An Economic Retrospect

The following message was addressed to the world last week by Wilhelm Marx, German Chancellor:

On Jan. 11, a year ago, the French and Belgian troops occupied the Ruhr in violation of the Versailles Treaty. A chain of great suffering and tribulation has been laid on the population of the old and newly occupied territories since that day.

Thousands of Germans and their families have been driven from home; more than 2,000 prisoners still await their liberation. Crimes laid to their door were obedience to the laws of their land and loyalty to their country.

Murders, killings, assaults, robberies, tortures have been committed by black and white troops, and they have made the population feel that they are deprived of all legal rights and delivered to foreign oppression.

Their martyrdom has increased beyond endurance through the acts of the Separatist rabble, whose doings are a mockery to the right of the self-determination of peoples.

I appeal to all those in the world who have still preserved their human feelings and respect for international law to work toward the end that legal conditions be restored in the Ruhr and Rhineland, and that, above all, the innocent Germans suffering in prisons be returned to their families and that the exiled be permitted to return home.

The Rhine and Ruhr are German and must remain German. Long live a united and indivisible Germany.

In spite of the verbosity of experts, it is too early to appraise the significance of the Ruhr occupation in its entirety, because the discussions of today were but the events of yesterday. Propaganda in myriad forms and from myriad sources has hypertrophied the entire situation. The facts relevant to the case at present are that France and Belgium went into the Ruhr to get reparations that they could not obtain voluntarily from Germany. Germany claimed that the step was illegal. Passive resistance was begun immediately by Germany and lasted throughout the Spring, the Summer and the best part of the Fall. At times the resistance became active rather than passive, consequently much blood was shed and much damage caused. For this both sides must be held culpable, but to what extent it is difficult, if not impossible, to decide. In the late Fall passive resistance collapsed, the mark, which had been steadily falling, fell out of sight. Germany was beaten; France had won her object. She is now getting raw materials, but can she get gold?

The point of view of France and Germany, which are generally held to be the real issues, are:

France. It can be fairly asserted, that the actuating motive which drove the French into the Ruhr was fear that the Germans would be able to turn their military defeat into an economic victory. Everything pointed to this end. Germany agreed (under duress) to pay reparations. She paid a fractional part of the sum demanded. Her industries were intact; those of France had been destroyed. The industrial revival in Germany kept pace with the fall of the mark, until the Ruhr occupation put an end to it. The manufactured goods of a mark-infested Germany were poured en masse into the world markets; the greater the fall of the mark, the greater the volume of business. Meanwhile, France, with Belgium literally "following in father's footsteps," was compelled to float huge loans to pay for the damage caused by the German invasion, while her own industries were ruined and while the Germans were dumping their cheaply manufactured goods here, there and everywhere.

Such a thought was intolerable to French men and women. But the core of the apple of dissension was, and is still, the financial situation. France had concluded that Germany would pay reparations ; accordingly, the loans and the charges thereon were placed to the debit side of a recoverable budget--recoverable from Germany. The best part of the gigantic public debt is held by the French people, by the small-investor, for capital there is well distributed.

Failure on Germany's part to pay reparations, therefore, meant not only certain bankruptcy but equally certain disillusionment of the French people and the probability of revolution. The desire to prevent Germany from winning an economic victory, the determination to make Germany pay reparations and the supreme intention of safeguarding the French people from financial catastrophe and future military aggression, were the cardinal reasons why France went into the Ruhr.

Germany. The tale of German financial difficulties is long; it started during the War, it is still going on.

During the War the Reich had concentrated its industry upon one thing-- the making of munitions. At the end of the War, German factories were so converted that they could make little else but munitions. Germany was, however, otherwise ruined; she had no raw materials, no food; her railways were crippled, her population restive.

Hundreds of thousands were demobilized and there was neither food, clothing nor employment for them. The help given by the Allies was relatively meager; the situation was desperate. From this moment the mark began its long toboggan. Then came the publication of the peace terms, which caused consternation throughout the country: Germany, ruined, defeated, with an internal debt anchoring her head to the ground, had to find an enormous sum for the Allies.

Industry was reorganized and an attempt was made to create a favorable trade balance with which to meet payment of reparations. The mark, which had even improved for a time, began to fall rapidly. Payment of the internal debt was made in paper marks and as the mark reacted by falling even more rapidly, so the internal debt was even more rapidly paid off. Industry and commerce were flourishing and goods were dumped in every part of the world where they were allowed to be dumped. Yet, because the mark fell so rapidly, there was always a large adverse trade balance. Purchase of foreign securities to pay reparations merely Bolshevized the mark. Capital was exported, undoubtedly a good deal of it for illicit speculation, and a tax on capital became impossible. Germans knew that the only chance of ever being able to pay cash to the Allies lay in creating a favorable trade balance with which to buy foreign securities. They reproached the Allies for not having given them adequate aid in their own interests immediately after the War, and when the Ruhr occupation took place the nation put its back against the wall.