Evening star., 1939-09-03
Debt-Ridden Nations
Plans 10 Finance
War Are Puzzle
England and France
Stronger, but Reich Hos
Big industrial Capacity
By the Associated Press.

By the Associated Press.
NEW YORK, Sept. 2.-How can
Europe finance war?
1t is difficult for the layman to
understand how nations wallowing
in debt, budgets unbalanced. gold
reserves depleted and currencies de-
preciated. can pay the fantastic
costs of war.
True, international credit today
is at a low ebb, and definitely not
what it was in 1914, but authorities
agree that is no deterrent to war.
Money is but a medium of ex-
change and credit a medium of de-
ferred exchange, and when they
don't work according to conventional
banking practice. governments un-
der pressure of war adopt uncon-
ventional methods of seeing that
the exchanges of goods and ma
terials are made, perhaps with dis
astrous results eventually, but they
do it.
The last war wiped out the value
of the German currency, and with it
the savings of the nations middle
class. Her financial status has been
regarded as more or less precarious
almost ever since, but that has not
deferred her from one of the most
spectacular rearmament programs
the world has ever seen.
Reich Dispenses With Gold.
Gold, traditionally regarded as an
indicator Of financial strength, has
been dispensed with by the Reich
When Hitler came into power in
1888, he paid out almost the entire
gold reserve of the Reich in settle
ment of certain debts, and in effect
told Germanys creditors if they
wanted further payments they
would have to buy German goods.
Without gold which automatically
settles differences in the balance of
international payments, business
men cannot freely trade in world
markets, and there can be no free
flow of merchandise.
But by a rigid control balancing
imports against exports, the Reich
not only has continued to carry on,
but has accelerated her internal in
dustrial activity to record-breaking
levels. Her iron, steel and cement
production have surpassed all ma
tions save the United States. and
she has become the biggest producer
. OF aluminium.
Despite the drive for self-sufici-
ency, Germany still looks to the rest
OF the world for a large portion of
her food supply such as meat, butter
and cereals. and for textiles, rubber,
tin, petroleum and other important
products. She lacks funds to buy
them and international credit on
which to borrow, but with her big
industrial capacity, has been export
ing goods in exchange.
Rigid Rationing in Effect.
War would presumably shut off
her sea-borne trade, but claims are
made that she has stored sufficient
supplies to keep going some time.
Rigid rationing is already in effect.
Also, the agreement with Russia
opens up, at least potentially, a
source of large supplies of raw ma
terials, for which the Reich could
trade manufactures.
The German rearmament propran
has been accompanied by huge in
ternal borrowing and staggering
tax burden. How well the Nazi eco
nomlc program is working, how long
II Will work, whether huge expendi-
lures will bring internal imitation
with disastrous rise in price levels
are moot questions
financially, compared with Eng
land and France, Germany is re-
garoed as weak. Against this she
mas manpoWer and great industrial
capacity. '%''
England's borrowing CAPACITY to-
Gay is scarcely what it was in 1914
Her debt is some three times what
1t was 20 years ago. France wiped
OUT good part of her World War
oeot IN the postwar initiation and
mas oeen through number of finan-
clal crises in recent years. But Eno.
iano and France each have more
than s2.0O0.000,0O0 in gold, more than
twice what they had in 1914.
ALLIES" Could Spend Gold.
During the World War the limited
states made cash loans to England
and France of 4,766 ,00o, 900 and
more after the armistice. Further
borrowing in America would rre-
sumably be banned by the johnson
ACT 1orbidding loans to defaulters
Jesse Jones, administrator of the
Federal loan agency, said in Wash
lngton yesterday, however, that The
Johnson Act did not apply to the
lending powers of the R. F.. C. or The
Import Export BankO
But England and France could
raise some billions in cash for for
eign purchases. They could spend
eneir gold, assuming the United
oCates would continue to take it and
tney could mobilize and liouida te
foreign investments. The Commerce
department estimates their invest~
ments here at between 50 900 0oo Coo
ana Oo,OOO,000. In addition Can
ada has some 81 400, ,00O, 900 invested
here. 'e''o"
france is economically one of the
more self-sufhcient nations in FIJI
rope. England imports most of her
1ood supply, and other essentials But
still is supreme on the seas, has her
dominions to draw from,