Evening star., 1931-12-24
BY the Associated Press.

BY the Associated Press.
BASEL, Switzerland, December "a
Following is the text OF the official sum
mary OF the Young Plan Advisory Com
mittee report:
THE report opens with an analysis of
the present situation in GERMANY on
whom the effects of the crisis of this
Summer were devastating.
Sweeping Withdrawals of foreign
credits played havoc with the financial
system OF Germany and led to a series
OF legislative enactments which culmi-
mated In the emergency decree of De-
cember 8, 1881, which includes meas
ures without parallel in modern legis-
lation.
Germany was particularly suscepti-
BILE to the credit crisis because of the
large amount of her short-term foreign
debt. A census taken by the German
government showed IL milliards of
reichsmarks owing at the end of July.
Prior to that date 1t was estimated
that 2.9 milliards have been withdrawn
and since then 1.2 milliards have been
Withdrawn under the standstill agree
ment.
Interest Rates High.
Against this, exports have recently
been heavy, but exceedingly long credit
has been given in many cases, and the
surplus OF exports has been due in part
to certain special causes, including pres
sure on manufacturers to sell stocks
and some exceptional sales to Great
Britain in anticipation of tariffs.
1T is doubtful whether this surplus
OF exports can continue at It's recent
level in view Of general adverse factors,
including higher tariffs, exchange re-
StrictionS in other countries and ster-
ling competition.
The rough balance of payments
shows that Germany will have had to
meet during the whole of 1881 with
drawals of capital amounting to about
40 milliaros of reichsmarks
After using other resources avail
able to her this has caused a drain of
gold and foreign exchange from the
Reichsbank of IT milliards Of reichs-
marks.
"As result, the Reichsbank has had
to take a series Of measures of increaS-
ing stringency in order to limit other
calls for foreign exchange which might
be made upon it. Nevertheless, it has
continued to lose reserves, while at the
same time 1t has been forced to ex-
tend its own credit to make up for
sweeping losses of deposits by banks
! and savings banks.
Industrial Output Drops.
"Germany's industrial production fell
between 1923 and 1881 by one-third,
which has resulted in an increase of
unemployment to a level of 100000
wholly unemployed, out Of about 2l,-
100000 employed persons.
Interest rates have been high in
Germany ever since imitation During
1880 advances to manufacturers of first
class standing have seldom cost less
than per cent. The figure is now
about II per cent.
The decline in industrial activity,
with its effect on profits, wages and
the level of unemployment, seriously
reduced the yield of taxation. If new
taxes bringing in is milliards of reichs-
marks had not been imposed, the de-
cline in revenue in the last two years
would have been about 35 milliards, or
40 per cent of the total
Besides new taxation, sweeping
economies have been made in the budget,
particularly in the salaries of civil
servants, which now are to be reduced
about 20 per cent, as compared with
1929 and will be below the level paid
in 1927
Poor Relief Reduced.
Reductions also have been made in
unemployment benefits and poor re-
lief. 1t is, however, an advantage TO
the German budget that the debt
charge contained therein is compare
lively low, and the sketch of the bud
get for 1882, which was examined by
tl.2 committee, contained consider
able sum for amortization of the short
term debt.
In view Of the measures taken in
the last two years and in particular
the decree OF December 8, 1881, the
committee expresses the opinion that
the burden of taxation in Germany has
become so high that there Is no mar
gin for further increase.
The decline in German business ac-
tivity affected the position of the rail-
way system, which Is finding it hard to
make both ends meet in the present
circumstances. But the committee is
of the opinion that once conditions re-
turn to normal the German Railway
Co., which is fundamentally sound
undertaking, will be able in the future
If managed on commercial basis-to
yield net operating surplus compar-
able with that earned by other big
foreign railway systems.
Chapter 2 Of the committees report
begins with a description of the world
crisis, Of which tie outstanding fea-
ture is the fall in prices. All forms
of economic activity have been affected
Reduced purchasing power involved
disappearance of profits, unemployment
and an uninterrupted slump IN stock
exchange securities.
Banks Stability Imperiled.
The stability of banks has been i'm
periled and the withdrawal of foreign
capital from borrowing countries-par-
ticularly in Central Europe-threatened
the stability of currencies, which has
resulted in control of the exchange
market and in certain cases suspension
of foreign payments. E,e spreading of
the crisis to lending countries involved
the abandonment Of the gold standard
by some of them, which has given rise
to tendency to hoard. The latest
phase is the imposing of tariffs and
other restrictions, which has still
further reduced international trade.
Commenting on this situation in
relation to reparations, the committee
recalls the dilemma referred to by the
Banking Committee in August last,
and points out the contradiction that
might arise between a system involv-
ing large annual payments by debtor
to creditor countries, while at the same
time putting obstacles in the way of
the free movement of goods.
so long as fresh capital was being
loaned to the debtors the dilemma did
not seem to arise, but in 1929, when
these capital movements ceased, it be-
came evident that in the long run
these annual payments must be met in
the form of goods.
But the world cannot quickly ad-
just itself to important changes in the
course of credit and trade, and at
tempts to maintain the international
balance of payments by large move
ments of gold weakened the monetary
foundation of many countries.
"Germany's demand for capital to
fill the gap left by the war and its
aftermath was met to substantial ex-
tent by an influx Of capital, estimated
by the Bankers Committee at 18 mil
lizards of reichemarkS Though 10 mil