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4/14 /7



Attend to

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SeAs per conversation
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Other remarks:


Reieksbank - Direction
Berlin, S. W. 19,
November 9, 1921.

9596 D

The experience which we have had in securing bills of exchqnge for

the payment of indemnities in connection with the fulfillment of the peace trerty,

mazes it seem to us desirable to bring about a direct connection among the central
note banks of tnose countries which are primarily interested in the easy handling
of the payments.

From this point of view we should consider it suitable if the

note banks concerned could open current accounts for erch other in their books.

.ccoruingly we nave, among other things, already entered into communication with
tne Bank of England in London for this purpose and received from it the promise thi_t

The preparations are under way, and.

lit will open accounts for us in its books.

;intend in tne course of time to make such arrangements that the business of

Reichsbank to be liquidateo in English pounds may be settled in the main tnrou61
In this connection it has also been agreed that tne Bank
Bank of England.
.England, insofar as, according to its constitution, it is not in the position


grant interest on cash capital, will undertake to maze interest-bearing invekL
` fiiints of consideraole sums with the best care for our interests.

We now permit ourselves to ask you whether you are disposed to
:-.4nter into a relation of like or similar form with us.


In our opinion, from thei,

'.bciprocal uirect connection valuable relief would gradually be afforded to the


exdnange market, with generally useful results.


ubout,to deposit a considerable sum in gold (minted or in bullion) abroad - probably

rtunity we should like to ask you a second ruestion.'
a corresponding change in the bank law can be brought

order to use it as a oasis for short-time loans in

Digitized for
need, inFRASER

Would it be possible for your bank,

Federal Reserve Bank of St. Louis



We should be grateful if our suggestion should meet with your
approval, and we most respectfully look for a favorable reply.
.teichsbank - Direction



the. eederal _reserve Bank of Yew York, riew York.


The president of the
Reichsbank - Direction

ho. 9596 D

Berlin, S. W. 19
November 9, 1921.

Honored Governor:

I do myself the honor of sending you a letter from the Reichsbank
Direction to the Federal Reserve Bank of New York, with the following observation:

I took tne opportunity a short time ago to call upon the Governor of
the Bank of England, :dr.

:jontagu Forman, in London, and to discuss thoroughly

with him economic-political questions, which affect the central note banks of
countries to a great degree.

of primary importance the bringing about of a

close business connection among the note banks was discussed, and it gave me
' particular satisfaction to find in the Governor a comprehending approval of my

is I dare assume, according to what he said, that you too share t


.views of the Governor of the Bank of England, which have not been unknown to you
',since his visit in Lew York.

I should like to yield to the agreeable hope that tr,.

',;tiae wishes expressed in the enclosed letter will also find approval and favor

Vth you.

It seems to me entirely probable that a close connection of the note (nif

banks of the United States, England and Germany might be the foundation for int

Pr lOraftbent

Perlin SW. 19, ben 9 .November 1921.


95.95 P.

Sehr geehrter Herr Gouverneur!

Anbei beehre ich Rich, Ihnen ein Schreiber des
Reichsbank-DireAtortuns an die Federal Reserve Bank of New Pork
zu Vbersenden und dasu foLgenles E,4 bemorken:

Ioh habe vor

Gelegenheit genommen, den

Gouverneur der Bank of England, Mr. Montagu Norman, in London
aufzusuchen und

it ihn eingehend wirtsehaftspolitische Fragen,

die die Zentralnotenbanken alter Lander in hohem Maize berEhren,
durchzusprechen. In erster Linie izurde auch lie Berbeifrhrung

einer engen geschaftZichen Yerbindung zwischen den Notonbanken
behande7,t, und es ger,,ichte mir zur besonderen Genugtuung,
bei den Herrn Gouverneur verste:nlnisvol,7e Zustinnung zu aetnen

Anregungen zu fin ten. Da ioh nach seinen iurerungen annehmen

dart, da: auch St3 die Insichten des Herrn Gouverneurs der
Bank of England, die Ihnen von seinen Bc,suche in New York her
nicht unbekannt sind, teilen, mochte ich rzich der angenehmen

den Gouverneur .ter Federal Reserve Bank

of New York, Mr. Benjamin Strong 1

New York.


Ho:: nun; hin;eben, daf die in dery beifoZgenden Schreipcn

ausedri:chten Cnsche auch bei Ihnen Anklang und ZustimmunQ
linden. Es erscheint mils darchaus wahrschein:ich, aaC eine

en;e Yerbinlang der Notenbanken der Yereini:7ten Staaten,
gn;:ands and Deutsch ands die Grandlage fir ein internatiow

nales Zusammenarbeiten ler Notenbanken alter bedeutenden
Ldnder werlen konnte.

Mit vorsT.clicher Nochaehtung





The law concerning the autonomy of the
Reichsbank according to the proposition of the Reichs=

bank has meanwhile,as I already have mentioned,passed

the Cabinet and wily expect,in short,also pass the
Reichstag. It does entire work and will,I am sure,
just as well satisfy you,as it does me. The Reichs.=

kanzlers leading activity of the Reichsbank is wholly
removed from the management of the Reichsbank,and on
his place the full autonomy of the Directorium of the
Reichsbank is installed. This latter with all its
members becomes independent from the Reichskanzler,

every personal commanding- power and disciplinary
authority being taken from him,and the verdict con=
cerning the case of introducing a disciplinary inquiry,

once in question according to the German officialslaws,is also transferred to the Reichsbank- Directorium.

Also the suspension of an official or his pensioning,

when at the age of 65 years,being generally admitted
according to officials-law in Germany,is also removed
concerning the Directorium of the Reichsbank,as it is
the case with the members of the Reichsgericht. There
only remains the formal appointment of the President


and the member:, by the President of the Reich,but

that can not be done away with and also does not
lay in the interest of the Reichsbank. But also here
the autonomy of the Reichsbank is observed. The

appointment of a member only can follow by proposal of
the Direktorium and the Reichsrat,therefore not againA
its will. Before the appointment the President,the
Directorium and the Central-Committee must be heard,
and it also is subject to the consent of the Reichs=

The constitution of the Direktorium by cooptation
- existing already as a fact,because never a proposal
of the Directorium for the election of its members
has met a refusal- is herewith legally constituted.
The appointment of an unsuitable President against

the wishes of the Directorium and the Central-Committe
in normal times is hardly conceivable. But if it
should happen once in politically difficult times,
such a President would have no significance. Because
the policy of the Reichsbank is only determined by the
conclusions of the Reichsbankdirektoriura;amor the twelve

members the President only is

primus inter pares"

and his special influence can only be the consequence



object and the whole economical life,especially as

we miss the financial and economical education of the
City and living actually in great political and econo

mical contrasts. We need full independence in both
directions -government and interested spheres- and
it is therefore,I believe,our system for Germany,givirE

the interested spheres (central-committee) only a
consulting voice,to be better and more adapted.
I am sure,that this new constitution of the

Reichsbank shall essentially strengthen its authority
in its own country and abroad and its position towards

the other Centralbanks,and I also believe,that it can
become an example also for other Centralbanks and
that this will agree with your wishes for a closer
cooperation of the Centralbanks. The importance of
corresponding meanings and resolutions of the Centralbanks and their influence on the economical and finan=
cial policy of the Government shall be the greater,as

the position of the Centralbanks is independent and
as it will be clear,that they only aim at serving
the matter.

It wants no confirmation,that the Reichsbank as
far as possible,also in future will oppose herself to

wrong economical measures and especially a policy of


inflation of the government,and the autonomy of the
Reichsbank will,if necessary,lay more stress upon
such a policy.

But in the whole for the next coming time I only
see limited possibilities for the Reichsbank to inter.
fere,and chiefly for limiting the inflation to day the
autonomy of the Reichsbank is but a very small
expedient. The Allied Governments and especially the
Reparation Committee apparently much underrate the
large,honest and successful efforts of the Gernan
government to limit expenses and to cover the


ry expenses by direct and indirect taxes and,a:
actually,also by loans. But the conditions forced upon
us are stronger than human beings,and the financial
position of Germany,if remaining such,as it is,is

hopeless and the inflation must continue,as long as
the impossibility of compensating the balance of

payment and of balancing the budget caused by the
impossible re)aration payments exists. The proceeds
of the new direct and indirect taxes and duties settled

by the Reichstag amounts to approximately 40 milliards
of papertharks;it is ,I believe,the very last sum,that


can be wrought from the German people.

But the enclosed tastes on the budget for 1922

kft+ftre II),which already contain all these new

taxes,will show,that only the own expenses of the
Reich and its administrations can be covered with all
these extraordinary high charges. A surplus of
16,5 milliards in the ordinary budget is faced by
12,3 milliards in the extraordinary budget and that

of the administrations of Post and Railways,not yet
being covered and to be coverd

only by loans,so that

the real surplus over the whole amount of the own
expenses of the Reich


206,2 milliards of Marks)

only consists in a little over 4 milliards. But also
this surplus surely will before the end of the year

soon be exhausted,because the continuing rapid decrem
of the purchasing power of the mark,that is the unin-

terupted increase of all prices,will be the reason
for increasing wages and salaries and expenses for

Dien the whole reparation budget of 187,5
milliards Mark remains completely uncovered. The cal-

culation of this sum is based upon a mark- exchange of






ca.190 E. The sum may he reduced

according to the possibility,that the decision of the
Reparation Committee consents to a reduction of the

reparations burdens in cash and kind for 1922,and on

the other hand it may be still raised if the German
ontinues to fall;at present one g equals
In order to procure at least one part of

for the reparation budget,the German Govern=

in the current year,will issue a voluntary

loan and,after it,a forced loan. The voluntary

only be short-dated (probably treasury-bonds

l years),if it should give somewhat conside=

rns. Its succealcannot be estimated with

inty,especially considering the danger for

st and redemption rates by the Peace-treaty

nex 2 to § 244 and § 248 of the Peace-treaty).

a return for 5 to 15 milliards to be possible.

stimating the proceeds of the forced loan

scertained supports are missing;round 40
are expected. But even in the case that

th loans should be realised proceeds of about

ds and that the reparation payments for 1922

siderably be reduced below the sum agreed

e Peace-treaty,and finally that the German

hould somewhat improve,there will remain at

0? milliards «n d more without any covor,and






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69* i-,X0



Annexe II


Apvreu conoernant la cl6ture du budget pour 1922.

Afin de faciliter un coup d'oeil d'ensemble,

le b4dget de l'exerctce 1922 a ete divise en trots parties
1. Administration gimg,rale du Retch,

2. Admintstrattons d'explottatton,
3. Exboutton du Trattg, de rersailles.

Dans Chaoune de ces trots divisions, l'On distingue le budget ordinaire du.budget extraordtnaire.

Le budget ordtnatre conttent les recettes et
d6penses permanentes et unt4buee, n6cessaires d couurir les
besoins courants.

Le budget extraordtnatre comprend:
a) les reoettes extraordinatres,
b) lee d6pemii,es untques dans des buts d'acquisttion,

o) les capenses untques, kant la consequence inevitable de la guerre

d) celles des d6penses resultant de 1'ex6cutton du Trait& de rerSallles et que l'on ne prevott pas,debotr
se reporter sur une longue p6rtode..


Les chiffres indiaug's ci-desrus correspondent

a ceux du devis budgtaire de l'excrcice 7922, modifte Butvant les d6cisions du Reichsrat et actuellement soumis au

al est possible que d'autres modifications

sultent des dg,librations du ReichaAag.


Les votes g,mis

au sujet des propositions ficcales amenrent des changementt.
a quelques articles des recettes, lesquels n'auront d'ailleurs pas d'influence sur le resultat final.







A.r. Case

J. L. Crane



December 8, 1921

Relations withproposed reply to the let
I attach a Reichsbank.



Owing to the fact that the Aeichsba

credited in Germany because it has yielded to po

there have been rumors in uermany of a new gover

tnere appears to be very uncertain at the presen

woula be wise to enter into close reciprocal rel

such as we have with some of the other foreign b

to leave the matter of negotiating a formal agre

ments for future consideration and merely indicat

we are willing to open a current account for the
account, but not extend credit.

I understand fr

Governor Norman that he believes any arrangement

be predicated on a clear understanding that we w

reparation account as Governor Strong would be op

resources to be used in furthering and continuin

You will note that in my proposed re

reasons for declining to extend credit, and as it

to explain in any detail, I thou-ht it might be d

in a personal letter frolGovernor Strong to Pre

the latter's personal note to Governor Strong, r
reasons in the formal letter to the Reichsbank.




Ext.ract from a letter written by Governor Strong to Governor Norman, Bank
of Bne1AJaiL, under date of November 25, 1921.

"First ae to your visit from President Havenstein and Mr. Kauffmann.
very much impressed indeed by what you write.

I am

It may be that this is partly senti-

mental for your letter indeed presents a sad picture of an old man heart broken and
disappointed and a,-)parently helpless in the face of events.

I have been told that

he is a most reliable and conscientious banker, but that he has lost his prestige
in Germany because of the failure of the Reichebank to withstand the pressure
of political domination.

This seems to agree with that he himself stated of

conditions in Germany.

"It is difficult to comment upon the contents of your letter, excepting
to add that it seems to add a few more strokes of the brush to a desperate and
hopeless picture.

I am very much discouraged ty recent developments in Germany,

and by that has been told me by Herr Bergmann of the Deutsche Bank, who has been

here discussing the possibilities of a loan for the purpose of protecting the
position of the mark vis-a-vis the dollar.
"Of course we will be most pleased to correspond with the Reichsbank.

I would like to establish relations with them of the right character and do everything that we can for them in a helpful and constructive way, but it is an arrangement which, it seems to me, should be predicated upon a very clear preliminary
understanding that we will be unable to interpose with credits for reparations

I would indeed feel shaken in my confidence in my own judgment if we

permitted our resources to be employed in furthering and continuing the impossible
situation which has developed out of the reparations muddle.

It is better to

have the break promptly, in my opinion, rather than to promote indefinite post-

ponements with an ultimately more serious breakdown than would occur it reconsideration of the matter were forced in the near future by realization of Germany's


to continue payments at the proposed rate.


"If Presiakn


us, as I presume he .ill, I shall endeavor

to send him as definite a reply as possible and one which will be satisfactory up
to the point of extending credits, which I do not think we should do at the present
time; nor in fact do I feel that he is likely to solicit them.
"Herr Bergmann has in mind a loan of t25 to f50 millions for six months
to be furnished by a strong group of American banks with the sole object of buying
marks, in an effort to restore them to a value of about 1 1/2 to 20.

He thinks

the sentimental effect of the announcement of such a loan will drive the German
speculator or hoarder of foreign currencies to selling them, and that the German

Government can acquire this foreign currency throUghthe instrument of a large
gold mark loan, which would in effect be a domestic dollar loan, subscriptions to
which vould be made in dollars, or any other foreign currency now held by German
citizens, at rates of conversion to be fixed by the German Government.
"I doubt if the project can be carried out.

of it anyway, upon the same grounds mentioned above.

In fact doubt the wisdom

I have told Herr Bergmann

that our attitude towards promoting such a transaction would be governed
attitude of some of our officials in Washington.

by the

There seems to be too much

transpiring just now to risk complications, which would defeat other matters of
major importance."

December 14, 1921.

she Reichsbank Direction,
Berlin, Germany.
Dear Sirs:

We have your estoemeu favor of November 9, which interests u
very much.

SIC hate particularly tne considerations which have led to th

tablishment of relations between you and the Bank of Enrinnd and the ext
these relations as described by you.

In reply to your first question, w

pleased to assure you thit we would be clad to enter into a similar rela
"ith you.

Like the Bank of Encland, we are not in a position to Crant

on deposits; we also would hve to undertake to make interest bearinr in
for you in order that your balances maintained in this country mic,ht not

3ucn investments would be in bankers bills or United 3tnt

treasury Uertificates of Indebtedness or other United States Government
ties, such as we micht ourselves invest in.

