Page
REPARATIONS AND INTER- ALLIED DEBTS;
MR. MOKENNA'S VIEWS.
*IMPORTANT ~ SPEDCH
In the course of an address on the subject of reparations and international debts, Mc. McKenna, chairman of the London Joint City and Midland Bank, Ltd, at the American Bankers' Association Convention at Now York on October 4th said ::
l
THE HONGKONG DAILY PRESS, WEDNESDAY, NOVEMBER
any large secumulation of such assets ža England. Neither Franon nor Italy bas similar reserves of wealth, and I doubt. whether either of them bas suficient to meet more than a trifling part of their Zoreign debt.
have lost their value as in the use of the Russian investments. Her shipping has been largely confiscated, and she has besa deprived of some of her moet pro duolive arrás --Alasca-Lorraine, the Barre Basin, and the Polish-provinces. All the sources whence an exportable surplus There remains to be considered their might have been drawn have been greatly exportable surplus in the ordinary way of impaired, if not wholly destroyed. At no trade, and I will ask you to consider the time was Germany's exportable surplus particular case of the debt due from France suficient to enable her to make the sunual to England. Before the United States came payments demanded under the London into tha war France's had borrowed ultimatum; it is entirely out of the ques$1,000,000,000 from the British Govern tion that she could do so to-day,
THE SLUMP IN THE MARK
The decline in the mark, which at every stage has been much greater in the external than in the internal value, has afforded a very considerable advantage to the German exporter, so much so, indeed, that there is bardly anywhere a manufacturer, producing goods for export, who does not complain of terman competition. Nevertheless the German trade figures show that the ports, long after the immediate deficiency in essential foreign commodities due to the war was made good, are still barely equal to the imports. The conclusion seems irre satible that Germany has no present capacity to obtain a surplus from the export of goods.
...
ment, and this amquat vas subsequently increased to over $2,500,000,000, PATERNA There are two preliminary observations which I must make. The first is that I
debt. Sha could only do so by producing Let us imagine France paying off this speak as a banker expressing my personal
goods and exporting them in very large views. I have nothing to do with politica.
quantities, far in excess of normal trade I approach the question solely from the
demands. But the immedie demandı. economic point of view, and my endeavour
created by the war has to parallel in peace, is to determine so far as I can the limit of
and it was cany our minds back to 1914 the debtors capacity to pay nad the
and return to the ideas appropriate to effect of payment upon the world's
peace conditions we shall rooognise at once trade. My second observation is to meet
that France has no trade surplus, or re- possible criticism. How can I, a member
serves of accumulated and exportable wealth of a nation which is one of the debtors of
to enable her to meet her present external the United States, speak freely to an
liabilities. The mere endeavour to extend American audience upon international in
her foreign sales to the neccessary degree debtedness? In the course of my argument,
would disorganise the trade of the world: however, I shall show that England has the
We have seen the painful effect of an ability to pay, and, once that is established, I
enforced competition by Germany; wa can unhesitatingly assert her determination For my part I do not believe that it is should experience precisely the same re to bonour her bond in full. The greatest within Germany's power to pay, but letussults from a similar effort by France. of all of these international debts is that of suppose for a moment that she can. We The inevitable conclusion is that these Germany for reparations, put by the Lon. hare then to consider what the effect of this international debts are far too great for the don ultimatum at thirty-two billion dollars, caforced payment would be upon interna- capacity of any of the debtor countries at which antount it stands nominally to-day tional trade, and whether it would be to the except England. The whole subject re- Of the remaining debts the liability of advantage either of Germany's creditors aquires a rational reconsideration by the France to the United States and Great a whole or of the rest of the world. If creditors, who must keep steadily in view Britain is sir and half billion dollars, and Germany could pay what is demanded of the immediate effect of the payment of of Italy to the same two countries four and her, the only method of obtaining the these debts on the general trade of the a half billion dollars. Busain owes these money would be by increasing her exports. world. The creditor countries will obtain countries three and a half billion dollars, An Increased exportable surplus could greater advantage from trade prosperity, and a further one billion dollars to Franco. only be obtained by extending her which will ensure full employment in their The other debts are all comparatively small sale of manafactured goods. To do factories and workshops, than they can in amount. Of the creditors of the European this in the teeth of the competition over receive from the precarious payment Continental Governmite England is the of ether manufacturing nations she must of these debts. I cannot help thinking greatest.
