ECONOMICS OF THE WAR. IO3 



Redistribution of employment soon takes place, and the 

 Government, by running up large debts, hides from the ])ublic, 

 for the time being, the sacrifices being made. 



We can now examine the position of the principal countries 

 after eight or nine months of war: — 



Germany. 



By the establishment of War Credit Banks and the issue 

 of notes by the Reichsbank and these institutions, with denomi- 

 nations as low as is., gold has been diverted from the pockets 

 of the public to the National Treasury, whose holding of gold 

 has increased from i6o,ooo,ooo to £120,000,000. It is estimated 

 that the total amount of gold obtainable in Germany is 150 

 millions. 



The notes are legal tender and inconvertible. The total 

 amount of the issue is not available, but they must have now 

 reached enormous figures, and when the war is over the country 

 will be faced with a very grave problem when required to re- 

 deem these promises to pay in gold. 



Germany has raised loans on a 5 per cent, basis which, as 

 far as can be ascertained, total about 570 millions. 



At the outbreak of war, taxation had reached a limit as 

 regards indirect taxation, and the country is now faced with the 

 problem of having to lew some direct tax in the nature of income 

 tax. Owing to the falling off in foreign trade, the return from 

 indirect taxation has decreased at a tremendous rate, so that the 

 problem to be faced is a serious one. 



Very nearly 50 per cent, of their foreign trade was with the 

 Allies, and the trade they have been able to conduct with neutral 

 countries cannot possibly have replaced this shrinkage. 



The foreign exchange rates since the war have been against 

 Germany, and increasingly so. They have already had to 

 forward five millions of gold to Denmark and Scandinavia. The 

 falling oft" in their exchange rates is partly accounted for by the 

 depreciation in their currency, and as time goes on they will no 

 doubt, in order to adjust matters, have to export large amounts 

 in gold. 



They are supposed to have an army in the field approxi- 

 mating five millions, and their industries generally have been 

 mobilised on a war basis. It is presumed that their supplies of 

 war materials in many cases are becoming exhausted, but in- 

 formation on this point is exceedingly difficult to obtain. With 

 regard to food, the matter was exhaustively gone into by a com- 

 mittee of German scientists at the time England declared her 

 blockade of food-stuffs. The results of their investigations 

 were published in the German Press. It was found that a 

 certain quantity of food-stuff's was required to keep their popu- 

 lation in normal health and strength ; this was about, roughly, 

 two-thirds of their consumption before the war. Their supplies 

 at the time fell slightlv short of this ref|uirement, but by saving 