It would be agreeable to us


ree,ive comi,ensation for this service either iv the maintenance of

balance in current account or by payment of a nominal commission for our
in making such investments which would be taken and yield for your accoun
risk with the 81kAU care which we five to our own investments.

If, however, it would be more agreeable to you to have our
of ,,ayment Lt maturity on any such investments which mipht be taken for
account, and further agreeLlent to take them back from

urity upon

ou prior to their matto do the


for you

Pectoral iieserve bank of Lew York

The Reichsbank Direction



within such limits as might be mutually agreeable, and with suitable urovision
for compens;:tion say, a comAssion of 1/4 of 1 percent. per arum= on the face
a.nount of bankers bills and 1/8 of 1 percent. per annum on the amount invested

in Treasury certificates.

With reference tu the second question raiseu in your letter of
November 9, relating to possible advances by this

bank against fold deposited

with a foreitp bunk, we scarcely need assure you of our desire to cooper; to
witn your institution in Lnese iabtters but we shoulu prefer that you do not
raise tnis question at tnis time.

/11AVE: the honor to remain,

Very trul7 yours,

3ei f. Strong,

December 14, 1921.

Rudolph Havenstein, Esq.,
President, The Reichsbank,
Berlin, Germany.

My dear President Hhvenstein:
was gled to receive r_ur personal letter of Noveeber 9, sccompagr
the letter of that date from the Reich:011;fmk Direction to the Federal Reserve

of New York, and to note y.)ur cbeervations with respect to the matters disco

by you mith Mr. Norman on the occasion of your recent visit with him in Lond

You are correct in your assumption thf.t his viee, which are well


to ue, are shared in by me and my associates in this bank.

A formal lette

this bank has to-day been addressed to the Reichsbank Direction in reply t
letter of Movesiber 9, but 1 dish to state to y u th/t me shall be most

correspond with tha ReichebanK, end to establish reitions
character and do everything that we can for them in a helpf


t I feel it ah.mild be mutually understood that such arra

ty at the prevent time be predicated upon a very clear recognition that
unable to interpose with credits for reparations account, and you *ill
better understand the reference thereto in cur formal letter addres
ichsbanir Direction.

I venture to 217.,e with you thrt a close connection of the banks

Germany, England and this country may be helpful in developing broader
etional cooperation of the central banksef all important countries and t
hope also that happier times will presently permit of broader r.nd ful

;vperation between us.

With kindest assurances of my high personal esteem, I
Very sincerely,






Mr. Vase
Benj. Etroni

ui7on the Treasury prod; ram.

he matter, but it does seem to

t:r, the opportunity may have
e of 'Pr. Gilbert's

sst year is the comparatively

hould have been retired in

ghteen months hence.

nce and memoranda which


he personL1 letter to Presiden

evelop the right kind of re-

I would like to have the pap
President Havenstein a






Lkt f, 271/ e?; (;r: r
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444 ff




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Translated by
K. D. Frankenstein
Statistics Dept.
7ebruary 8, 1922
The President of the
eichsbqnk Direction
No. 101/I

Berlin, S. W. 19, January 19, 1922

Lr. Benjamin Strong,
Governor, Federal Reserve Bank of New York
New York

I am glad to acknowledge the receipt of your kind letter of the
14th of ls<st month, and beg to refer to the letter of the Reichsbank-Direction

of the 9th of this month to the Federal Reserve Bank of New York, through which
the opening of an account is by this time under way.
In regard to the question of the gold loan, I beg to call to your

attention the fact that in relation to the Federal Reserve Bank as well as to
the Bank of England and the Bank of the Netherlands it has been far from our
intention to Wish to use a gold deposit in England for creating rseParation
credits; that, in the interest

of as safe and normal a developme


of the German and the international money market, and in the interests of checking speculation in foreign exchange, it is, rather, for us simply a matter of
airecting our transactions in money and exchange uniformly from one place; also,

that the sums in question, which might, at the most, amount to perhaps 10 million
dollars, are to be drawn upon only temporarily and would not bear any relation
to credits for meeting reparation payments;,and that, on this account also, the
Bank of the Netherlands, in agreement with the Governor of the Bank of England,
has declared itself ready for these transactions.

to ask you to/consider the question of the gold loan from this standpoint, and
to be so kind as to let me know whether, in view of this aspect of the situation,
a renewal of the Reichsbankls suggestion would meet with your approval.

Assuring you of my esteem, I am
Very truly yours,
(1 signature)

cr Vraftocnt

ferlin SW. 19, oat 19.Januar 1922.



101/ I.

Sehr geehrter Herr Gouverneur!

Mit verbindliehstem Dank besteitige ieh

den Erpfang des gefalligen Sehreibens vox 14.v.Mts.

und nehme ergebenst Bezug auf das Sehreiben des
Reiehsbank-Direktoriums von 9.d.M. an die Federal
Reserve Bank of New York, dureh das die Eroffnung
eines Kontos nunmehr in die ?lege gel eitet worden ist.

Hinsiehtlieh der Frage der Goldbeleihung
erlaube ieh rir, darauf aufrerksam zu maehen, dag es

uns der Federal Reserve Bank ebenso wie der Bank von
England und der Niederlandisehen Bank gegenziber


ferngelegen hat, ein Golddepot in England zur

Besehaffung von Reparationskrediten benutzen zu wol-

len, dag es uns vielmehr ledilich darauf ankommt,
im Interesse einer m6gliehst ruhigen und gesunden
Entwieklung des deutschen und des internationalen

Geldmarkts und zur Eindammung der Devisenspekulation

den Gouverneur der Federal
Reserve Bank of New Pork
Mr.Benjamin S t r o n g

inNew York.



unsere Geld- und Devisentransaktionen einheitlieh von einem Punkte aus zu dirigieren,
daj3 cluck die Summen, um die es sick handelt
und die sick im Hochstbetrage auf vielleieht
10 Mill ionen Dollars belau fen konnten, nur
vortibergehend in Anspruch genommen werden

rtollen und auger Verhdltnis zu Krediten fur
die Aufbringung der Reparations1eistungen
stehen- wiirden, und dal deshaib aueh die Niederldndisehe Bank sick im Einverstandnis it
dem Herrn Gouverneur der Bank von England zu

diesen Transaktionen bereiterklart hat. Ieh
rdehte daher bitten, die Frage der Goldbeleihungen noehmal s von diesem aesich tspunkte

aus zu prilfen und mir gefdlligst mitteilen
zu wollen, ob gegeniiber dieser Sachlage eine
erneute Anregung der Reiehsbank dortseitige
Zustimffung linden Wirde.

Nit der Versieherung meiner ausgezeiehneten Hochaehtung

Ihr sehr ergebener

y dear President Havenstein:
At the time of receipt of your kind letter of November 9, it

4as my

sfortune to be incapacitated from giving much personal attention to that and
ther matters, as I was obliged to go to the hospital for a sli7ht oeration,


is ie my first opportunity to send you a personal =.:nd confidential letter, su
I had hoped tc write at the time my lettere of December 14 mere prepared by
e of my associates for my signature.

4hile you mey regardthose ast"narmal expression of the attitude


k, I am now writing to explain that my friend, Governor Norman cf the Bank


g' and, has kept me personally fully inforred of his meetings and his corres-

ndence with you and,as he has doubtless advised you, I am very much in sympat
th the general purpose .which he exreesed, of bringing about a more intimate
d sympathetic relationship between the various banks of issue than has hereto`17


eted, or been possible.

Such relationships I have allays regarded as depending more upon perontil

uaintance, understanding, and mutual res2ect and confidence, than u2on the
to formal understandings that can be arrived at by correspondence.


.sill ns

cessary, according to my view, to await opportunity for a meeting with you whet'
,ay have the pleasure of discussing sor:,e program of accord, and I am looking

ward to an occasion when that may be done.
In the meantime, this is simply,
eneral, and quite personal letter of assurance to you for the :air:ose of ex-

my belief that, within the limits imposed upon us by the Federal Reserv
and those required by good business judgment, (.ur minds are open to prop°


such a relationship as will be to our mutual advantage and profit, and in
rat of years

viii develop a good understanding between your institution anc




-2.1a af4Paks,,4



The Federal heserve System is such a complicated and has now become

a. vast organization that I do no

think it is always possible for our frienol

other lends to understand its many ramifications, and why certain policies aro

lie have, as you know, twelve so- called regional 'ranks, each serving a.

atinot geographical division of the United States.

Such a regional system, as

otinguished from a branch system, is not only possible but necessary in a
entry as large as ours and with so many diversified interests; and is in fact
etter system than a branch system in practically all respects but one; namely,
the conduct of such foreign business as the system undertakes.

To overcome

it defect in the Federal Reserve Act as originally passed, it .vas azlended some

ire ago so that it nos provides that, with the approval of the Federal Reserve
rd, which is the, supervising body appointed by the President, one Federal
terve Bank may act in behalf-of all twelve Federal Reserve Bionics in that divertit of the System's business.

Nora such a plan not adopted, all sorts of con-

.nations would be likely to arise.

The Federal Reeerre Bank of New York has

in designated by the Federal Reserve Board to conduct business of that character
1 acts in behalf of all of the ?ederol :lesarve 3anks.
eon that I have invited this correspondence with you.

It is in fact for that
But you nay properly

from what I have noz written to you that whatever 4-0 do is in behalf of

System as a whole rather than the Federal neserva Bank of New York alone.
'ean, of course, so far as concerns any actual business wnich may develop.

It should further be explained that the Federal Reserve Loard, which

its offices in the Treasury Puilding in Washington, is not an eoerating body,

a suerviein6 body, and tho conduct of such business as IS ma, undertake with

will be based upon uncerstendfngs which we may arrive at, subject to the sub-

istwent approval of that Board, and of the carticipation authorized by the respect:

rds of directors of the other eleveo reserve banks.

This a:.eers to make the


-iftau6uratioa of net business connections a rather formidable and cumbersome matter, se have
wit in practice
Federal Reserve Bank of St. Louis

found that the:afrangemente-csn

he preliminary understandings are definitely set out; so that I vculd not hal

regard this as an obstacle in the acoomeliehment of the purpose which NO

utually have in mind.

As Governor Norman doubtless has explained to you, cne of the import
osults of the understandings already concluded between certain of the banks c

sue, has been the exchange of information in regard to conditions and develc

ents in our respective countries, which is of interest and importance.

pe that you gill find this in accord with our purpose to develop such a


I she

ee are just now especia ly interested in the discussions which

taking place in Germany (according to press dispatches) respecting e posei

ange in the statue of the Reichabank.

If you feel at liberty free time tl

into me on this trio similar eattere, viii you not to good enough to do so,
d indicate to me in like fashion say matters concerning *high you would like
ar from me.

?lease acceet my ecologies for this long latter.

is my fir et co;

pity to dictate it, and I have eritienye4 gitti eeeeiierabla freedem in order
at you may understaad the friendly seirit in ghioh le are eer)roaohing this

.ter, and gith which we boos to see e mutually valuable relationship ultinat

Pith eesurance of ty high eereonal esteee, I !_)(7 t3 remain,
Faithfully yours,

dolph Havenstein, Esq.,
esident, The Reichebank,
rlin, Germany.

dear President Hovenstein:

It occurs to me to suggest that the facilities of you
Jc might enable you to write me personal communications of thi
Lracter in English.

It will be preferable if that can be do

it avoids a certain amount of translation and copying.
This, however, is only a, suggestion, and made subject

drely to your own convenience.
Yours sincerely,

lolph Havenetein, Esq.,
isident, The Reichsbank,
-lin, Germany,









February 20, 1922.
Reichsbank, Berlin,

ention to yo.x letter January nineteenth has been delayed by our holida;s.
er full consideration we believe it will be inadvisable for you to renew
posal for gold loan at the present time. This need rot be construed as
icating a permanent policy regnrding our relations. ';:e hal1 write you
ly by an early mail.

Federal :ieserve Fank of New York.

February ?:,


dear ?resident Havenetein:
Your kind letter of January 10 arrived at a time then becaure :)f the

pence of some of my colleagues during the holidays of this month, it vas
in order that you night not

cf. :%ry for me to delay a reply until this week.

nconveniencto 1 cabled you yesterday as foliate:
"Attention to your letter January nineteenth has been deleynd
After full consideration 4e believe it. will be
by cur holidays.
Inadvitable for you to renew proposal fur gold loan at the ,:sreeent

This need not be oorstrued as indicatin a permanent policy
le ehell write you fully by an early mail."
regarding our relntione.

The circumetancee to which our earlier lettere had re'erence, and

led to our .riling you in the terms herein ex;:.reseed, still impel us to

to the rolicy therein indicated in regard to credits >f tho character

'iited in your letter.

to do not wish you to underrtand that le are un-

ai,e4istic in the difficulties with thich you are necessarily confronted, m-r
,.,uld not desire,
.411, 4

Tore it In our poser, tc facilitate their Solution.

It has, hotever, seemed to me, and tc, my aseocitter as tell, that such

I cream, as thct indicated in your letter can not be dissociated from the whole
pubject of reparations, the ar!juetment of which to us at this distance

Lo te, at the -resent time, a subject of 17portence to the whole morld.

Is lay

isaphaeis upon the i:oint that this small credit of flOmillions can hardly be ex-

pected to bring about any stability in the exchanges, the erfect would be
.cmporary, and the amount inedequate to accomplish


object sought to be attained.

In an academic eenen to can hardly overlook the fact that the aeakening
Digitized for Reichsbank as
of the FRASER

a bank of issue, on the one hand, by continually enlarged



sues of' notes, and on the other hand, by the dissiration or pledging of ita

Id reserve, must in it6elf be a

influence towards unsettling the exobaosee, and

t the subject requires a more thorough -going and fundamental trb,atment than

to be 7meeible by the establishment of !N credit ,f this ch%racter.

It is my earnest hope that you sill understand the friendly spirit


mpta me to dictate a reply or considerable frankness to your courteous; letter
January lg.

lith aseurance of my esteem, I be

to remain,

Faithfully yours,

ph Havenetein, Ea.",
ident, The Reichatank,
tin, Germany.




- On? Vrafihnt

Perlin SW. 19, ben rl th of March 1922.



APR 14

Private and confidential.

Dear Mr.Governor


I have the honour to acknowledge the rece.ipt

of pour kind lett=;rs of the 3

21St of-Nrre* and
and 21

have taken much interest in your deductions concerning
the system of the Federal Reserve Ranks. You will
surely believe, that I would be very glad to have a
conversation with you about the matters interesting us
both, if I had a proper occasion for meeting you. I
assure from ?roar kind letter, that your B,,nk out of

certain reasons for the beginning is not in the case
to pay attention to our suggestions of gold loans. But

nevertheless I would like to point out, that the Reiahsbank too,of course, does not expect "a sttibilising of

the rates of exchange" by o temporary loan of a comparatively small amount of gold, but only thinks about

a factl:Yation for its own dispositions and together



with it hopes, that tOo vivid oscillations of the
daily rates could somewhat be moderated.
The changement of the Bill of the Reiehsbank and the rules of the Roichsbank in the sense
cf on autonomous position of the REi2hsbank has in
the meantime considerably been furthered. I took
the oppon!unity, to write about it more amply to

Pr.Norman, and beg to Join a copy of the points
relating to it in my letter for your information.
It can be expected that the bill in short will pass
the R2ichstag.

Your kind suggestion as to a mutual

exchange of opinions I am only toohappy to accept,
and will not forget about it occasionally.
I remain most respectfully yours


Mr. President:

Your kind letter of :larch ?I reached the office during my absence in

dngton, and only to-day have I been able to read it carefully, as well as the

You have not, I


Hosed advances upon gold.

sure, misunderstood our attitude in regard to the
This letter you may oonsider as a confidential ox-

Ision of my personal views, as I think you should know them in view of what I

already written you on the subject of our future relations.

