Evening star., 1931-12-24
Experts Reparations Summary
Young Plan Committee Recommends Adjustment of
War Debts Without Delay if Ne~ Disasters
Are to Be Avoided.

an increase of debt which grew in
disquieting fashion
Though imitation had reduced the
public debt by 1924 to a very small
amount by 1881 it had grown to "a
mlllards Of reichsmarks, of which one
third were for public undertakings.
When the crisis came, the fact that
expenditure was on so high a scale
meant that the deficit was correspond
lngly large. In this connection the
committee again calls attention to the
SYSTEM under which substantial part
OF the taxes levied by the Reich is
automatically handed over to the states
ano communeS-a system which means
that control OF expenditures is divorced
from the responsibility of raising rev.
enue TO meet it. The committee thinks
reform in this matter would have bene-
ficial results.
Factories Activity Reduced.
THE committee terminates this
chapter by observing that every previ-
Gus crisis has been followed by a neriod
OF stability and prosperity, and that
1t would be unjuStif1able to Judge its
prospects for the future on the basis
OF an exceptional period of depression.
AT the present time the budgets of all
countries and of most railways show
oetlclts. To assume that equilibrium
Will not be regained after the present
crisis would be a counsel of despair,
This Is as true of Germany as of other
countries. In past years she has built
up an immense and powerful economic
equipment.
The restriction of markets and the
fall in prices have prevented her from
utilizing this to the full The activity
OF her factories is now necessarily re-
duced. But although it is impossible
TO fx a date, 1t is none the less GER
tain that it will ultimately be restored
with the assistance of measures sug-
geSteo IN tne conclusions of the COM
mittee's report.
The committee has no doubt that
as regards railways and the budget
receipts are no less elastic than else
where
Inc report summarizes the German
emergency DEGREES of the last two years.
Inc income tax has been raised twice.
peer ana tobacco taxes have been In
creased, and the turnover tax raised
from O.2o to 2 per cent Official SAL
aries are reduced by 20 per cent. Sim
llar cuts apply to the local authorities.
who have also imposed a poll tax and
new local taxes on beer and other
beverages.
Unemployment insurance contribu
tlons are raised to 6l2 per cent, prices
ana rates are to be cut by 10 per cent
and wages reduced to about the 1927
ieVei. Inc interest on longterm bonds
reduced by about 25 per cent
Control OF banks has been set up,
I4
banks. "A stringent foreign exchange
central operates, and drastic provisions
against the flight of capital.
Question Left Unanswered.
The question how far the measures
described above will be successful can
not be answered at the present mo-
ment, put the committee consider that
the steps taken to defend and to main
Tain the stability of the currency and
the budget show, in their opinion a
resolute desire on the part of the Ger
man government to meet the situation.
In the final chapter the committee
draws the conclusion from its survey
OF the facts that Germany would be
Jus"fied in declaring, as she is en-
tltled to do under the Young plan, that
IN spite OF the steps she has taken to
VIC oIdouIy Ol IleT currency
she Will not be able in the year be-
ginning In July next to transfer the
conditional part of her annuity.
The committee, however. goes nm IN
say that it would not consider it had
lully accomplished its task If it did not
oraW the attention of the governments
10 the unprecedented gravity of the
crisis, the magnitude of which un-
ooubtedly exceeds the relatively short
depression envisaged in the Young plan.
TO meet which the measures of safe
guard contained therein were designed
The Young plan, with its rising series
OF annuities, contemplated a steady ex
panslon in world trade. not merely in
volume, but in value, in which the an
nuities payable by Germany would be-
come factor CT diminishing impor-
tance. In fact, the opposite has been the
case.
Since the Young plan came into eff
lect' not only has the trade of the world
Shrunk In value, but the very excentonal
fall in gold prices that has occurred in
the last two years, has itself added
greatly to the real burden. not only of
German annuities, but Of all payments
fixed in gold.
Concentrated Action Advised.
I'm the circumstances the German
problem-which is largely responsible
Tor the growing financial paralysis of
the World-callS for concentrated action
Wnlcn Ihe governments alone can take.
But that problem has assumed world
WIDE range. There is no previous paral-
lel IN time Of peace to the dislocafion
that Is taking place and it NAV we'll
involve profound change in the Geo.
nomic relations of the nations tn one
another. Action is most urgently needed
IN much wider field than that of Ger
many alone.
The economic interdependence of tho
various countries of the world TODAY
needs no further proof Recent wears
nave most strikingly illustrated it.
since July last, for example, it has
been evident that if the crisis by which
Germany has been overwhelmed were
not remedied it would spread tn the
rest Of Europe, destroy the credit sys-
TENS so painstakingly built up and
create profound repercussions in other
parts of the world.
The committee recalls that the
Bankers Committee on August last
struck note Of warning in this con-
nection. but events did not wait, The
year 1881 Is not yet ended and already
the crisis has assumed formidable d.
mensions
Economic activity continues with
difficulty at very low ebb in the face
of restricted credit. rigid control of ex-
changes and paralyzing restrictions on
international trade
This state of things is complicated
by the reaction of economic affairs and
political problems and vice versa.
Adjustment Recommended.
"In examining this situation the
committee suggests that the govern.
ments should particularly take note of
various considerations:
Il. That transfers from one coun
try to another on scale SO large as
to upset the balance of payments can
only accentuate the present chaos.
20. Release of debtor country from
a burden Of payments which it is un-
able to bear may merely have the
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