work longer hours for less wages, she must that there has been a general, though very We have no record in history of inter-cut profits, she must reduce her imports natural, misauderstanding of the conditions, antiqnal claims of this magnitude. The to the indispensable minimaa. But her under which international payments are indemnity exacted by Germany from competitors will not consent to stand idle made. Mistaken opinions on these economic France under the Treaty of Frankfort in while they lose their trade. They will questions are not surprising, but they are 1871 was, in round figures, one billion find themselves faced with growing unent causing grave disasters throughout the dollara. By September, 1873, the whole playment and heavy trade losses. They world. indemnity was paid Here we have an too, will be compelled to reduce wages and example of a very considerable inter-cut profits. And thus Germany's effort to maliqual debt rapidly paid off without any extend her foreign trade must be confronted A better understanding of international serious disorganisation of the world's with the opposition of the whole manafne-trade and of the possible limits of interna trade. Now, what were the conditions turing interest of the rest of the world, tional payments will quickly enable us to find which made this possible? The war had aud only be successfully countered by a
a remedy for the evils which now distract us.” beon short, and the amount of the in general lowering of the standard of life. The public on both sides of the Atlantic are demnity was well within the capacity of
beginning to take a more rational view than France to pay. Her nationals held large
was possible three years ago, and if the :blocks of foreign securities, which wore
leaders of opinion direct our footsteps along realisable in foreign markets; her credit
the right path I believe the world is now was good, which enabled her to obtain
prepared to follow it foreign subscriptions to her loans; and in her effort to increase her exports she was not hafhpered by high tariffs. But of the several factors in the Freach ability to pay the most important lay in ber accumu fated reserve of wealth, the foreign securities owned by her nationals.
BRITAIN OVERTAXED.
BENEDY FOR EVILS.
It is said that Germany has intentionally depreciated her currency in order to induce her creditors to abandon their claims. We are told that her people are not adequately To sura ap: The conclusion to which I am taxed, and that, if they were subject to driven is funt Germany can only pay now the burdens borne in some other countries, whatever she may have in foreign balancas, the Government would be able to meet its together with such amount as she can liabilities. It is certainly true that in my realise by the sale of her remaining own country far heavier taxation is levied foreign securities, that this payment than in Germany, but I am inclined to is only possible if all other demande It is interesting to note the industrial think we are overtaxed, and that over are postponed for a definite period conditions of France at that time. Employ.taxation, so far from fostering, cannot faillong enough to ensum the stabilisation ment was extremely active and production to depress national production. But who of the mark; and that future demands was on a great scale. The improved ther I am right or wrong in that opinion I at the expiration of this period must be standard of efficienty in production which fail to see how additional taxation can limited to the annual amount of Germany's was thereby forced upon her endured long stimulate foreign trade and provide a exportable surplus at that time. Further, after the period of the indemnity. In larger exportable surplus. The taxes would that England has the capacity to pay to the Germany, on the other hand, there be paid in marks, and whether the marks United States interest and sinking fund on was a very different experience. The re- are derived from avowed taxation or from her debt; but that the other debtors are none .ceipt of a large amount of gold and concealed taxation through the use of the of them in a position to meet more than a silver had, with other causes then in operas, printing Press, they are in neither case a small part of their external liabilities, and tion, a serious effect upon German internal currency which would be accepted in dis-in the existing condition of Europe prices, which rose rapidly. It would not be charge of foreign liability.
definite postponement of any payment by Certainly Germany can pay something, them is desirable in the interests of -correct to say that the trade conditions in
Germany were entirely due to the payment though not in the form or under the call the parties. The actual amount of the French indemnity, but undoubtedly ditions it is now sought to impose upon her, which the other debtors could ultimately it was a contributory cause of material Many Germans possess foreign assets, pay should, as in the case of Germany importance. The comparative prosperity in whether investments or balances in foreign be ascertained by inquiry into their export. France and depression in Germany are banks, and it would be a perfectly practiable surplus at a full and frank conference remarkable, and give colour to the story cable proceeding for them to sell these assets between creditors and debtors. If I have that Bismarck, in commenting upon the to the German Government, who in turn become convinced that an attempt to state of the two countries, declared unt the could hand them over to the Reparation enforce payment beyond the debtor's ability next time be defeated France he would Commission. I have no doubt that if these is injurious to the international trade of insist on paying an indemnity. Such 18 assets could be sold for an assured profit the whole world, lowers wages, reduces the only precedent we have for the payment the holders would be willing to dispose of profits, and is a direct cause of unemploy- of a great international debt. The águres them. It must be remembered that toment, the conclusion is founded solely on we have to deal with to-day ars on a far considerable extent they are the proceeds of economic grounds and is uninfluenced by larger scale than the indemnity exacted sales of marks which have been dung by any political considerations, or any regard from France Bfty years ago, but the pro- Germans on the foreign marker under the to the moral obligations of the debtore. I blem in all essential particulars is the well-founded apprehension that the pres know very well that there are other consi- sure of reparation payments would rapidly derations affecting the debts, but these ara depreciate their value. Remove this matters of statecraft to be determined by pressure, and the mark would immediately the rulers of the creditor countries accord- The first question is: What is Germany's improve. It has still a far greater value in ing to their view of wise policy, which capacity to pay? I have no doubt that the Germany than it has outside, and the covers many interests besides those of experts who advised the signatories of the German holders of foreign assets would trade and finance. The fact that a debtor Treaty of Versaillea that Germany could have a clear advantage in selling them for cannot pay does not of itself discharge pay 120 billion dollars had made many care-marks to their Government.