It has appeared to me that the formula applicable to the establishment of
x.eparatione schedules of ,;ayments must ultimately in some form provide that

r total shall be within the capacity of the Gorman pooplo to ,my reparations.
icheme not conforming to this formula must ultimately break down.

Ln the

ir band, I cannot help but recognize, as I am sure that you do, that it is within
polar of the German Governn:ent to enlarge or impair its capacity to make

ration payments, according as it may pursue ft sound or unsound polio' in finance
I am frank to say to you, quite rrivately and personally,

sonetary matters.

in general, my own view has also been that thu earlier schedules were excessive,
possibly because they were excessive, or due to some other cause, reforr in
nce in Germany has not progressed to the point daere it might have -drogressod
the schedules been more moderate.

This, of course, is a rather broad statement

azard, and I shall not undertake to cite any supporting data, cr ma '._e any
silent in detail.

These comments are called forth, however, in response to your own most



respe ^ting the e

fluacy of a more wap3otaAamtonome an tile,


April 14, 19??.

Rudolph Havenstein, Esq.

'eanagement of the Reichabank resulting in anything in the nature of control of

emissions of currency.

As I took the liberty of writi:Ig to Governor Norman some months ago, the
proposal for more autonomous of t1..1 Reichebank would seem to put you
personally in po-Jition to exert an influence upon your Governmentle financial and
monetary policies, but bele-ie.:1 thet, if tra hydset cannot in fact be brought into

balance, or reasonably into balance, there is simply the choice between further
emissions of bank notes, issues of some other currency directly by the Government,
or suspension of payments.

I hope you will not mind my asking you rather frankly a personal
question which is nuzzling me very much.

It bears directly tr:son the subject of

reparations, and upon the ability of your Government tc clover even a reasonable

schedule of eayments within a reasonable period of time.
le read many oomnente in the press upon the rather panicky scramble of

the German people to buy property and by those of large incomes to convert their
bank balances and currency into physical properties.

This it is reported has

extended to those of very large means who seem to be acquiring very large industrial
and other interests to such extent in fact that there seems to be a concentration
()I' the instruments of production in Germany into a comparatively few hands.

That I mould just now be interested in learning is what type of financing
the proprietors of these enterprises undertake in acquiring their properties.
Are they issuing obligations bearing fixed interest with fixed maturity?

Or are

they acquiring these properties by the issue of stocks or other instruments, which
have no fixed maturity and upon which interest payments depend upon earnings?
The point is, of course, that profits acouired under the existing conditions in
Germany, which are somewhat artificial because they represent enhancements in value
growing out of depreciated currencies, must nevertheless be taxed, and very heavily

taxed if the constant currency depreciation and consequent onhanementein property
values Bank to Louis
Federal Reserve are of St. find

reflection in enlarged government revenues.


ehile it goee without saying that even our own government has suffe:
some inconvenience in balancing its own budget, due to the appreciation in the
velue of the currency and the corresieonding decline in ODMTN,

being reflected in its income, I can well apprehend the seri
which the German Government till be confronted if its systee

provide means for enlarged revenues, which vould conrensate for the dec
value of the mark.

Those of us 'rho are earnebtly considering whet means may be adopted

ilitating world recovery art here, in the case of the German position, con.

nted with a type of criticism which it ie very difficult to answer,end it
ld indeed is illuminating to me were you able to eend Ms some tiectieeion o
feature of your Gevernment's ,e.ogrem of taxation.

You will, I an very sure, ;4.. President, understand that I
frankly in a most friendly spirit, but f.tiite confidentially, in

my personal vieve, in the hope thet you will reciprocate in qui
ion, r,nd with equal freedom.

&at you trite me fall, of cours


Again thanking yeu for your courtesy in sending me the

eats accompanying your letter, and with assurance of my eats

Benj. Strong,

Rudolph Havenstein, Esq.,
President, The Reicbsbank,
perlin, Germany.


er Prafibent

Fortin sw. 19, ben &1st of


May 192Y.


lir. 7 geh.

Private and confidential.

neT 2


Dear Mr. Governor!

I have the pleasure of expressing you my sincere
thanks for your kind letter from April the 14th

a.c. ,

which I received on the 28th of April. Especially I am
grateful to you for writing to me personally and confidentially and quite openly, and I for my part will
also openly and freely answer the questions you put me.
I am much pleased to understand from your words,
that you personally think the amount of the deliveries

charged upon the German Nation in accordance to the



payments made up .itherto to be looegeg-ge--

,rat-ed. According to a

most careful examination and a

thorough knowledge of Germany's conditions I must absolutely testify this your opinion as a true one. The

amount, Germany has to pay in cash and in comodities,
asa fact far superates her financial and economic capacity of pay2ent.

This capacity of payment chiefly depends upon
the situation of Germany's balance of payment. As you

probably will know the ice-President of the Reichsbank,

To the Governor

of the Federal Reserve Bank

of New


kr. Benjamin Strong,

New York.

Dr.o.Glasenapp, in the first Reconstructionnumber of the
Idanchester Guardian Commercial of the 20th of April has

discussed the question of the German balance of payment


which in its details and results perfectly agrees with my
oiews and convictions. Therefore I would like to recur
Annex A.

upon this article, which I here beg to join in a photoyraphica1._gDpy.

The figures concerning the German (visibJ4

balarr6e of trade shown in this article finish with the and

of the past year, because, while writing the article,more
1094o in


recent fi gures were not yet available. In the meantime

the figures for the first 4 months of 1922 have been
statistically fixed; they amount to (in million goidmarks)

for January














that is an excess of
exports of:

39,z Excess of (40,8 L7xces3 of
exports of)

5,0 Excess of ?6, 8
imports of)

The first two months showing an active balance of trade,
this is to be explained by the decrease of imports,

especially by the fact, that the import of necessary food
stuffs having already at the :nd of the past year much de.

creased had still more to be pushed back in the two first

months of 1922. But then in .arch and April imports show
a considerable increase, because we could no longer renounce sufficient imports of foodstuffs/if we would pregent a dangerous reduction of the standard of life and th e
productive power of the German people. The consequence was
a pass44-e balance of trade for these months, which proves

the opinion expressed in the article, that it can not be



iC lArtPr 1411

hoped for au...air...ace trade balance as a total for the cur-

rent year. So-called invisible exports, which might wipe
trade balance, are not at the

out the

disposal of Germany to a large amount, and as far as they
exist - purchase of German property, enterprises, stocks
by foreigners - they reduce the substance of Germany's
national property and increase the German foreign debt;
only the travelling of foreigners in Germany :406s a moderate asset,

to be estimated

to a few hundred millions

goldmarks at the highest. On the contrary, as the article
describes more detailed, for paying interests and amortisation of credits taken up abroad Germany has to pay about
750 millions goldmarks a year and large amounts for foreign shipfreights, as she has lost nearly her whole merchant navy; to this must be added the enormous payments

according to the peace treaty, the cost for the occupation
army, payments for clearing purposes and above all the reparation payments in cash and kind. For so-called internal
payments (that is payable in papermarks) for occupation

purposes up to the end of March, 1922, about 14 000 millions hcd to be paiC. To what okount the much higher external payments for occupation purposes (that is payable

in gojdmarks) have to be summed, can not yet exactly


as a final account is missing. The German government has
estimated them,4v
/about 5 500 millions goldmarks up to the

end of March, 192k. The reduction of the costs of occupation - resolved by the All

according to newspaper re-

ports - to a total of 240 millions c;oldmarks yearly has

not yet been realised. For clearing purposes 468 millions


goldmarks had to be paid until the end of 1921, at the end
of April 1922 the whole amount will have reached about
550 millions goldmarks.

According to the so-called London Ultimatum Germany is obliged to pay for reparations 2000 millions gold-

marks a year as a fixed pay lent and besides 26% of the
whole German exports as a variable payment. The total ex-

ports then being estimated to 5000 millions goldmarks, a
total annual payment of 2000 + 1300 = 3300 millions goldmarks would hereafter be the result. Already in 1921 it
was proved impossible to bring up this total amount,and
at the same time it also was proved, that the only endeavour to bring it up had the most disastrous economic consequences not only for Germany, but for the countries connected with 4-4-by commercial interests. ;nth regard to

this it was settled in Cannes to call in as the total
amount of payment until ,farther notice 7,0 millions gold-

marks in cash and 1450 millions goldmarks in payments of

In order to put the signification of these figures for
Germany's capacity to pay into the right light, I would
like to show you two other figures:
he rBefore the war the 4.9,944s of the whole of Germany,z .

balance of payment amounted to about 700 - 800 millions-

goldmarks. One ought not to for that then Germany
owned the colonies furnishing

with raw materials, the

provinces of Posnania and 17est-Prussia providing ft- with

agricultural products, a large merchant navy, many m4-1

gold in foreign securities, many ni4-1---14-7German


German private property in the countries of her enemies,
the industrial enterprises and the rich ore- and coaldeposits in Lorrain, in the Saar-district, and in Upper-

Silesia etc. and was unrestricted in her commerce. Today
all these values, with which she could have paid her foreign debts, have been taken from her; the annual reparation payments nevertheless required however amount to
the 5 - j fold of the said whole previous assets.
Further: England's war -debt to the U.S. amounts
to about4500 millions 0,

that of France to about 3500 mil-

lions $. The annual payment of interest therefrom would
be, reckoned with

4 42

%, about 800 and 640 millions in

gold, that is only a fraction (1/5 - 1/3) of the burden
exacted from Germany. Both of the countries have in the


three years declared to be unable to bear this

burden, and Prance does so until today.

It is obvious, that the German national economy
hereafter is not nearly able to bring up these enormous
amounts of interests, of clearing payments, of payments

for occupation and reparation purposes, which - according
to the moderated reparation figures settled in Cannes and
the above mentioned reduction of the costs of occupation,

probably intended but not yet realised - would amount to
3500 millions goldmarks every year. Such sum of indebted-

ness can after all definitively be brought up only by way
of excess of exports. This, in the discussions at the con-

ference of Genoa, has generally been acknowledged. In the
unanimously accepted introduction of the Report made by

the comission of financial experts of the Genoa conference


it is said as follows:

"Foreign obligation by one country must be balanc -Si

by a capacity in other countries to absorb the surplus
production with which alone those obligations can be met.
the burden of any country's external obligations is
beyond its capacity to pay, and it cannot be assisted by
foreign loans, the effort to meet those obligations must
accordingly result on the one hand in dislocation of markets in other countries, and on the other hand in a continuous depreciation of the currency of the debtor country,

which will entirely prevent it from making any start whateoer in the direction of stabilisation."
Judging after the pe&e4ive trade balance and the

smallness of so-called invisible exports Germany, as a


matter of fact, only was able to pay the enormous amounts
abroad by taking up credits, by selling German securities
or other parts of German national property or by selling
marks. It is clear, that, especially the continuous sellinc
of the mark was apt to depreciate more and more the rate
of the mark exchange and it is evident, that this depreciation will in ever growing measure continue in future,

if the burden forced upon Germany will not be diminished
to a bearable degree. Finally the German mark would become
unsellable abroad, and by this fact a complete collapse
of Germany's national economy would be the consequence.
This development can not be avoided by an ever

so skilful and sound financial and currency policy of the
German government. Because also by straining to the utmost

the taxation of the German people only amounts in papermark

mark can be got in, whose change into foreign currencies
in order to execute payments abroad, only could be effected

by a continuously growing sale of papermarks. This continuous sale must, as it was already said, devaluate the
mark ever more and the necessary amount in papermarks must
increase on and on. Of course I am of your opinion, that
the German government is able to have an influence upon
the capacity for effecting the reparation payments, according as it may pursue a sound or unsound policy in finance
and monetary matters. But nevertheless it can not be
doubted, that in front of the reparation payments, which
equally overcharge the German balance of payment and the
budget of the Reich, even by the most suitable financial
measures, especially in taxation and currency questions,
the imminent collapse can not be hindered.

Concerning the development of Germany's taxationsystem and the reform of the finances of the Reich, I re-

cur to the statements given in the memorandum of the
Reichskanzler in date of January the 28th a.c., which I
join in a copy together with all its annexes; some of the

Annex B.
f i

figures given in the annex II, having altered in the
meantime, I ordered to be corrected. The statements give

Loos° i

a conception of the extraordinary difficulties, with which
the changement of the whole taxation-system was connected,

in order to get an adequate income for rising such enormous

SUNS. The collection of taxes had, until the end of the
war, been executed by the "Bundesstaaten" of the Reich,

whose officials worked after quite different methods. In

front of the large debt service of the Reich the financial


reform in Germany had to begin with unifying the financial administration and taking it ooer to the Reich in
order to equally distribute taxation. One was conscious
about it,

that the speed of getting in the wanted taxes

would suffer temporarily under these changements and developments of the administration. But these difficulties
had to be taken into account

a way


disorder should be found. Besides I would like to point

that the finances of the Reich were for a long time

charged with great amounts of unproductive expenses - help
for unemployed, allowances for foodstuffs etc.

- which

were necessary to avoid a deviation of the broad masses
of the population, after the military collapse of the
Reich, into the most radical political directions and a
social dissolution of Germany.

The financial reform began with a strong grip on
the fortunes grown or originated during the war by extraordinary wartaxes from the property and with a large
offer, taken only once, from the property, the so-called
"Reichsnotopfer" (emergency tax). Besides a general,

partly very seoere increase of current taxes took place
and a large number of new taxes were introduced. The annex
I of the here joined memorandum of the Reichskanzler from
Ja77.uary the 28th a. c. offers more details for the deve7

lopment of the taxationeystem. On the results, which these
taxes have already brought in and on the further develop-

ment in the last months, I would like to extract some notices out of an article of the secretary of state Dr.

SchrOder, going soon to be published in one of the Reconstruction-nupbers

struction-numbers of the "Manchester Guardian":

"The effects of the financial reform are clearly shown by the
effectioe receipts of the Reich since 1919. They were
in 1919

10.543 millions marks







(The receipts during the final year 1921 are specified in the
Annex O.

added suroey of the financial board of the Reich.)



The increased of the German taxation-burden is eoident
hereafter. It is to be owed to the collective effect of direct
and indirect taxes, which only as a whole are to be considered
as the burden of a people. They would haoe wholly sufficed to
cooer the states needs, if the constant fall of the German exchange had not increased the expenses of the Reich all along.

The experts of the Allies on the Conference at Bruxelles in 1920
haoe expressed, that Germany's "actual tariffs for the direct
taxes seemed to haoe been driven to the utmost, and that, if
the assessment was brought in order again and the taxes yielded

the Ain return, one perhaps eoen would come to the conclusion,
that concerning the fiscal results, being so nearly connected
with Germany's economical wealth, a reduction of certain direct
taxes had to be taken into consideration, especially of those
laying heavily on trade and industry. Zeoertheless Germany resoloed already in 1921 a further strain of taxes. The taxationsbills haoing passed the Reichstag in the third reading at the
end of Larch till the beginning of April 19 2 increac3 the rates
of taxes for corporations to about 35 % for industrial companies

They introduce a continuous property-tax, rising up to 1 %a
year and of which for the time of 15 years additiotic up to z00


are raised, taking the place of a part of the "Reichsnotopfer"
not yet raised. The old property-tax is replaced by an increased
tax for additional property with rates up to 10%. The property
is further more charged by a number of stampduttes (for establishment of companies, for turnover of stock exchange, for the
issue of securities) being achieved in a "Kapitalverkehrssteuergesetz" by independent taxes with higher rates. Also the taxes
for automobiles, for insurance and totalisator have been increased. But above all the rate of the general duty on mercan-

Vle transactions has been raised up to

54 The coal-tax having

increased from 20 % to 40 % of the coalprice the burden for the
whole production and consumption has become heavier. Also the
customduties fixed on the goldrate have been considerably
enhanced, among them especially the taxes for objects of luxury.
;That signification for the economy the increase of customs ne-

cessarily has, is understood by the statement, that by paying
in paper money the actual rate is 5900 % to be added to the
custom. rate. The rates of the most of the internal consumption

duties have pertly been recently increased to a manifold of the
previous rates. Also the receipts from hectolitres of the monopoly of spirits has been raised to a manifold amount."


