WHAT THE OFFER MEANS.
I might easily fill considerable space by describing the excited nature of the rise in prices during the past week, but it would probably be more to the point if I state briefly the general view of the City with regard to President Hoover's action and its probable or possible effect upon the financial outlook. First, with regard to what is actually involved in the way of figures by the President's offer. Of the present total of German Reparation annual payments off the equivalent of about £80,000,000, probably from £4,000,000 to £5,000,000 is represented by interest on loans actually held by investors abroad ; and those payments are not affected by the present proposals. Therefore, the " Offer " means to Germany a saving of about £75,000,000 for one year. The total payments by the various Governments to the United States Government aggregate 'at the present moment about £49,000,000 a year, so that by its offer the United States Government loses that amount for one year. As against the- 138,000,000 paid by Great Britain each year to' the United States; we receive from (Continued on page 1080.)
Finance—Public and Private
(Continued from page 1028.) various ex-Allies and by way of our portion of German Reparation payments about £33,500,000 annually, so that at first sight our net losses for the year would be about £500,000. It is not quite clear, however, how the Dominion obligations may,be affected by the arrangement, and if certain concessions were made to them, it is possible that Great Britain's total losses under a year's Moratorium would be a much larger amount. To Italy there would be a saving in her interest payment to America for next year of from £3,000,000 to £4,000,000, with some large loss on Reparation payment. To France there would be a considerable net loss because, whereas her payment to the United States for the current year would be about £10,000,000, her total receipts on German Reparation payments are such that she would probably be the loser for the year by at least £20,000,000. That is, roughly, how the matter may be expressed in figures, .but, of course, the real point is that if, in the absence of an acceptance of this arrangement, there should be a financial crisis in Germany, Europe would suffer ten-fold more, first by reason of having to meet indebtedness to the United States without Reparation payments coming from Germany, and, second, by reason of the general credit crisis which would result, which, it must be added, would also hit the United States.
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