Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-01-06
|SCFIACF1T URGES AN INCREASE
IN WORLD PURCHASING POWER
Former Reichsbank Head Believes Spur
Is Needed for Consumption in
Undeveloped Countries.

The task of the money and invest
ment markets of the world over the
next years will consist not so much in
providing capital for existing indus
trialized countries. but more in increaS-
ing the purchasing power of the unde-
veloped countries, according to Hjalmar
Schacht, former head of the Reichs-
bank, who discusses "The Money Mar
kets Before and After the War" in the
current Harvard Business Review.
Referring to the masses OF Africa,
Asia, a considerable part Of Eastern Eu-
rope and particularly Of Russia, DR..
Schacht says the world is menaced
not so much by overproduction on their
part as by underconsumption. The fac
tories being established in Russia. he
says, probably will have thoroughly
modern equipment, but the quantity of
articles which may be produced by them
Is ridiculously insignificant when COM
pared with the potential consumption of
the 150,000,000 inhabitants OF the coun-
try.
In extending credit to finance In
creased consumption on the part of
these peoples, the farmer head of the
Reichsbank continues, discrimination
must be exercised.
Production Stimulus.
mo credit may be given the eco
nomic use of which is not assured" he
says, in part. when using the express
sion financing of consumption l do
not refer to the articles of immediate
consumption, such as food, clothes, etc,
nor to those OF military armament, but
to things which may be used during
long period, such as instruments, ma
chimes, means of communication of any
description, water, light and power
equipments, and so on. The creditors
have not only the right but also the OBJ
legation to be attentive to the use of
their credit.
This leads to another consideration,
viz, the profit-earning capacity of
credit: Do the articles bought with the
help OF credit serve to effect new pro-
duction, the formation of new capital,
and do they stimulate work that will
later give benefits? Only if these con-
ditions are fulfilled will credit expan-
sion be benefit, and only so will the
yet undeveloped countries become MEM
bers Of the civilized community.
"A sound investment policy with re-
gard to those new countries will thus
be the task of the next years and dec
AIDES. This task laid before us is not
only gigantic, but it is also a step in
the direction of spreading prosperity
over the whole world. The work on this
task has the tendency to bring mankind
CLOSER UOBeLner, 10 equallZe the beneftS
of prosperity is still very irreg-
ularly distributed-and to promote in
this way the social and economic peace
of the world.
Comments on Distrust.
at is matter of course that all
these things can only be done if the
countries are ready to cooperate peace
fully, if the distrust spread over the
whole world by the unjust treaties of
peace is removed, If the obligation of
one part of the world to pay war in
IDENTITIES to other people is repealed
and If the word of an American Presi-
dent-who has not always had lucky
hand, but who inspired himself with the
best intents and with noble ideas-is
eventually realized, the word that the
end of the World War should not see
either conqueror or defeated, but that
morality and justice should govern the
relation between the countries.
"One of the most striking features
of the international money and invest
ment marketS-the ample abundance of
! funds on the short-term money markets
! in face of the shortness of funds on
the long-term markets-is merely due