Of course the qbtfct increase of the receipts of

the Reich since 1919 must partly be explained by the progressive devaluation of the papermark. For the rest it

must be taken into consideration, that it takes some time
- the Belgian ;:inister Theunis reckons

to 3 years for

it - until the assessment and the collection a new tax

smoothly act. At any rate the reproach made occasionally
to Germany, that she does not really carry through her

bills of taxation, is not justified, as I surely can af-

firm, knowing the situation. The assertion that the charge
of taxation in Germany is less high, than in the victorious countries is refuted in the subannex 2 of the

Reichskanzler-Memorandum. Recent investigations made by
Englishmen came to the conclusion, that as well the indirect, as the direct taxes in Germany were much harder
to bear, than in France and England. The "Daily News" of
1,:arch znd a.c. state about the two largest indirect taxes


Germany, viz.

the taxes for turnover and coal, that

the tax for turnover in the amount of 2 * charges every
exchange of goods with 8 *,

if the commodities from raw

material to manufactured goods only pass as an average
through 4 hands (the consumption


luxurygoods is charged

with even higher amounts), and that the coal-tax of 40 qb

must naturally be added to the price of manufactures proceeding out of every industrial process of manufacturing.

After the same Lhglish source from the revenue has to be
paid by:

a bachelor with a labourincome
of 20 000' 11 (= 4000 Fr. = 90 4)

8, 8

man and wife with z children and
with a labourincome of 250 000 marks
(= 50 000 Fr. = 1125 4)




3,25 %

in Germany



a bachelor with a rent of 250 000
marks (= 50 000 Fr. = 1125 4)

31,7 9









the same with a rent of
10 000 000 marks
( = 2 000 000 Fr. = 45 0004)





These calculations are based upon a rate of 1 Fr. - 5 II,

= 2201W; meanwhile the purchasing power has fallen


again to 1 Fr. = 25 1.4r,


= 1200 Ar,

and consequently the

per-cent charge of taxes of German revenues has become
essentially heavier. It need not be mentioned, that all

such parallels between direct and indirect impositions
of taxes in different countries relating to the average
incomes of people liable to pay taxes of course can not

claim to be scientifically blameless, essentially for the
reason, that the average-income can not be ascertained
with absolute trustworthiness. It may also be admitted,

that some indirect taxes and customs in Germany have still
lower rates than in other countries - so e.g. spirits and
sugar are heavier charged in ,ngland and France, than in
Germany. But one will always be lead wrong,

to compare

the charge with consumption-taxes for themselves, if you
at the same time do not consider, that the revenue also

of the lowest classes in Germany is charged heavily with
direct taxes, while that is not the case with the broad
masses in France and England, and that besides the con-

sumption power of the German population has considerably
diminished; a low revenue out of consumption-taxes per
head does not prove a lower charge of taxes in an im-

poverished country like Germany, but even more a slackened
consumption power. It has however nowhere been considered,
what means a disastrous indirect tax like the continuously growing inflation of papermoney.

The statement of a fixed budget for the Reich

naturally, for a longer period to come, is made perfectly
impossible by the fluctuations of the exchanges, which
could not be restrained, and the devaluation of the ]ark.



For it is technically impracticable, to increase the receipts in all items of the budget at the same speed, as
the expenditure increase, because, as already mentioned
above, the growing enhancement of prices, a consequence
of the continually decreasing purchasing power of the

mark, continually moves the total base of Germany's national economy. Duties on mercantile transactions and traf-

fic taxes, customs and consumption-duties are more movable
and partly automatically get hold of the inflation of the
amounts of mark, liable to paying the taxes; also the institutions of the Reich, especially Post and Railways,
allow a more shifting tariff-policy. It must however be
considered, that a mechanical rise of tariff- rates, cu-

stoms etc. mathematically corresponding the devaluation
of the papermark at home or abroad, not sufficiently regarding the special condition of the object for the as-

sessment, does in no means warrant equal amounts of gold

for the receiptof the Reich; so for instance the large
rise of tariffs with the post and railways has had as a
consequence a considerable reduction of traffic. The taxes
on property which are a chief source of revenue for the

Reich, can practically not be adapted so quickly to the
devaluation of the money, because the dislocations connected with the devaluation of money in the state of income and property of the different classes of population
take place in way wholly different from one another.There-

fore a change in the amount of property taxes fixed for
the mass of liable tax-payers must every time be preceded
by a new assessment for taxation, what merely on the technical

nical side would meet the greatest difficulties regarding
the necessary expenses for the new officials, if this
would be repeated at short intervals.

The budget for the running financial year proposed to the Reichstag in April a.c. in a revised form
is shown by figures in Annex II. The budgetitems, as I

subsequently may adduce from the mentioned article of the
Dr.Schrdder, show the following for judging the financial
condition of the Reich:

The administrations for traffic (i.e.Post, Railways etc.)
cover their running expenses out of own revenues; but for re-

novation and suppletion of constructions they need an amount of
loan of 19 442 millions mar4 The amount at first may seem high.
But, taking the devaluation of money and the rise of all prices
into consideration, it is lower, than the normal needs for ma.nagement befor the war (17,7

of total expenses against 31,1 %

in 1913). The amount appears even smaller, considering the great
deterioration of the constructions by the war. It has been given
up as a principle to build new railway lines. It is really to
be doubted, if it is possible to get 19 442 millions by way of
a longtermed loan already in 1922.

The receipts of the general administration of the Reich
in the ordinary budget exceed the expenses with 16 500 millions
marks. The expenses of 90 000 millions
contain 29 000 millions marks for the debt service and 22 000
millions murks for transfers to the countries and communes. To
the countries portions of the new Reichs-taxes are assigned,

belon,ing to them as a compensation for the great taxes taken
away from them and which they need for payment of the most urgent expenses. For pensions and maintenance of relicts of sol


diers further 1C 800 millions marks have to be spent. The
resting amount of about 28 CCO millions marks serves as a payment for the running expenses for all the branches of administration of the Ketch. In 1913

100 millions marks were

payed for these purposes. If you take into consideration, that
the general

dearth, the rising of the prices of all materials

and the cost for the standard of life for the functionaries as
an average has arrived to the 25 fold at least, the calculation
of 28 000 millions marks, equalling to an expense of 1100 millions goldmarks, proves an economical management.

The needs for loans for the extraordinary budget of the
general administration amounts to 3110 millions marks. They
have essentially been provoked by the consequences of the war
and must in the following years disappear or be redUced to a
low sum.

The excess of the ordinary budget of the general admini-

stration amounting to 16 500 millions marks shall be used for
carrying out the peacetreaty. But only to a small degree it can
cover the necessary expenses for the same. And here we come to
the source of the whole misery of the German finances. The expenses for the peacetreaty have to a considerable part to be
paid in foreign values. They are therefore immediately dependent on the rate of the mark. The 720 millions goldmarks fixed
at Cannes for 1922 require 34 400 millions papermarks, the dollarf rate being ZOO marks; 51 400 millions papermarks, the rate
of the dollar being i00 marks. For the payment of this burden
the measures of taxation do not suffice. Even if it was possible
to rise the proceeds from taxes so that the amount wanted for
the moment could be covered wholly that would not mean a real




part of Germany in order to fulfill the assumed liabilities; occasional mistakes in the financial measures are,
of course, admitted.

Special difficulties have arisen for the financial department by the flight of German capital from
taxation also mentioned in your letter. All possible
measures have been undertaken by the German Government

to counteract it. Notwithstanding serious doubts Gemany
has suspended the banksecrecy and has introduced the obli-

gation for depositing securities with banks; further the
transfer of balances, means of payment and securities
abroad has to be announced to the financial authorities,
that is,

the board of assessment has a control over the

moving capital and its transactions with foreign countries, as far as measures from the German side are efficacious enough; the sub-annex IV of the joined memorandum
of the Heichskanzler gives special explanations about it.

Besides there has been concluded an agreement with
Tshechoslovakia about reciprocal legal protection and
redress concerning taxation affaires. It was Germany's
endeavour during the Genoa conference to give the legal

protection an international character; the proposition
has by the financial commission in Genoa been passed to
the league of nations, while the comr:ission itself stood

on the standpoint, that the liberty of the exchange-market
and th

bank-secrecy ought not to be injured. The mention-

ed measures of the government have, adapted to Germany,

naturally only limited effects and can, if not supported
by the neighbouring countries, only be insufficient.Zoreover


over the flight abroad of capital liable to taxes is cow

mon to all countries charged with impaired currency and
high taxes. It also seems to me,

that the flight of capi

tat from Germany abroad is exceedingly overtaxed. As far
as the flight of capital takes the form of proceeds of exports left abroad and not put at the disposal of Germany's

national economy, it is confined to very narrow limit4
because the control of exports and the duty of delivering
foreign bills on a large scale ;et hold of the accumulat
ing proceeds of exports.

The flight of German capital abroad essentially
is but one side of the fact called the "Flucht aus der

Lark" (flight from the mark), stimulated with every new
fall of the mark exchange; the other more important side
remarked by you,

is the panic purchasing of goods of every

kind and also the hoarding of foreign currencies. Both

facts are resulting from the inconsistency of the value
of the papermark and the shifting changes between the purchasing power of the mark abroad and at home. The shifting changes according to the extent of the fluctuations
keep the German economic life under a feverish up and
down of quickly changing conjunctures and are the reason
of temporarily to be observed excesses of selling out. At
the same time by means of the fluctuations of the foreignand inland-value of the mark we see the deplorable process
of Germany's empoverishment going on.
:7ith the false splendour from the inflation with

its increasing numbers of nominal value this process
threatens also the German productive capital. In many cases


enterprises show fictitioUs profits, because incomes from
deliveries of kind in papermarks are booked as profits,

though they do not cover the corresponding sale of kind
according to its gold-value, so that by and by the proceeds do not any longer suffice to ascertain the original
supply of capital for business purposes. To a greater extent the considerably enhanced providing of capital for
the industrial and commercial enterprises is to be taken
as an absolutly necessary filling up of the original bu-

siness property; the joint stock companies, and the other
companies of shareholders with limited liability (Aktiengesellschaften


Kommanditgesellschaften auf Aktien and

Gesellschaften mit beschrankter Haftung) in Germany
claimed in 1921 for fresh establishments 5 947 millions

papermarks, while for the increase of capital were claimed 22 772 millions papermarks (in 1920 the figures were
1808 millions and 8947 millions).

The need of capital for enterprises is partly
covered by shorttermed bankcredits, partly t


ing outsiders, also foreigners, but especially by issuing
stock and bonds, or both combined, will say, preferred
shares bearing fixed interest.

It is obvious, that during a period of desultory

money devaluation the juridical form of the joint stock
companu is preferred because of its greater movableness
on the money- 'zarket. The admissibility of the money- and

capital-market of course was especially large for stocks
not only as a consequence of the lasting abundance of

money, but also in connection with the mentioned efforts


to purchase physical property or shares of such. Consequently the getting of capital in commerce and industry
by means of stocks is predominant; and in 1921 the issue
of dividend values amounted to 21 712 millions papermarks, the issue of bonds bearing fixed interest to
5 415

millions papermarks. In such times, when the tanks

must be very cautious with granting longtermed credits,
smaller firms being more or less dependent upon bank
credit, often are pushed aside by the large enterprises,

having immediate connection with the capitalmarket by
means of issuing stocks and bonds. Such a development
necessarily leads to a chan,gement of private firms to

joint stock companies, to fusions of undertakings and to
joining with rich enterprises


the same or a related

branch of business. The continuing changements of German

private enterprises into joint stock companies and the
fusions of enterprises thus are a natural consequence


the changed economic conditions. Besides it must be

considered, that Germany has lost very valuable districts
of economic excess, which also was the reason for a
fargoing reversing of some industries (only in the l'est


there were lost 75
the output of coal,


the output of ironore, 9 5)


56 of the German flattening-mills,

dl 501 of the blastfurnaces,

of the textile industry;

in Upper -Silesia among others had to be abandoned 77,5 %


the tgrri-- output

of coals,

all the ironore mines with

an output of 61 000 tons a year, z2 blastfurnaces out of
37 in all; further 77
86 512



of the output of lead-ore and

the output of zinc-ore, that will say 75 To of


the whole German output of zinc-ore). Similar reversings
were necessary with numerous enterprises by the liquidation of establishments, participations and rights abroad
It is in the following forms, that industrial
,fusions chiefly take place: companies, connected with on


another on the base of interests, increase their capital
and exchange the new amounts of stocks reciprocally.

Wit h

the absorption of joint stock companies the same measure
of increasing the capital is mostly adapted, in order to
satisfy the shareholders of the absorbed company by fres
issued stocks. In Germany rarely one chooses to get hold
of an enterprise by means of purchasing the majority of
stocks at the stock exchange, while the entering of
foreign capi tal into the economy of Germany more often

goes this way. But also without such financial transactions relations between companies are installed by placing
representatives of one firm in the board of directors or
the administration of the other.
As for the large capitalists whose .ftnancing

methods you wanted to be informed about, the development

is in some regards different. They themselves issue nett her
stocks, nor bonds, but are used to take up a bank-credit
at first, if their current means do not suffice for purchasing a business or for participating in a such, a cre dii


which as a rule, judging their special trustworthiness,

is without any difficulty to be got and which they in a
normal way will repay out of profits or with the liquida
tion of former investments. If they haoe a deciding.inIluence in an enterprise they have the possibility to


make the enterprise to claim to the money market directly
by issue of shares or bonds or by performing other transactions as above mentioned, in order to procure new means.

Occasionally the financing operation is performed in the

that a chief shareholder induces the company in-

fluenced by him to rise the capital by issuing stocks,

giving him a profit by his purchasing the new shares at a
very low rate. The chief shareholder then, as far as it
does not interfere with his influence in the enterprise,

can partly realise the profit he has recetoed by the cheap
purchase by selling the new stocks at the stock exchange
in order to invest the profit in new enterprises. Naturally such profits are due to taxation, though the real
value of the invested', capital as a rule has not essen-

tially changed by such. transactions; because if, for instance, an enterprise representing a ;;old oalue, weakens
its capital by issuing new stocks too cheaply, not pro -

viding it with corresponding fresh means



the shares of this enterprise left in the hand of the ca-

pitalist loose in value, and if also the shareholder uses
the realised profit for purchasing other gold- values, he

mostly by such operations only fills up his property in
gol,d-values to the original amount. If a large capitalist

joins all shares of an enterprise in his hand (e.g.


stocks of the Friedrich Krupp joint stock company are held
by lirs.Krupp v. Bohlen and Halbuch _ind the shards of the

mining-company of the Thyssen-concern are in the possession of the mining-industrial August Thyssen) he will not
procure new means by issuing shares, being herewith obliged


ed to accept other sh'reholders into his business, but
he will issue bonds.

The energies in the economic life

of Germany

inducing to perform /fusions essentially result out of the

obligation to keep the productive apparatus in a possiJle
good state of health just as in such a period of fluctuat
ing crises in business and money affairs, during which
.all affairs relating to valuation and production have
turned topsy-turvey. But the partly

accumulated capital

employed in business, however high the amount may be in

papermarks, must be reduced to their gold-value if one
desires to estimate their real signification; because
the German base of production has, as already mentioned,

undergone a severe restriction. It is natural, that the
wealthiest enterprises hereby have got aheua 0.1- the

weaker oneo, partly this natural preponaerance of the
leading enterprises results from the fact of their pos-

sessing coal, around which ndustries of semimanufactured
and manufactured goods widely are spread. Nevertheless
the tendency of the German people do not as a general
and in continued custom
rule/aim at changing their bank-balances and their cash
into goods, though it temporarily was the case in a pant
sort of way, and especially as for the large capitalist
it remains in certain limits. The balances with the banks
and saving-banks are growing continually, and the increa sed rates of shares - the increasing of the quotations ha
been caused not only by the devaluation of money and the
purchases by foreigners, but temporarily also by that
above mentioned tendency of getting hold of physical property -


perty - have in the meantime considerably been reduced
and every slight improvement of the mark lowers the
quotations. So it is evident, that the market is not
lacking for securities. The reports you have received,

saying that those of very large means are acquiring industrial and similar shares to such extent, that the
whole production in Germany seems to be concentrated into
comparatioly few hands, show a perfect lack of practical
knowledge on the subject. It can not be spoken of such a
dimension of. lurchases of physical property, and the

danger of such a concentration is not nearly existing.On
the contrary as a consequence of the devaluation of the
mark in recent times many a large industrial enterprise
and concern feels so much the lack of capital, that they
are forced partly to sell the shares of other enterprises
being in their hands.