the obligation. The debt becomes the fal calculations of this kind. But what wo Itis impossible to give any precise estimate subject of negotiation and bargain, by have to investigate is not Germany's of the total value of these assets, but I believe which, if the debtor obtains relief, the capacity to produce wealth, but her capacity it would be safe to put them at less than a creditor may still recover some advan to pay foreign debt. Nobody has ever billion dollars. Whatever the amount may tage to which he may be justly entitled. doubted Germany's immense power to be, however, Germany could par it, provided But I conceive it to be the duty of produce, but production by itself is not the fall in the mark was arrested. More bankers to help so far as they can in enough. She must find a market for her than that, I do not think she has the ability forming a sound public opinion upon the exports. Nor is this the end. We must to find, at any rate for some years, and it financial and commercial aspects of these remember that an increase in her exports would be a condition of this payment that international debts, and it is in pursuance will only provide funds for reparations if no more should be demanded of her for of this duty that I have ventured to there is no corresponding increase in a long time to come. I believe that, make these observations to-day. imports. Payment for her indispensable looking merely at the amount to be received, imports must be the first charge upon the the creditors would gain. by abandoning proceeds of her foreign sales, and it is only the attempt to obtain other money pay- the balance, the exportable, surplus, which as available for roparations. “
game.
WHAT CAN GERMANY PAT?
meats for a period of at least three years,
PLATE GLASS WINDOW and I am quite sure the world as a whole would be an immenso gainer in the general "Looking through my Toris lenses is stabilisation of exchanges which would ence upon an arrest of the fall in the like looking through a fine plate glass mark, I bare no wish to minimise the just window," said an American lady, in the claims of the Allies against Germany. But course of her remarks while in a tran no solution of the reparation problem is possible unless political considerations are subordinated to ecoupmid facts-
INTERNATIONAL DENTS.
2.
car the other day. She said 'just the right thing. It cost a bit more-to-build a plate glass window and it cost a bit more to make a pair of Torio lenses then
In speaking of a pation's exportable surplus we must not forget that other factors may contribute to it besides the balance of exports over imports. Interest received from foreign investments and pay ment for external services, such as shipping, may be contributory factors. Before the war Germany possessed a very considerable exportable surplus derived from all three sources, but mainly from the interest
I have dealt at length with the reparation on her foreign investmente, which word probably worth not less than 5 billion problem in an endeavour to show that the ordinary fat kind. Tories are mors dollars. As regards the surplus from the nation, except in so far as it has an export than worth the mall ¿liherence, în cont sale of her products and payment for able surplus, can only pay foreign debt out services, it is safe to say that it never of the wealth it has accumulated outside to you in the added comfort you derive exceeded 100 million dollars a year. But its own country. If we pass now to the from their use. Toris lenses of any hat is her position to day? Most of her other international debts we have to prescription are manufactured by The Foreign investments have gone. Some recognise that the general argument Hongkong Optical Co., Budce were sold during the war, others have been equally applicable to them all Have the
debtors an exportable surplus, and what are Clark & Co., Manufacturing, and Queen's Road their foreign assets? With regard to the ing Opt latter question, the only debtor possessing ADVE
ized as enemy property by the Govern month-of-the Allied and Associated Powers and most of what remai
1999
5 Points about the Famous Cigarette
Made by hand
Large bright leaves
free from dust
matured in bond
pure vegetable-paper
that stands in a class by itself
555 are each individually made by hand, at ten times the cost of making by machinery.
555 are made from selected Bright Virginia Leaf. Only 5 lbs. out of every 1,000 lbs. of Virginia Leaf grown are good enough for 555.
555 are freed by hand from stalk, sand and dust, 30 per cent. of every Hogshead of Tobacco being eliminated in this process.
555 Leaf
555
is
matured for years
rare old wine.
O are each separately cased by hand in pure Vegetable. Paper, which in burning does not interfere with the perfect
flavour or aroma of the Tobaco.cat
STATE EXPRESS
VIRGINIA CIGARETTES
NO
555
ARDATH TOBACCO CO.LTD.
LONDON
Obtainable in Every Country of the World.
KING
GEROUS BEWARE of Cheap chinére But manufactured by Machinery, el the rate of thousands per minule aquantity of Tobacco dust and sand, which
555
GO., Ltd.