.
INITIATION IS IMPOSSIBLE
Neither Liquid Nor Suitable for
Foreign Currency.
By EDGAR ANsEL MowRER.

y Radio TO The Star and Chicago Daily
News. Copyright 1924.
BERLIN, May 15-Creation and
sterilization of the rentenmark is a
rare triumph of financial genius,
quite naturally claimed by all who
nad a hand in the business. But it
must not be thought that the renten-
mark has replaced the paper mark
Theoretically, the rentenmark is not
money at all. It is a kind of mort
gage receipt The official German
currency still is the paper mark.
Today it takes four trillion two
hundred billion paper marks to equal
a dollar. One trillion paper marks
equal one rentenmark, and the two
currencies. within Germany, are in
Aerchangeable.
E1torts at substituting passive re-
SIStance in the Ruhr caused such in
n3llon as the world has never before
seen. But by the end of the summer
~ was clear that this imitation was
ieaolng straight to ruin. This was
me period when all wages had to be
na1d daily and spent within the hour,
under penalty of deprecia ton. Ciphers
on the banknote showed in the mil
ilons IN September. In October they
mad risen to the billions, and in No
Salad of Currency.
Tho situation was further compli-
lated by a perfect salad of various
4. kinds of lesser currency-Re
notes, notes issued by various cities
postal money, special gold loan re-
celpts, etc. Bankers and bookkeepers
we're driven nearly crazy. Ledgers
were Inadequate TO list the various
npia u,
On the verge of collective dementia.
Children aped their elders and played
At stock exchange in the streets.
Ihere was a children's stock eX-
corner initiated their elders Older
people, less adaptable, went to the
insane asylumS
The government, in an effort to
preserve some semblance of financial
order, fixed the exchange rate, with
the rtsSult that German money was
quoted abroad at only half its Ber-
lin value, and hordes of spectators
enriched or impoverished themselves
IN shady transactions. But the de-
probation was really going faster
than the printing presses. The gold
value of the German currency became
less and less. This was not apparent
owing to the rapidity with which it
changed hands.
Suggested Rye-mark.
Several plans for stabilization were
proposed in the cabinet The best
was one for rye-lnark, suggested by
Deputy Helfferich. But Finance Min
lister Helferding opposed it on the
ground that the price of rye was
fuctuating. and demanded gold
standard In this he was supported
by the banks. But no gold was
available. 1t was feared that the
government. under pressure, would
inffate the new money, as it had the
old.
+ The result of much discussion was
What the rentenmark was empowered
to take Il Kind of mortgage of per
cent on all German fixed property
except urban buildings. This mort
gage carries interest of per cent
cXacted from all owners, as tax,
and is paid to the rentenbank, which
is private institution. ln1atlon'
therefore, would be rendered lmpos-
Sible because il would hurt the rent
enbank owners and all who accepted
renten mortga geS. On the strength
of these mortgages, called rehten-
briefe, We're issued rentenmarkS' ek
changeable for interest-bearing rent
enbriefe. The agreement was reached
on October Is.
Fall is Retarded.
Tho first act Of the government.
when it received full power from the
Heichstag two days later to tackle the
financial and political crisis, was to
establish the rentenbank. Gradually
rentenInarkS were printed and silpped
into circulation. Initiation of paper
marks continued for time, but
slowly AMI gradually the number in
circulation became smaller. The re-
Ntions between the rentenmark and
me paper mark is not prescribed by
law but little by little the fall III the
value of paper marks was retarded.
Finally. on November 80. the paper
mark became stable at Il value which
Still is maintained. This process nee
essarily entailed a complete fiscal re-
form. Therefore, it was necessary to
re-establish the currency on gold
basis.
President Havenstein of the reichs-
bank died October 20. He was tenn
porarily replaced by a currency com
missioner. the banker Hjalmar
Schacht, who. on December %, was
named reichsbank president.
Two Share Credit.
Credit for re-establishing the Ger
ran fiscal system on gold basis is
shared by Schacht and Finance Min
ister Luther. This stabilization was
such miracle that for weeks the
Germans themselves. did not believe
in it, Tt was q novelty that financial
stability could be achieved by faith,
hope and charity.
1t must be remembered that the
-enten1narks are effective only be-
cause they are limited in number.
Tyhe rentenmark can remain stable
Indefinitely SO long as taxes are coli
scted in gold values, and not too
many are sent abroad. This is it's
,sseakness. 1t is not liquid. 1t is not
suitable for d foreign currency.
IEehce it had to be supported recently
~ 1.-THE new gold credit bank founded
,c5fh English and German money,
Syhich serves to provide industrial
credits and also as a medium fs~s
roreign exchange But it must bic
considerec that uo'ess German eco
nomic unity Is re-established the
C;crman budget cannot be balanced.
without balanced budget paper
mark Initiation is inevitable. Such an
;,fIation eventually will prevent col
laction in gold of taxes and So de-
str-rTv "a rentenmarK and preeSsitate
a new catastrophe.
Meanwhile the Germans, guided by
the late Helferrich, by Hilderding, by
Schacht and by Luther, have given
n,arvelous example of German genius
nd crezAed temporary staoillty
Taich is serving to bring in the new
cp1d bank on a rock bottom founda-
tion-