May 1. was only to be expected that Germany's creditors would refuse {to be over-impressed by the case made out by Dr. H. Schacht, Reichsbank Governor, supporting his claim that Germany was unable effect transfers for payment of her' debts. To a certain extent his observations have been admitted, lout sufficient proof has not up to ithe present been advanced of inability, and to support this there is claimed to have been an actual growth in the Reich's domestic prosperity. What the German financial leaders appear to have done is to attempt to limit the. resources upon which they might ical for the purpose of meeting {thelr abilities under the foreign loans, to an export surplus and to that alone. There is little doubt that the German trading balance has progressively deteriorated until {it is perhaps too small to provide the foreign exchange for the service of a foreign debt which is admittedly not too large for a country such as Germany to bear. Long term indebtedness stands at Rin.
7,436,000,000, to which it has been reduced since 1930 through one cause or another, while, in fact, the burden of reparations' has been thrown off. The question is consequently asked why income in foreign exchange available for meeting this service has so decreas-led. The German contention is that other people will not buy their goods. It would be idle to deny {that trade conditions the world over have become such that there might a great deal of merit in such a contention. They have undoubtedly become more and more difficult, but it is nevertheless a fact that the German Government by its commercial and political policies have quite unnecessarily alienated many potential as well as actual customers. The commercial relations of Germany with such countries as the Scandinavian and Russia, Holland, Czechoslovakia jand Austria in certain respects record a deterioration due in a very great degree to Germany's economic nationalism, or autarkic. It consequently claimed by the credi-{tors now busily engaged in pressing Germany, that there were avoidable levants which a debtor genuinely'
Janxious to pay would have done everything to avoid.
It is a part of the German case that it has done everything that could be expected in order to put itself in a position to export. Up the time of Dr. Bruning's Cabinet it is true that by the drastic reduc-ition of expenditure and the deflation of wages a state of affairs was brought about which contributed greatly to the success of German exports, but since that time the policy of the German government has been completely reversed, with ithe result that internal expenditure thas risen considerably, while taxation, direct and indirect, has followed suit. The result, together with ithe maintenance of the - gold standard, has been to render German export goods increasingly less competitive, and there is probably something in the contention that fied and an unhappy reference to Britain in the matter is clear favourable trade balances have been the League and the Powers has enough: it will probably be clearer reduced to.such a degree that it is been excised. That need not neces- still when Sir John Simon makes impossible to find foreign exchange
Text read from the printed page and cleaned; old type leaves the occasional error.