Evening star. [volume] (Washington, D.C.) 1854-1972, 1927-08-13

Dr.. ReinhoId Says Country
Will Be Able to Meet
/ Heavy Preparations.
Special Dispatch to The Star.

WILLIAMSTOWN, Mass, August
13.-Germany will make her repara.
tons payments on schedule in 192S-29
the year when the payments under
the Dawes plan reach the maximum
of 1925. Zoo, 900. and any breakdown of
Preparations at that date will be due TO
the transfer problem rather than to
Germany's inability to turn over the
necessary number of gold marks to
Parker Gilbert, agent general for rep
Rration payments.
This prophecy is made by DR. Peter
Reinhold of Dresden, former finance
minister of Germany in the Luther
cabinet. who is attending the sessions
of the Williamstown Institute of Poll
tics. DR. Reinhold in an interview on
the prospects for the Dawes repara-
tions plan during the next two years.
on whose outcome depends the success
or failure of the plan, took issue with
the recent prediction of John May
nard Keynes that the present budget
AIRY program of Germany will lead in
evitahly to failure in meeting the max
tmum annual payments in 192S29.
Payments Assured.
eff our economic and industrial sit
Oation continues to improve i'll the
hext two years as it has in the past
two, which we have every reason TO
expect, we will continue to make our
eeparations payments regularly" de-
clared Dr. Reinhold. whether the
transfer problem, which comes to a
head in 1929, can be solved is a differ
ent question:
Mr.. Keynes, British economist, in
4 recent article on The Coming Crisis
IT, Reparations,' made three points to
support his prediction that separations
will break down in 1929 because of
Eermany's inability to pay; that the
German states and communeS are en-
titled to draw upon the Reich for un-
buly large proportions of the national
revenues, thus weakening the national
treasury; that Germany has met her
payments so far only by securing long
term foreign credits; and that in order
TO meet reparations payments from
her own income Germany must in
grease her exports by So per cent be-
tore 1929.
"On the first point many Of our
financial experts believe that it is alb
solutely impossible for the German
municipalities and states to decrease
the percentage of national revenue
which they are entitled to draw from
the Reich. They now receive rs per
cent of the income and corporation
tax payments, 80 per cent of the turn
over tax, SO per cent of the real es
tate taxes, so per cent of the tax on
Industrial companies. This is one of
The most holly debated phases of our
present financial program; it is an i'm
portant political issue at present. 1t
Is contended that the States could not
meet the entire expenses of their adj
hinistration without paralyZing their
economic life. The national govern
ment pays directly the expenses of the
Army and navy, the war pensions,
separations; the rest of the national
income goes to the local governments
br administrative expenditures"
Admit Heavy Loans.
DR.. Reinhold admitted that Germany
has borrowed amounts equal to her
separations payments to date, but he
believes that the principle of long
term credits to stimulate productive
enterprise is a sound one, and wiser
n the long run than to increase the
national taxes to a point which would
btifie industry.
IN the long run, such taxes as we
bad for a few years after the war can
bot be borne by any people," he said.
FOUR net revenues increased as soon
Is taxes were reduced under the re-
organization affected by the Luther
kabinet in 1924. We are going on the
heory that all expenditures for such
projects as canals, roads and post
bfiices, which will benefit future gen.
brations, should be met not from taxes
but from foreign loans. You in the
United States have given an example
II how unproductive expenditures can
De avoided"
Can you increase your exports by
he So per cent which Mr.. Keynes de-
flares necessary to build up an export
iurplus by 1922" DR.. Reinhold was
tsked.
'It is absolutely impossible he de-
Haired, unless we dump our prod
lets on world markets. No one will
permit that.
THE only possibility Of reducing
the present unfavorable balance of
trade" he added, Lies in reducing
imports Of non-necessities. Another
possibility lies in the increase of the
o-called invisible items Of trade,
tuch as tourist expenditures. This
would greatly facilitate the transfer
if reparations funds across the Ger
nan border.
Tourists Could Aid Issue.
MANY German economists" he
bald, believe that if thousands of
he American tourists who now spend
their dollars in Paris would go to
Berlin the problem of reparations
would practically solve itself
Another factor which gives ground
Tor optimism in regard to Germanys
financial future, according to DR..
Reinhold, is the development Of the
treat industrial organizations known
Is syndicates or "cartels," having all
he resources of large scale produc-
hon and based on the findings of
.cience. Modern chemists who have
made 1t possible to manufacture
lynthetic gasoline out of Ignite, and
Who are constantly finding methods
,or cheap production of chemicals
tsed in industry, are an important
actor in the industrial renaissance
which has enabled Germany to stand
he strain of reparations payments,
be claimed.
One important factor which DR..
Reinhold believes is overlooked by
The economist who looks at the prob
EN- of reparations on a dollars and
tents" basis, backed up by figures
In budget expenditures, export and
import totals, ct cetera, is the will
10 achieve" which animates Ger
hany today.
THAT confidence in the future
which inspires the will to work is
Die decisive factor in the entire eco
homie life of the nation - Tlr Pain.