I already mentioned above, that the capacity for

paying taxes of the commercial and industrial enterprises
in Germany is very highly strained. And I fear, that the
direct taxes are overstrained already, as the German eco-

nomy as a whole continually consumes the substance of its
productive power; unfortunately the profits in paperLarks
resulting from the devaluation are apt to veil these real
losses to a superficial critic. The more the nation is in

danger to succumb under the exceeding burden, the more
its view is troubled about the limits really existing in
the working-energy of Germany's national economy. The colletting of the heavy taxes prescribed by the German t axalion system, and the compulsory loan (Zwangsanleihe) decided



According to Germany's situation the ReichsbankDirektorium did not feel able to refuse the discounting
of the treasury certificates offered by the Reich however sharply it may condemn the increase of the float
ing debt in its effects to an increase of the circulatio n
of bank-notes. It had to act in this way understanding,

that the Reich until now had no other way open, than by
taking upfloating debts, in order to cover the expenses
not to be covered by ordinary receipts, and to a great
part connected with the peacetreaty. A suspension of pay
vent would paralyse the whole administration of the Reic
and would lead to an anarchic state of things, which wou ld
have as a consequence the ruin of the German national
economy and the perfect devaluation of the mark, with al 1
the consequences also for the international trade. In
fact, as you yourself express, if the German budget cannot be brought into balance, there is simply the choice
between further emissions of bank-notes, issues of paper
money directly by the Reich, or suspension of payments.
I hope to have answered the questions put by you
and to have illustrated

the problems mentioned in your

letter, but I still add to your further information abou
our money and exchange situation three memorandums, concc-kio,i,

posed in the Reichsbank on 'The Germany




and e ssuing- banks"

and "Exchange-Questions".

As I am not sure, that the English translation
of my letter exactly meets the meaning of the German tea t,
I also join it.

I should be very much pleased to meet you soon


at the conference for Central Banks in London, it being
then possible for me to

gibe you

further information by

talking it o'er with you.
With the

Assurance of my

esteem I beg to remain


Vat Virdlibent

Devlin SW. 19, ben


cif Shan


Mat 1922.


7 geh.

Prioat und certraulich.
3n ber 2Intwort ift bie 2Inabe
vorftet?enber linnnner ermiinfd?t.

Sehr geehrter Uerr Gouverneur!

Kir Ihr freundliches Schreiben corn 14.

April d. Js., das ich am 28. April erhielt, beehre

ich mich, Ihnen meinen aufrichtigen Dank auszusprechen. Ich bin Ihnen besond.ers dankbar daffir,

daS Sic mir mit ooller Offenheit persdnlich und
vertraul ich geschrieben haben, und ich werde Ih-

nen enso offers und freimfitig auf die con Ihnen
gestellten Fragen antJorten.

Zu meiner groBen Freude entnehAe ich aus
Ihren iiusfihrungen,

daLi Ste persJnlich die in Ge

mdi3heit der bisherigen Zahlungspldne dem deutschen

Volke auferlegten Leistungen f:r zu weitgehend erachten. Au' r:rund


und genau

ester Kenntnis der deutschen Verhdltnisse kann ich

ichtigkeit dieser 4uffassung unbedingt be-

stdtigen. Das, was Deutschland an L:arzahlungen

und an Sachleistungen aufbringen soil, 9eht in der
Tat liber seine finanzielle und wirtschaftliche

Leistungsfdhigkeit hinaus.
.Die -se Leistungsfdhigkeit hdngt in der


den Gouverneur der Federal

Reserve Bank of New York

.7.. Benjamin Jtrong




Hauptsache von dem Stande der deutschen Zahlungsbilanz

ab. Wie Ihnen pielletcht bekannt geworden 1st, hit der
Vizeprdsident der Reichsbank, Herr Br. v. Glasenapp,

in der ersten liederaufbaunummer des Manchester

Guardian Commercial oonz 20.o.,,ls. die deutsche Zahlung,

bilanz einer Erdrterung unterzogen, deren AusfUhrungen

und Ergebnisse sick mit meinen ,chauungen und Uberzeugungen oallkommen decken. Ich mdchte daher auf den
Artikel Bezug nehmen, den ich in photographischer 112aoh-

bildung beizu1egen mir erlaube. 3ie in dem Artika geO.

gebenen Ziffern fiber die deutsche (sichtbare) Handelsbilanz enden mit AbschluB des abgelaufenen Jahres, weil

zur Zeit der Abfassung des Artikels neuere Angaben noch

nicht zur VerfUgung standen. Inzwischen sind die ZUfer)
das erste Tertial des Jahres 1922 statistisch fest-

gestellt; sie ergeben in lallionen Goldmark fur den







245, 9

338, 4

407, 6

321, 6

einen Import von


296, 7



330, 8

15, 0

7(3, 8

mithin einen Export iberschuB von





40, 8


Ann die ersten beiden Monate eine Aktioitdt der .7arenbilanz nachweisen, so 1st dies auf die Abnahme des Imports, insbesondere darauf zuriickzufUhren, dal die

schon zu Ende des Vorjahres stark rUckgdngige Einfuhr
notwendiger Lebensmitte1 in den ersten beiden Zonaten
des Jahres 1922 noch wetter zurUckgedrdngt werden
Die l'onate ;;.rz und April zeigen dann aber ein erheb-

liches Anschwellen des Imports, da ohne starke Beeintrdchtigung der Lebenshaltung und damit der Produktioitdt der deutschen aeodlkerung auf eine ausreichende Lebensmitteleinjuhr nicht ldnger verzichtet werden konnte.


Die Folge oar eine passioe ,iarenbilanz fur diese .zona-

te, welche die in dem Artikel zum Ausdruck gebrachte
Auffassung bestdtigt, daB eine Aktioitdt der larenbilarrz

fur den Jahresdurchschnitt nicht zu erhoffen steht. Sogenannte unsichtbare ExiJorte, welche die Passioitdt der

darenbilanz auszugleichen oermdchten, stehen Deutschland in grdl3erern Umfange nicht zur Verfdgung, und so-.
weit sie oorhanden sind - Ankauf deutscher Orundsti.icke,

Unternehmungen, Aktien durch das Ausland - mindern sie
die Substanz des deutschen Vo1ksoermdgens und oermehren
die deutsche Verschu1dung an das Aus1and; nur der Reise-

verkehr der Aus1nder in Deutschland bringt einen md2igen Aktioposten, der aber im gi4!nstigsten Fall nur auf

wenige hundert

11ionen Go1dmark oeranschlagt werden

kann. Vie1mehr hat Deutschland, vie der Artike1 des
ndheren ausfdhrt, zwecks Verzinsung und Amortisation
der in dusland aufgenommenen Kredite jdhrlich rund 750
Go1dmark aufzubringen und infolge des Verlustes fast der gesamten Handelsflotte sehr hohe Betrdge fur ausldndische Seefrachten zu zah1en; dazu treten
die gewaltigen Zahlungsoerpflichtungen auf Grund des

Friedensoertrages, die Besatzungskosten, die Zah1ungen
im Ausg1eichsperfahren und oor allem die Reparationsbarzahlungen und Sachleistungen. An sogenannten internen (d.h.

in Papiermark zu leistenden) Besatzungskosten

muBten bis Ende iJdrz 1922 rund 14 000 L'illionen Lark

gezahlt werden. Telchen Betrag die weit hneren externen (d.h. die in Go1dmark zu leistenden) Besatzungskosten erreichen, steht in Ermangelung etner oollstdndigen Abrechnung noch nicht genau fest, Die deutsche
Regierung hat sie bis Nnde 124rz 1922 auf rund 5 500
,,111ionen Goldmark oeranschlagt. Die oon der 3ntente

Zeitungsnachrichten zufolge - beschlossene Herabsetzung


zung der Besatzungskosten auf insgesamt 240 Zillionen
Go1dmark jdhrlich ist bisher noch nicht praktisch geworden. Im Ausleichscerfahren waren bis L'nde 1921
468 iillionen Goldaark aufzubringen, bis Ende April
1922 wird die Summe insgesamt etwa 550 Liillionen Goldmark erreicht haben.

An Re)arationszahlungen sind durch das sogenannte Londoner Ultimatum Deutschland jdhrlich 2000

Mlionen Goldmark als feste und au2erdem 26i) der gesamten deutschen Ausfuhr als variable Leistung auferlegt. Bei einer damals auf 5000

Goldmark ge-

schdtzten Gesamtaus,fuhr wiirde sich hiernach eine jdhr-

liche Gesamtleistung con 2000 + 1300 = 3300 lallionen
Goldmark ergeben. Bereits im jahre 1921 erwies sich
die Unmdglichkeit, diese Gesaatleistung aufzubringen,
and erwies sich zugleich,

dal:3 schon der Versuch, sie

aufzubringen, die schwerwiegendsten wirtschaftlichen

Folgen nicht nur fur Deutschland selbst, sondern auch
fur die mit Deutschland in Verkehrsbeziehungen stehenden Lander zur Folge haben muBte. -it aicksicht hierauf
wurde dann in Cannes beschlossen, diese Gesamt1eistung
corldufig nur in ildhe con 720 i,illionen Goldmark bar

und con 1450 irillionan Goldmark in Jachleistungen einzufordern.

Um die Bedeutung dieser Zahlen fur Deutschlands
Zdhlungskraft ins rechte Licht zu setzen, mdchte ich
thnen zwei andere Ziffern gegenfiberstell3n:

Vor dem Kriege betrug das Aktiosaldo der gesamten Zahlungsbilanz Deutschlands, das damals die ;ioh-

stoffe liefernden Kolonien, die landwirtschaftliche
trodukte liefernden

' Posen and WestpreuBen,

eine groBe Handels,flotte, otele i tlliarden (Goldmark)

ausldndischer 4'ertpapiere, stele :Alliarden deutschen


- 5 -

Privateigentums in den Lindern seiner


die Industrieunternehmen und reichen Srz- und Kohlenlager in Lothringen, an der Saar und in Oberschlesien
pp. besa[3 und in seined Handel unbeschrdnkt war - ca.

700 - 800

(Goldmark). Heute sind alle diese

Ye rte, mit deren Hilfe es Auslandsschulden bezahlen

thin genommen; die gleichwohl von ihm gefordertc

jdhrliche Reparationsleistung aber betrdgt das 5 3fache jenes gesamten frUheren Aktiosaldos.

Ferner: Die Kriegsschuld 3nglands an die Vereinigten

Staaten betrdgt etwa 4500 lallionen 4 die Frankreichs
ca. 3500 lulllionen O. Die Jahresleistung daraus wiirde
- zu 41/2 % berechnet - ca. 800 und 640 011.Goldmark

betragen, also nur einen Druchteil

(1/5 -

:3) der von

Deutschland gejorderten Last. Beide Lander haben sich
aber in den oergangenen drei Jahren und Frankreich noct,
heute Jr ti

unfdhig erkldrt, diese Last zu tragen.

Es liegt auf der viand, dal die deutsche Yolks-

wirtschaft die ihr hiernach zur Last fallenden Betrdge
an 7insen, an Zahlungen im Ausgleichsoerfahren, an Besatzungskosten und an Reparationsleistungen, die sich
- unter Zugrundelegung der ermdeigten Reparationsziffern von Cannes und der oben erwihnten ;,:inderung der

Besatzungskosten, die wohl beabsichtigt aber noch nicht
veroiriflicht ist - ins; esaat auf mindestens 3500 1;:il-

lionen ijoldmark jahrlich belaufen, auch nur entfernt

aufzubringen auBerstande 1st. Aufgebracht werden kdnnen
derartige Schuldsummen endgilltig nur tm :ege eines Ex-

portUberschusses. Dies ist im Laufe der Verhandlungen
in Oenua aliseitig anerkannt worden. In der einstimmig
beschlossenen Introduktion des Rapports der Finanzexperten-Kommission der Genua-Zonferenz heiBt es wdrtlicr,

"Foreign obligation bg one country must be balanced


- 7-

piermark einbringen, deren Umwandlung in Deuisen zum
Zwecke der Zahlungen an das Ausland sich allein durch

fort und fort gesteigerten Verkauf oon Papiermark bewirken lie2e. Dieser unausgesetzte Verkauf mu20 wie
oben ausgefdhrt, fortschreitend die Lark entwerten und

daait den in Papiermark aufzubringenden Betrag Lamer
wieder aufs neue erhdhen. Gewi2 pflichte ich Ihnen
darin bet, daB die deutsche Regierung die nihigkeit,

Reparationszahlungen zu leisten, zu beeinjlussen oer-

mag, je nachdem see gesunde oder ungesunde Finanz- und
'YdhrungsmaL3nahmen ergreift. Indes steht es leider auger

Zweifel, daB gegenLber den die deutsche Zahlungsbilanz
und den Reichshaushalt gleicherweise erdrdckenden Reparationsoerpflicht'ingen der drohende Zusammenbruch

auch durch die zweckmaBigsten A2nahmen auf dem Gebiete
der Finanz-, insbesondere der Steuer- und der Jdhrungspolitik nicht verhindert werden kann.
das die Ausgestaltung des deutschen Steuersystems und die Reform der deutschen Reichsfinanzen anlangt, so beziehe ich mich auf die der Reparationskommission mit Schreiben des Reichskanzlers oom 28. Januar d.Js. gegebenen Aufschlusse, die ich mit alien Anlagen in einem Abdruck beildge; einige der darin in An1

lage II gegebenen qffern, die inzischen Uberholt sired
und bereits berichtigt werden konnten, habe ich berichtigen Lassen. Die Ausidhrungen geben eine Vorstellung
oon den auBerordentl ich groBen Schwierigkeiten, mit de-

nen die Umstellung des gesamten Steuersystems auf die

Erhebung einer den ins Riewnhafte gewachsenen Lasten
einigerma2en nachkommenden Einnahme notwendig perkndpft
war. Die Steererhebung hatte pis zum iiusgang des Krieges in den Handen der Bundesstaaten des Reichsgelegen,

deren Finanzverwaltungen nach obllig oerschiedenen



Grundsdtzen arbetteten. jegenaber dem groBen Schuldendienst des Retches mu2te die Finanzreform in Deutschland damtt beginnen, zwecks gleichmdBigkeit der Be-

steuerung die Finanzoerwaltung zu oereinheitlichen und

auf das Reich zu iibernehmen. 1,-an war sich dessen beou3t,

dad die Schnelligkeit der Erhebung der beschlcssenen
Steuern unter dieser (Leistellung und dem Ausbau der Ver-

waltung oordbergehend leiden wurde. Diese Schwierigkeiten mueten aber wohl in Eauf genommen werden, wenn Uber-

haupt ein Ausweg aus der finanziellen 7irrnis gefunden
werden sollte. Au2erdem mdchte ich darauf hinweisenlda8
ldngere Zeit hindurch auf den Reichsfinanzen sehr erhebliche unprodukttoe .4usgaben - fur Erwerbslosenunter-

stutzung, Lebensmittelzuschsse u. dergl. - lasteten,
die notwendig waren, um nach dem militdrischen Zusammen
bruch des Reichs ein Abgletten der breiten Liassen der

Beodlkerung in die radikalsten politischen Richtungen
zu perhindern und eine soziale Aufldsung oon Deutschland abzuwenden.

Die Finanzreform begann mit einem krdftigen
Erfassen der im Kriege gewachsenen oder entstandenen

Veradgen lurch Erhebung auerordentlicher Kriegsabgaben
oom Vermdgen sowie mit einem einmaligen grolden Opfer

oom Veradgen, dem "Reichsnotopfer". Daneben wurde zu
einer allgemeinen z.T. sehr rigorosen Erhdhung der laufenden Steuern und zur Einfahrung einer gro2en Zahl
newer Steuern geschritten. Die Anlage I der beiliegenden Denkschrift des Reichskanzlers tom 28. Januar d.Js.

geht auf den Ausbau des deutschen Steuersystems ndher
ein. Uber das Ergebnis, das diese Steuern bisher gebracht haben, und fiber ihren weiteren Ausbau in den

letzten Jonaten gestatte ich mtr, einem demndchst in
einer diederaufbaunummer des %lanchester Guardian" erscheinenden

scheinenden Aufsatz des Staatssekretdrs/Dr. chrdder einige Ausfdhrungen zu entnehrnen:

"Die lirkungen der Ananzreform zeigen sich
deutlich in den tatsdchlichen Einnahmen des Retches
seit 1919. Sic betrugen:
im Jahre 1919

10.543 lallionen








(Die Einnahmen wdhrend des Rechnunosjahres 1921 rind
in der beigefdgten ubersicht des Reichsfinanzministeri-


ums spezialisiert).

Die Steigerung der deutschcn Steuerbclastung
ist hiernach offenbar. Ste wird del Zusamnenwirken von
direkten and indirekten Steuern oerdankt, die fur die
Belastung eines Volkes nur in ihrer Gesamtheit betrachtet worden ddrfen. Ste hdtte ooll ausgereicht, die
Staatsbeddrfnisse zu befriedigen, wenn nicht der stdndige Fall der deutschen sidhrun4; die Ausgaben des Ret-

ches dauernd hdtte wachsen lassen. Die Sachoerstdndigen
der .;11iierten haben auf der Brdsseler Konferenz des

Jahres 1920 zum Ausdruck gebracht, da2 in Deutschland
"die gegenwdrticen Tarife filr die direkten Steuern bis

auf das HdchstmaS gesteigert worden zu sein schienen,
and daB man otelleicht sogar, wenn die Veranlagung wieder in Ordnung set unit die Steuern vollen Ertrag brdch-

ten, zu der Feststellung komnen wdrde, da13 in Interesse

des fiskalischen Ergebnisses, welches mit dem wirtschaftlichen :ionlstande Deutschlands eng oerbunden sei,

eine Ermd2igung gewisser direkten Steuern zu erwdgen
sei, besonders derjenigen, die auf Handel and Industrie
lasteten. Dennoch hat Deutschland sich bereits im Jahre
1921 zu einer weiteren Anspannung der steuerlichen
Leistungen entschlossen. Die Steuergesetze, die Ende


- 10 kdrz/Anfang April 1922 room ,eichstag in. dritter Lesung

angenommen worden sind, erhdhen die Sdtze der Ejrperschaftssteuern fdr Erwerbsgesellschaften auf etwa 35
Sie fiihren eine laufende Veradgenssteuer ein, die bis
zu 1

jdhr1ich ansteigt und zu der auf die Dauer


15 Jahren Zuschldge bis zu 200 % erhoben worden, die
an die 3telle eines noch nicht erhobenen reties des
Reichsnotopfers treten. fie bisherige Besitzsteuer wird
durch eine erhdhte Vermbgenszuoachssteuer mit Sdtzen
bis zu 10

o ersetzt. Der Besitz wird wetter dadurch

Delastet, dati eine aeihe oon Stempelsteuern (auf die

Errichtung der Gesellschaften, auf die Bdrsenumsdtze,
die 3mission

on lertpapieren) in einem Kapitaloerkehrs,

steuergesetz durch selbstdndige 7teuern mit hdheren
Sdtzen ausgebaut sind, 3ie 3teuern auf Kraftfahrzeuge,
die Ver.sicherungssteuern und die Rennwettsteuern sind

gleichfalls erhdht. Vor alle
allgemeinen Umsatzsteuer auf 2

aber ist der Satz der
heraufgesetzt. Die Be-

lastung der gesamten Produktion und des gesamten V6rbrauchs ist dadurch oerschdrft, daB die Kohlensteuer
oon 20 5) auf 40 Vii des Zohlenpreises erhdht worden ist.

Aluch die auf der goldbasis festgelegten Zdlle sind in

ihren Sdtzen betrdchtlich gesteigert, unter ihren namentlich die :1511e auf Gegenstdnde des Luxusoerbrauchs.
:7elche Bedeutung die Zollerhdhung fur die .Jirtschaft

notwendig hat, ergibt sich aus der Feststellung, da3
der j=oldaufSchlag zurzeit 5900 cio des Zollsatzes betKigt

Die Sdtze der meisten inneren Verbrauchsabgaben sind
on neuem zum Teti auf ein Vielfaches des bis dahin
geltenden Satzes erhdht.

uch die Hektc1itereinnahme

beim Branntweinmonopol ist um ein Mehrfaches heraufgesetzt."

Die oben wiedergegebene schnelle Steigerunc


der Reichseinnahnen sett 1919 mu2 zun Teil natUritch ouch auf die fortschreitende Entwertung der

Papiermark zurckgePihrt werden. Im Ubrigen ist
in Betracht zu ziehen, dal es eine ldngere Zeit
dauert - der belgische .Minister Theunis bemlBt die

Frist auf 2 - 3 Jahre

die Erhebung einer neuen 3teuer reibungslos funktioniert. Jedenfalls 1st, wie ich each meinem 3inblick in die Verhdltnisse bestimmt versichern
kann, der gele2entlich gegen Deutschland erhobene
VorwurL es fiihre seine Steuergesetze nicht wirkitch durch, unberechtigt. Der 2ehauptung, die

Steuerbelastung in Deutschland bleibe hinter der
in den Siegerstaaten zuruck, wird in der Unteranlage 2 der beigefugten Denkschrift des Reichskanz-

lers begegnet. Untersuchungen, die neuerdings auf
englischer Seite angestellt sind, gelangten zu der
Feststellung, daB s000hl die indirekten als die
direkten Steuern in Deutschland weft hdrter sind
als in Frankreich und Sngland. Die "Daily :yews"
vom 2.

..drz d.J8. konstatiert von den beiden gr52-

ten indirekten Steuern Deutschlands, von-der Umsatz- und der Kohlensteuer, daB die Umsatzsteuer

in Udhe von 2 4 wenn die rare vom Rohstoff bis
zum Fertigfabrikat durchschnittlich nur durch 4
Hdnde geht, jeden ;7arenaustausch mit 8


(der Luxusoerbrauch wird mit noch wesentlich hdhe-

ren Sdtzen belastet), und dal die Kohlensteuer von
40 ';,; ebenfalls in jedem industriellen 7eiteroer-

arbeitungsproze2 zusdtzlich auf den Preis der Fabrikate umgelegt wird. Von Einkommen hat nach der
gleichen englischen vuelle zu zahlen


- 12 -


- 13 -

allein in Vergleich zu stellen, wenn nicht zugleich berucksichtigt wird, daB in Deutschland
das Sinkommen auch der untersten Schichten durch
direkte Steuern stark belastet ist, wdhrend in

Frankreich und England die breiten Lassen der 3eodlkerung wenig oder gar nicht mit direkten Steuern belegt sind, und daB auBerdem in Deutschland
die Konsumkraft der Beodikerung erheblich gemindel
ist; ein geringes Aufkommen aus Verbrauchsabgaben
au! den Kopf der Beodlkerung beweist bei einem
oerarmten Lande wie Deutschland nicht sowohl eine
geringere steuerliche 3elastung, als oielmehr eine
geschwdchte Konsumfdhiglieit. Welche oernichtende

indirekte Steuer zudem in der fortschreitenden
Papiergeldinflation liegt, wird fibrigens an keiner
Stelle berJcksichtigt.

bisher nicht einzuddmmen gewesenen
Kursschwankungen und die Entwertung der :. :ark ma-

chen naturgemdB die i.iufstellunQ eines festen

Reichshaushalts)lanes fair einen ldngeren Zeitraum

odllig unmJglich, Denn es ist technisch undus!WIrbar, die Einnahmen in alien Etatspositionen unmittelbar in dem gletchen Tempo zu steigern,

chem die Ausgaben zunehmen;

in wel-

da, wie schon oben

bemerkt, die aus der stdndig abnehaenden :ctufkraft
der ...ark sich ergebende wachsende Verteuerung

fortwdhrend die gesamte Jrundlage der deutschen
Volkswirtschaft perschiebt. Umsatz- und Verkehrssteuern,

und Verbrauchsabgaben sind beweg-

licher und erfassen zum Teti die Aufbldhung der
1r'arkbetrdge, von denen die Abgabe erhoben wird,

automatisch; auch die Reichsbetriebe, insbesondere
die Lost und die Eisenbahnen, gestatten eine beweglichere


- 14 -

1ichere Tarifpolitik. Indessen ist zu beachten,

da2 ein mechanisches, der Entwertung der Papiermark im In1ande oder Aus1ande rechnerisch entspre-

chendes Erhdhen der Tarifstze,

usw., das

die beson:dere Lace der betrellenden Veran1agungsobjekte nicht geniigend beriicksichtigt, keineswegs

gleichbleibende Goldmarkbetrdge !Lir die fieichsein-

nahae 9arantiert; so haben z.B. die starken Tariferhdhungen bei Post and Eisenbahn eine ganz erhebliche Einschrdnkung des Verkehrs nach sich gezogen.

Bet den Besitzsteuern, die eine Haupteinnahmequelle des aeiches bilden,

ist eine derartige schnel-

lere Anpassung an die Geldentwertung praktisch


well die mit der Geldentwer-

tung zusammenhangenden Verschiebungen im Einkommens- and Veradgensstande der einzelnen Beod1ke-

rungsschihten sich gdnzlich abweichend ooneinandei
ool1ziehen. Desha1b wird etner IdIderung der fUr

das Gros der Steuerpf1ichtigen oeranlagten Besitzsteuerbetrdge jedesmal eine neue Veranlagung zur
.3teuer oorhergehen mii,ssen,

die bei de

erf order -

lichen Aufwand an Steuerpersonal rein technisch
auf die grnten Schwierigkeiten stollen u,i;rde,


sie sich in kurzen Zeitr:iumen wiederholen adBte.

)er dem aeichstag im April d. Js. oorgelegte iiberarbeitete ilaushaltsp1an fir das laufende

Rechnungsjahr ist in der Anlage 2 ziffernadBig dargeste11t.

:us den Budgetzahlen ergibt sich, wie

ich weiterhin dem oben erwihnten Artikel des jerrn
Dr. Schrdder entnehmen dart, fur die Beurteilung
der Finanz1age des i2eichs folgendes:

"Die 3etriebsoerwaltungen (Post- 3isenbahn

decken aus eigenen 3innahmen ihre laufenden Ausgaben;


- 15 -

sie haben aber fUr 3rneuerung und Erganzung der Anla-

gen etnen Anleihebear!

on 19.442 Zillionen Z. Der Be-

trag erscheint zundchst Koch. Er ist aber, wenn man die
Entwertung des Geldes unf die 3teigerung aller Preise
beKicksichtigt, ntedriger als der noraale Bedarf der
Betriebe cor de; 1=riee (1717
ausgaben gegen 31,1

der gesamten Betriebs-

iin Jahre 1913). Die Zahl er-

scheint noch geringer, wenn man die starke .bnutzung

der Anlaen durch den Zrieg bedenkt. ,iuf den Bau newer
Bahnstrecken hat man grundsdtzlich cerzichtet. 01) es

allerdings gelingen wird, die erforderlichen 19.442
Zi11 ionen

im ;i'ege einer langfristiQen Anleihe schon

inn Jahre 1922 zu beschaffen, muB bezweifelt werden.

Die Einnahmen der allgemetnen Reichsperwa1tung

abersteien im ordentlichen Hdushalt die Ausgaben um
16 500 Zillionen Z. In den flusgaben

on 90 000

onen A: sind 29 000 iallionen L !Ur den SchLadendienst

und 22 000 Zillionen L !Ur Uberweisungen an die Lander
und Gemeinden enthalten.

7)en Ldnern werden Anteile

an den neuen Reichssteuern iiberwiesen, die ihnen als
Ersatz Itir die ihnen genommenen groBen 3teuern zustehen

und die sic zur Bestreitung ihrer dringendsten Ausgaben
bendtigen. Kir Pensionen und Versorgung der L'interbliebenen der Kriegsteilnehmer sired ferner 10 800 ;,:illionen
Zau.fzuwenden. ,ius dem Rest con rund 28 000 lijillionen A

werden die lau!enden Ausgaben aller VerwaltungszL)eige

des Retches bestritten. Im Jahre 1913 wurden fur diese
Zwecke 2 100 MIllionen L-ausge2eben. 3tellt man in

Eechnung, daB die a1lemeine Teuerung, die Steigerung
der Preise aller A:aterialien und die fosten der Lebenshaltung der Angestellten im Durchschnitt r;zindestens das

25!ache erreicht hat, so beweist der ,j1satz con 28 000
Alfillionen A, der einem Ausgabeposten con 1 10C ,...ill ionet,


- 16 -


Goldman- gleichkommt, dczB sparsam gewirtschaftet wird.

Der Anleihebedarl des aui3erordentlichen haushalts der allgemeinen Verwaltung betrdgt 3 110 ;:ill Toner
Er ist i ra wesentlichen Burch die Nachwirkungen des
Krieges hervorgerufen and mug in den foloenden Jahren
perschwinclen od,er doch auf eine nur geringf:igige Sumnze
herabgedr.ictt werden.
Der SberschuB des ordentlichen ilaushalts der
allgemeinen Verwaltung chit 13 500 AJillionen AZ soli zur
Durchliihrung des Friedenspertrages verwendet werden.
*Er kann aber die hierfar erforderlichen Ausgaben nur zu
einem ganz kleinen Teile decken.
dieser Feststellung kommen wir zur Queue des ganzen Elends der deutschen Finanzen. Die auf dem Friedensvertrage beruhenden
Ausgaben sind zurn erheblichen Teti in :reader Valuta
zu leisten. Ste sind deshalb uninittelbar abhdngig vom
:urse der .L.,-ark. Die 720 Zillionen Goldmark, die fair

das Jahr 1922 in Cannes lestgesetzt sind, erjrordern bei
einem Dollarkurse von 200 A:: 34 400 A;A`illionen Papiermark,

bei einem Dollarkurse Don 300 i,I 51 400 Millionen Papier
mark. Zur AbbUrdung dieser Last geniigen die Zittel der
Steuergesetzgebung nicht. Selbst wenn es moglich ware,
die Steuerertrdge so zu erhJhen, daB der im Augenblick
erlorderliche Bedczr: an Tapiermark insgesaat gedeci
so w-Lirde das doch noch keine wahre Deckung becleuten, solange die Zahlungsbilanz der deutschen Volks-

wirtschalt nicht ausgeglichen ist. Denn Steuern erbringen nur 1-1-a,Jiermark, jr die Zahlungen mUssen aber De-

visen beschafft werden. 1st der Ausfuhrii,berschua der
deutschen .7irtschaft nicht so grog, dal3 die Devisen dem
Reiche gegen Fapiermark zur Verfugung gestellt werden
k5nnen, so bleibt dem Reiche nur die .4-dc,)lichk.eit, Devisell


- 17 -

sen tm Auslande anzukaufen. Das Zahlungsmittel des Retches
ist wieder die i'ai)termark. !Awn de-n Grundsatz ion Angebot

and iVachfrage mu2 dieser Zwang, Papiermark au! den Zarkt

zu werfen, um Deoisen dafUr einzutauschen, den Kurs der
Zark stetig wetter drUcken".

Die stdndig anschwellenden EaptermarkzWern pflegen
darijber hinwegzutduschen, daY3 trotz scheinbarer Geld-

fldssigkeit and scheinbarem Reichtum eine Verarmung
grdiJten Umfanges in Deutschland eingetreten ist. Von

sachNundiger Seite ist berechnet worden, daf3 das gesamte

deutsche Volksceradgen, was vor dem Kriege etwas Uber

300 lalliarden Goldmark betrug, seitdem eine Verainlerun;

auf weniger als die Halfte erfahren hat. Den fremden Gel.
Bern in fine con 30 bis 35 ,-ill iarden Joldark, die vor

dem Kriege in den deutschen Geldinstituten porhanden waren, steht gegenwdrtig ein Bestand con schatzungsweise

200 _illiarden Papierark gegenUber, der einen Goldmarkwert con etwa 3 :Alliarden ...ark darstellt. An dieser

weitehenden Verarmung Deutschlands, die sich in solchen
?if fern offenbart, mdssen die bisherigen Steuerleistun-

gen and die aus Deutschland herausgeholten Reparationsleistungen gemessen worden, um .zu erkennen, welche ungeheuren ,instrengungen tatsdchlich

on deutscher Scite

zur ErPillung der Ubernommenen Verpflichtungen bis zur
Stunde gei:acht worden sin:h; gelegentliche Fehlgriffe in

den deutschen Finanzma2nahmen mdgen dabei zugegeben



3esondere Schwierigkeiten hat der deutschen Yinanzcera)altang die auch in Ihrem Schreiben berdhrte Steuerflucht des deutschen ;Capitals bereitet. Ihr entgegenzu-

wir7en, sind seitens der deutschen Regierung alle erdenklichen


- 18 -

denklichen Schritte unternommen worden. Deutschland hat
trotz schweren entgegenstehenden Bedenken das Bankgeheimnis aufgehoben und den Bepotzwang fir ]ertpapiere
eingeliihrt; ferner ist die

b rtragung

on Outhaben,

Zahluncsmitteln und 7ertpapieren nach dem Auslande den
Finanzbehdrden anzqmelden, die Jteuerbehdrde iibt also

eine Kontrolle des mobilen Zaitals und seiner Bewegungen im ierkehr mit dem Auslande aus, sa4;cit I,2aBnahmen

oon deutscher Seite hierzu ausreichen; die Unteranlage
4 der beiliegenden Denkschrift des Reichskanzlers gibt
hicrUber im einzelnen Aufschlu2. 211t der Tschechoslowa-

kel 1st au2erdem ein ertrag fiber gegenseitigen Rechtsschutz und 1?echtshille in :;teuersachen abgeschlossen

worden. Deutschland hat au.1 der Zonferenz zu Oenua an-

gestrebt, eine derartige Rechtshilfe international zu
gestalten; der Vorschlag 1st seitens der Genueser Finanzkommission dem Vdlkerbund Czbenoiesen worden, wahrend

die Kommission selbst den 3tandpurkt einqahm, da3 die
Freihelt des Techselmarktes nicht unterbunden und das
Bankgeheimnis nicht uerletzt werden dUrfe.




kungen zwischen

und Binnenwert der Zark der

traurige Proze.8 der Verarmung Deutschlands.

Unter dem Scheinglanz, den die Inflation mit
ihren wachsenden Nennwertziffern ausbreitet, bringt
dieser ProzeB auch das deutsche Produktionskapital in

In oielen Fdllen weisen Unternehrnungen Schein-

gewinne aus, indem Einnahmen aus Suchleistungen in Pa-

piermark als Gewinne oerbucht werden, obwohl sie den
entsprechenden Abgang an S'AchgUtern ihrem Goldwerte

nach nicht decken, so daB die Ertrdge allndhlich nicht
mehr ausreichen, um die ursprUngliche Ausstattung des
Betriebes mit Kapital sicherzustellen.

Zuni grdBeren

Teil ist die erheblich gesteigerte Kapitalbeschaffung
der deutschen Industrie- und Handelsunternehmungen als
eine unbedingt notwendig gewordene AuffUllung des ursprUnglichen Betriebsoermdgens anzusehen;

die Aktien-

gesellschaften, KOmmanditgesellschaften auf Aktien und
Gesellschaften mit beschrdnkter Raftung in Deutschland
beanspruchten im Jahre 1021 fur Neugrundungen
5 947 Millionen Papiermark, odhrend fur Kapitalerhdhun-

gen demgegenUber 22 772 011ionen Papiermark gefordert
wurden (im Jahre 1920 batten die Ziffern 1 808 LIllionen
und 8 947 &111ionen betragen).

Der Eapitalbedart der Unternehmungen !Indet
Eleckung tails in kurzfristigen Bunkkrediten, teils in

der Kapitalbeteiligung AuBenstehender, auch des Auslandes, const oornehmlich in der Begebung oon Aktien und
Obligationen oder in einer Serbindung oon beiden Formen,
ndmlich oon Vorzugsaktien mit fester Verzinsung.

Es liegt au! der Hand, dae wdhrend einer Periode sprunghaf ter Geldentwertung die Rechtsform der Aktiengesellschaft


Gesellschaft, wegen der freieren Beweglichkeit am Finanzmarkt beoorzugt wird.

Die Aufnahmeinigkeit des Geld-

und Kapitalmarktcs war denn auch gerade far Aktien
nicht nur infolge der anhaltenden Celdflussigkeit, sondern auch im ZUsammenhang mit dem er5rterten Bestreben,
Sachwerte bezw. Anteile an Suchwerten zu erwerben, besonders grad.

Dementsprechend aberwiegt die Kapital-

bescha,Mng in Handel und Industrie durch Aktien; so
belief sich im Jahre 1921 die Emission

on Dioidenden-

papieren auf 21 712 Zillionen Papiermark, die Emission
festoerzinslicher 7erte auf 5 415 M,llionen Papiermark.

nttlere und kleinere Firmen, die mehr oder minder auf
den Bunkkredit angewiesen sind, geraten in solcher Zeit,
da die Banken mit langfristiger Ereditgewdhrung zurfIck-

halten mUssen, oielfach oor den groSen Unternehmungen,

die durch Ausgabe oon Aktien und Obligationen unuittelbar an den Kapttalmarkt herantreten kdnnen, ins Hintertreffen.

Fine derartige Entwicklung fiihrt zwangsldu-

fig zur Umwand1ung von Einze1.1irmen in die Form der

Aktiengesellschaft, zu Verschmelzungen oon Firmen so
wie zur Anlehnung u nd zum Anschlud an kapitalkrdltigere

Unternehmungen des gleichen oder eines oerwandten Gesch4ftszweiges.

Die fortgesetzten Umgrilndungen deut-

scher Privatbetriebe in Aktienunternehmungen und die at-

samensohlUsse oon Unternehmungen sind dlso eine natUrliche Folge der oerdnderten virtschaftlichen Verhdltnisse.

Es ist zudem zu berUcksichtigen, da2

Deutschland sehr wertoolle VberschuBgebiete eingebaBt
hat, was ebenfalls zu einer starken Umstellung einiger
Industriekreise zyang (im :esten gingen allein oerloren
75% der Eisenerzfdrderung Deutschlands, 9% der SteinkohlenfUrderung,


kohlenfdrderung, 23% der deutschen Bisenwalzwerke,

31% der HOchofenwerke, 20% der Textilindustrie;


Oberschlesten muBten u. a. abgetreten werden 77,5% der
dorttgen Gesamtkohlenfdrderung, sdmtltche Etsenerzgruben mit 61 000 t jahrlicher Erzeugung, Don insgesdrat
37 HOchdfen 22,
ferner, 77% der Bleterzft):rdeiung und 86% Zinkerz-

f5rderung, d. h. 75% der gesamten Zinkerzfdrderung

Gleiche Umstellungen wurden bet zahl-

rgichen Unternehmungen durch die Liuldation

on Anla-

gen, Betetligungen und Rechten im ,,uslande notwendig.

Die Formen, in denen sich industrielle Kan_
zentrationen in der Hauptsache vollziehen, sind folgende: Gesellschaften, die in Interessengemeinschaft miteinander treten, erhdhen ihr Kapttal und tauschen die
neuen Akttenbetrdge gegenseittg aus.

Bet Aufsaugung

von Aktienunternehmungen wird ebenfalls twist der 7eg

Uber eine Kapitalerhdhung beschritten, um mit 1Mfe
der neu geschaffenen Aktien die Aktiondre des zu fibernehmenden Instttuts abzu:inden.

Der Neg, da3 die Herr -

schaft fiber ein Unternehmen durch den Erwerb der Aktien-

majoritdt am Bdrsenmarkt erreicht wird, ward oon deutscher Seite seltener geodhlt, wdhrend sich das Eindringen des ausldndtschen Kapitals in die deutsche Ntrtschaft dfter in dieser :seise abspielt.

Indessen werden

auch ohne solche Finanztransaktionen Verbindungen


Gesellschaften beschlossen, indem Steller tm i1ufsichts-

rat oder in der Verwaltung des etnen Unternehmens mit
Vertretern des andern besetzt werden.

In mancher Beziehung anders stellt sich die
Entoicklung hinsichtlich der Grabikapitalisten, fiber



deren Finanzierungsmethoden Sie informiert zu werden

Sie geben selbst ceder Aktien noch Obliga-

tionen aus, sondern pflegen, wenn thre oorhandenen
flUSsigen Mittel fur den Erwerb eines Unternehmens oder
far eine Beteiligung an einem Unternehmen nicht hinreichen, zundchst Bankkredtt in Anspruch zu nehmen,

der thnen in der Regel an9estchts threr besonderen Kredituilrdigkett unschwer zugdnglich 1st and den sie nor-

malerwefse aus aufkommenden Gewinnen oder aus der
Liquidation frilherer Kapitalanlagen abtragen werden.

Besitzen sie den ausschlaggebenden Einfluls an einem
Unternehmen, so haben sie die Mdglichkeit, das (Inter-

nehmen selbst zwecks Beschaffung neuer Mittel durch
Ausgabe Don Aktien oder Obligationen direkt an den
geldmarkt herantreten oder die sonstigen oben erwdhnten
Transakttonen oornehmen zu lassen.

Die Finanzierung

nimnt hierbei gelegentlich die Form an, dais ein Grae-

aktiondr die Don ihm beetnfluBte Gesellschaft zu einer
Kapitalerhdhung durch Ausgabe

on Aktien Deran1a2t,

die ihm bet Obernahme der neuen Aktien durch einen
niedrig bemessenen Bezugskurs einen Gewinn zuwendet.

Der GroBaktiondr kann alsdann, sowett es ohne Beetntrdchtigung seines Etnflusses auf das Unternehmen mdgitch 1st, den ihm mit dem billtgen Bezugsrecht zugewendeten Geotnn durch Verdui'erung Don bezcgenen neuen

Aktien an der Bbrse teilueise realisieren, um den Gowinnbetrag zu neuen Beteiltgungen zu verwenden.


oerstdndlich werden derartige Geotnne steuerlich erfal3t, obwohl rich der materielle 7ert des angelegten

Vermdgens trotz solcher Trcnsaktion in der Regel nicht



wesentlich Derdndert hat; denn wenn 2.B. ein Unternehmen, das einen Goldwert darstellt, skin Kapital durch
zu billige Ausgabe neuer Aktien, die ihm nicht entsprechende naue Produktionsmittel zufahrt, Derwdssert,

so entwerten sich die in der Hand des rapitallsten
verbliebenen Anteile an die sem Unternehnen, und wenn

der Aktiondr auch den realisierten Gewinnbetrag zum
Erwerb anderer Goldwerte benutzt,

er meistens

durch solche Operationen im besten Fall nur seinen
Goldwertbesitz auf die urspriingliche Fdhe wieder auf.
Vereinigt ein Groiskapitalist sdmtliche Ge-

schdpsanteile eines Unternehmens in seiner Sand (z.B.
befinden sick die Aktien der Friedr. Krupp A.-G. in
den Hdnden c4er Frau Krupp v. Bohlen und Halbach und

die Anteile der Gewerkschaften des Thyssen-Konzerns im
Besitz des Montanindustriellen August Thyssen), so
wird er die Beschaffung neulr Yittel nicht durch .1ktien-

ausgabe, wobei er fremde Teilhaber in sein Institut
aufnehmen muBte, bezirken, sondern er wird our Aufle-

gung einer Obligationsanleihe schreen.
Die Krdfte im deutschen Xirtschaftsleben, die
zu der zu beobachtenden Zusammenfassung Don Unternehmen

drdngen, resultieren im wesentlichen aus dem Zang, in
einer Zeit wechselnder, alle Bewertungs- und Produktions-

Derhdltnisse aus der Bahn werfender Ynrungs- und Ge-

schdpskrisen den lroduktionsapat nach ANglichkett
gesund zu erh:Aten.

Die hierbei zum Tail zusammenge-

hduften Betriebskapitalien, so Koch sic auch in Papiermark bez-Ufert werden mdgen, mussen jedoch au! ihren
Goldwert zurfickgerechnet werden, wenn man thre wirkliche

Bedeutung richtig einschdtzen will; denn die deutsche
Produktionsbasts selbst hat ja, wie erwahnt, eine einschneidende Verengerung erfahren.

ale die kapitalkrdf-

tigsten Unternehmungen bei die56M KonzentrationsprozeB
den weniger starken Unternehmungen den Rang ablaufen,
liegt in der Aiatur der Suche begrundet;

zum Tell baut

sich dies natfirliche Schwergeoicht pihrender Unterneh-

mungen auf dem Besttz der Kahle auf, um den sich die
7eiteroerarbeitungs- und Fertigindustrie in


der Verdstelung gruppiert.
Imm,3rhin 1st das Bestreben der deutschen Ee-

odlkerung, thre Bankguthaben und thr Burgeld in Sachgater umzuwandeln, wenn es auch zeitweise fast panikartig aufgetreten 1st, keineswegs allgemein und andauernd, und insbesondere bei den GroBkapttalisten ndlt
es sich in mdBigen C;renzen. Die Guthaben bei den Banken

and Sparkasse'z wachsen fortgesetzt, and die Steigerung

der Aktienkurse, die nicht nur durch die Geldentwertung
and den Ankauf durch Ausldnder,sondern zettweise auch
durch jenes Bestreben, Sachwerte zu erwerben, stark in
die Line getrieben !f,(Lren,

1st inzotschen einem erhebli-

chen RUckgang gewichen, und jede leise Besserung der
tienmatera ,illsein Mark driickt Die Ihnen zugegangenen zeigt, dass an
"angel 1st. ihre Kurse tiefer. Das

Berichte,wonach Grosskapitalisten, industrielle and
sonstige Beteiligungen in einer AusmaBe erwerben, da2
eine Konzentration der gesamten Produktionsmittel in
Deutschland in oerhdltntsmdBig wenigen Hdnden oorzuliegen scheint, beruhen auf oejlitger Verkennung der Dirge.
Von eine

solchen Umfange dieser Ankdufe iron Sachgfitern

1st keine Rade, and die Gefahr einer solchen Konzentra-



tion liegt auch nicht im entferntesten oor. Infolge der

Entwertung der Hark wird in neuerer Zeit gerade manchen
grossen Industrieunternehmen and - konzernen das Betriebskapital so knapp, dai3 sie sick gezwungen sehen,

die in

ihrem Besitz befindlichen Beteiligungen an andern (Internehmungen (Aktien pp.) 2Ugt Tell wieder abzusto2en.

Ich vies bereits oben darauf hin, class die Steuer-

kraft der Handels-und Industrieunternehnungen in Deutschland ausserordentlich stark ungespannt ist. Ich fUrchte,

Bass die direkten Steuern bereits erheblich Uberspannt
sind, du die deutsche 7irtschaft als Ganges fortgesetzt
an der Substan2 ihres Produktionsoermdgens zehrt; die
lediglich aus der Geldentwertung entspringenden Papiermarkgewinne sind leider geeignet, einer oberfldchlichen
Betrachtung diese realen Verluste zu oerschleiern. Je
,I,ehr der Staat in Gefahr gerdt, der ihm aufgebUrdeten

Vberlast zu erliegen, umsomehr wird rein Buick fur die
nun einmal oorhandenen Grenzen der Leistungsfeihigkeit
des deutschen Wirtschaftskdrpers getrilbt. Die Einziehung
der ill?. Ausbau des deutschen Steuers,dstems durchgefiihrten

schweren Steuern, sowie der beschlossenen Zwangsanleihe
wird zu einem sear bald fUhlbaren Kapitalmangel fUhren,
dem ein RUckgang der zurzeit oorhandenen geschdftlichen
Lebhaftigkeit auf dem litthe folgen muss, falls nicht etwa

ein weiterer Sturz der Mark mit seinen Scheingewinnen
eine neue Konjunkturwelle ausldsen sollte.

Ich mdchte mein Urteil dahin zusammenfassen,da2
die uneriassliche Voraussetzung :fir eine Konsolidierung

der deutschen Wirtschaft ale Zurfickfhrung der



Friedenscertrag beruhenden enormen wirtschaftlichen and
finanziellen Belastung


ein tragbares MaR bildet,d.h.

du: ein PJa2, das con Deutschland ohne fortschreitende


Zerstdrung seiner wirtschaftlichen Leistungsfdhigkeit
aufgebracht werden kann,

(denn gegenodrtig besteht in-

folge der Reparationsoerpflichtungen in lahrheit eine Zahlungsunfdhigkeit Deutschlands).

.Wiese Voraussetzung

allein ourde Deutschland die ajglichkeit erdffnen k5nnen,

im Auslande ausreichende Kredite aufzunehmen zwecks BeschaffUng der Rohstoffe, deren die deutsche Industrie zur
Erweiterung ihrer Produktion bedarf, die Passioitdt der
deutschen Zahlungsbilanz durch oermehrte Produktion und
erweiterten Export bet mdglichster Einschrdnkung des
Imports auszugleichen sowie die Ausgaben des Reichs durch
ordentliche Einnahmen zu balanzieren und damit etner Zunahme der schwebenden Schuld oorzubeugen, die durch ausreichende innere Anlethen mit Erfolg fundiert werden kdnnte. Die deutsche Valuta ourde stch alsdann 'don selbst auf

ein Ntoeau einstellen, das deL gegenuber der Vorkriegszett geschodchten Stande der deutschen Volkswirtschaft
entsprdche. 7dre ein solches gletchbleibendes Nioeau erreicht, so kdnnte es durch eine Devaloation legalisiert
und die deutsche 7dhrung oon neuem auf eine metalltsche
Grundlage, die nur das Gold sein kann, gestellt werden.

Nach Lage der deutschen VerhLitnisse hat es das

- 30 sehr es die Vermehrung der

schwebenden Schuld des Reichs in ihrer Tirkung auf eine
Steigerung des Banknotenumlauft hin oerurteilt - nicht
oermocht, die Dtskontierung der room Reich angebotenen
Schatzanweisungen abzulehnen. Es muss to so handeln in der

Erkenntnis, daB dem Reich zur Decking der durch ordentliche Einnahmen nicht zu bgleichenden, gro2enteils .mit

den Friedensbedingungen zusamaenhdngenden Ausgaben etn
anderer reg als die Aufnahme schwebenden Schulden bisher




nicht offers stand. Eine Zdhlungseinstellung des Retchs

wUrde die gesamte Reichsoerwaltung lahmlegen und anarchische Zustdnde herbetfuhren, die den Ruin der deutschen VOlksoirtschaft and die D5llige Entwertung der
Mark mit ihren auch den internationalen Verkehr berfIhren-

den Folgen nach sich ziehen mdsste. Tatsdchltch besteht,

ote Sic es selbst aussprechen, in dem Falle, dal Deutschland nicht in die Lage Dersetzt wird, das Budget des
Reichs zu

Ausgleich 2U bringers, keine andere .'Tail als

die zwischen der cue iteren Emission

on Banknotenlder

Ausgabe oon Staatsnapiergeld oder der Zdhlungseinstellung
des Avichs.
Ich hoffe,

in den Dorstehenden Ausldhrungen die

Don Ihnen berilhrten Fragen beantwortet and die beregten
Problerne beleuchtet gu haben, lege Ihnen aber auch zur
yeiteren Information ilber unsere Geld-und Tdhrungsver-

hditnisse noch drei in der Reichsbank ausgearbeitete
Denkschriften f_lber

" Den Geldumlauf in Deutschland",

Zentral - und Emtssionsbanken und "Valutafragen" bet.


6nglischem Text. Da ich nicht sicher bin, ob die

hier angefertigte

englische Obersetzung dieses Schrei-

bens dberall genau den Sinn trifft, !lige ich auch die

deutsche Fassung dieses Schreibens bet.

Sehr erfieut ydre ich, wenn ich Ste au: der
Konferenz der Zentralbanken in London dernndchst begrd2en
kdnnte, um Ihnen in mUndlicher Ausspracile weitere Aufschlasse 2iZ geben.

twit der Verstcherung meiner Dorztiglichen HOch-

achtung bin ich





Governor Strong


July 10,

Havenst eint a_LLemo.


Two things seem to me to stand out in this letter;
The first is an old one, and that is the reiterated insietenc
upon Germany's incapacity to Day in cash any such sum as two or three milliards of gold marks, with the camouflaged implication that it could not pay
this amount at all, whereas this sum would not exceed 5 or E per cent, of
the total of Germany's pre-war national income, which was around 40 to 50
billion gold marks.
But it does still remain a very wide open question as to whether
Germany could pay this amount plus the taxes to meet her very heavy goyI do not know what is the taxable limit on a
ernmantal expenditures.
nation's product--Sir Josiah Stamp considers it in his recent book on the
subject, and imagines that it may be much hi&,er than most students of the
subject have believed.
The second is the last part, and that is the curious evasion
of the fact that it is the increase in currency and not the increase in the
floating debt that is responsible directly for the fall in the mark; and with
Of course if they could
this a justification of the Reichs'oank's course.
only stop the fresh issues of currency, then and then alone would it be pos- Mt
Bible to balance the budgets (and to float internal loans.) The people of t.
Germany are not going to subscribe to a huge loan in a currency that is con-,
tinually depreciating under their eyes.





October 2, 1922.


Dear Ur. Piaeident:
'1)u must not believe from not having heard from me before this that
a am at all lacking. in appreciation of your letter of 1:ay 31, and the most

interesting and importaat information which you were good enough to send me
More than once I have undertaken to start a reply, but conditions

with it.

abroad have been so kaleidoscopic, and the obange has been so rapid from time
to time, thA I have not felt that it was'poeeible to, bend you any intelligent
comment upoa what you have sent me, because it would be out of .date before it
reached you.

This has been especially true during the last sixty days.

felt rather Fending having made
translation enough to adopt
Yau were good of your-letter. myI suggestion inguilty in ma ar Englishthe suggestion
,hen I becaae aware of the labor which it had imposed upon you, and as we now
excellent facilities for making translations of that character, permit me

to withdraw the revest and allow me to-relieve you hereafter of_this burden.
It had been my hope and expectation to attend the meeting of
central banks to be held in London sometime
of meeting you there.

this fall, and to have the pleasure

Various developments, of which you are informed; have

resulted in aostponing this meeting ao that there :.same to be no likelihood of

my makings trip abroad until next year - possibly early in the year.

This in

part explains my delay in writing you, as I was in almost daily expectation


the receipt of advice that the meeting would be held, and of answering your kind
letter in person.

gill you be. good enou7
of your owm,:,ald of
:early dJ.te:-L

ccect this letter as an acknowledgment

warm appreciation of it,iuld the ,Lseurance that at an,

aoPing to write to you in solewhat similar faa'rlion. as to conL

--dftions in this country, and something of our public opinion in regard to.
;natters whic:. are transpiring abroad.

It will, I hope, take the place of

.the conversson which we might otherwise have had in London, or if not there
in Germany,
W111 my personal good crispers, and assurance of my esteem

Faithfully yours,

Ben,-!.. Strong,
Go verno r.

Rudolph Havelstein, Esq.,
President, The Reichsbank,















The good and confiL.:P.-Ltic/


iions existina betu;een. The FedPral

roerLtc that,

an" th



o you

in connexicn I'ith the occupatian of the

.:uhr District ,ti? 2.7r:Ot"

Lri2iu,7:, recently happen,-


on 7;


daiso affe.ct, accoring to

1\can issuing

p.lorth Ac eri



Hre&is of 211 Ce!ltrol :Vote L'ni

79-th o

orer to

W;UCi: WE,


!7ZFC.1S Of pay,zo:t,


places of


or from certain ,?maces


Oj SCe, been sei;...-d


partly duin) the trans".;or-,


stellen at 1.ach


_-)r of



1 it r















it. 1'01

it,14 r..,31'


























Jo au;

0 aagnialq

fulpurq fo





bUD sropiffo

:442 au; aouolslsso

u4o, pauado ul aapao of firddns


(saa;soo Tuo v)o; woal







fo au;

TUO ul











-07,4:31p ;0

dr 'o;



IC 43r)




auru aa7rbaa U0 -0.22X9






1f02R lo ay; )rbuog, ap ',aouoaz ;0


firpp ,s;a7:L:a7ntaa /o



;:gla sociro,o uouvaz dooa;

afo uo7ux po4





passasE'od 'SdCT937:IdTi2







as7adaris au;



aoDrd to 9a fc

aa.,,aorb ),_sod

Jo uaefixo

Uw 200 Jo -01Q




:5227pa00oc 02


uoNor ;su7otn





paaa;ua au; alos puD




au; Tioppi


u021J0 U1D..U0O




T.3iro q_77:12





a7 u0 'sa;oaC





d:4 'OCD3

10 nOT




000'02, Tri"t

uo J77






,noTo Jo








-asodard ;I




au2 -.);.)0 /0 au; /79U0LY fo ow, vogsu0;47' sou




a fiT.-97.7aa;2



10 aq; aroutn





eon perhaps iPipossibletopaL;thcor;i::

by necessity lead tc /1,)

:-I-uraanceo and must largely

io.trigues of the communi:fts. It

faoor the plans an


is on11) too ObDiOUS
and peri:aps cec

in .7erma7



it scread

r07.1.7d not ctop on

}° borc?ers.

on.prioate capital


- an

1-s way th,c'
i s,

fo::nLied on17;
cr,nclent from the f.lornr:!ent


hus been as !lei oiolntly aepri9ed of no less
127.186.750.000 mcrA- in total..It ic a matter of co re,
::iscir-nt supply


that in front-of ....uch

with means of payment, inf.;:ipensably necessary in tte

economical interest o: the 000 pied districts

i.-. a77

their parts, will be rendered more difficult to the order to carne -:..rough, for all that, as far as
possible, this .:;upply,


ere coripelled to determine

on engaging in ire:).ter

pri?lting of:q.ces !rii:2in the


occupied districts, for the p.:rpose of the malt-ing of

Reicsbank-note.s. rhus
;,:ulhein on Ruhr,


- first. of al/ - at

conication of the large 23erlin
L':.:xenstein, lade an agreement with

printing hour, - of

the printing fira of E.


in fulfillment of which

this printing house is bound to print forms, to be used
as notes of


and then to de.liber to zame.


` :OAF


objections ;:(22,' to





ac;ittoeci, ucc,pt,



this they

put into :Jirculcii:on

acouire the character of notes of the 2.eichsbank and
simultaneously also tLo quality of a legal tender. Now,
on April 6th, as points out the copy enclosed of an
ur, .')714
exhibit, directed by us to our Foreign Office, have










i 040.

v .44140k 010.104-404**V,.



French troops of occupation inocded ti:p printing office

arks. Dy seized: the printing plates,

of Y.

sheets, not yet co,:ipletell: printed,


th6- sherts, a17-eddy

pr,inted ,;;,!.t not get oat into.forms as ';.,11 as the already
finished bani: note forif:.s,


a?;d tCOr

the;, away.

g72,e printin:

piece - the

be(-n - "itiz exception of

not fully printed -sheets, except 41 aolle sheets, given


well as the

thesf- 41 dou4;1e sheets


pr,Lted, but not

finished for.s

cut sheets, and the already

not been returned. :he fully printed

note sheets a


n all to a nominal

not: fonzs a7.ount

oalue of ltib* millions


receij E, giocn by the

Frrh troops of occup..)-ion, a copy of Thich is enclosed

priori the inten-

in this letter, shows evidently, that

tion preoailed, to issut: those pieces ;:3 genuine ones.

It can, of course, not be the question of genuine notes
in this case. Or the contrary',

the ilicJitimate cutting .

into pieces of the fully printed sheet:: represents an
21zttir.2 into circuLltion of pieces,

act of
after o)tting

found alreado (..1:.ttted

to ?he

7;c11 as of those ferns which were


in the printing 1-se, is tantamoun7

pieces do not.huve. the

at the time,
than a


For, these

ssue of coLi,ner:'eft ,paper


of legal notes; they were

tairen hold of, nothing more


,roduction of the printing housc, a mere property
It seer,"Lec,

incredibly to us that the .:,Irench Govern-

m-nt really :p.ight att(:xpt to put into .:irculation this
counterfeit paper ;,:on:7y. :foyoer, for .,reater security,

en t,

i,as, at all

nts, pubished the announce

copied in our letter to vhr Foreiwl Office,


the public to Lccept those ille)itiT.ate notes.

I% 01











"-->nrrrd tn





to 100

to cr(:.-'it


coLel,t to th

count ('Jiro -c:Onto).

tranz3fc ac-




our intruction, has bPrn r,
oered, have been canc('17.=d

the pieces, de7i-


!,ay of perforation.
::Lttep s haor

;ihr..r9 too

On J:;:ril


.,.:i0,:ber,..0-,,jol-Qte7le such

illegiticte notes, amount;
oupti7i7 7:Tr,

nr f"nt -



Ocnk hous: in co7o,?ne and

ofyicers in the

1?eichsbanA7,t:,11(.7 ut 1)uis;..urj.

of those, T:?ntic)ned cno

tendered note fom:s


to 6 millions

change into

oalid notes. :.aping been r,,used this change,

lently poif :hr


t :ey oio-

fror: the cash


and disappeared, leabing mho e note forms, :chose "change"
they thus. - so TO

- in




,.. .



.. ...





en or-




se'L;ed and not returned,


..7di.;e been used yor the

not ful77./ Pr2:):7,'ff

ourpose of :or-er:


note shertL y.LrC not
nor narr.:;Frca,

ncreasing :':easu-e.

suaYied Tith si.:-lat,re types,

iroes, Cu: 0.T of t::ez, haz.:E now, supplied

toes and false numbers,

?Ath i7legiti77.ate signdtur

come into circulation, how many,
yet, there haoe co:77.e

cossession, cz.zr





it cannot beAs
?;;:.ich are no!,*




and erbeg to


enclose the :-)otojroz:ic ri...i.::rojuction of

that piece. l''rom a coirison 7.:ith another enclosre

Of a photo2rapic-reproduction, being a cov::ete7z;


in our

One those Pieces


has been tendered by ,'rench officrs it



printed note Om. of the alJo!:)e m(.ntior./7d

Tito eoidence that



types and number;,

bein: applied by :;:edi=! of couh:'erfeit stamps.


7e ii77.73e,

as you will kindly see from tie photos, the counterfeit
pieces ofter?ords had cancelled by riuintuple or sextuple
It ::ill be euident - without any dc,:Ca't - what
enormous danger may grow to the whole f;.-.)


from the abo!?e detailed proceeding of ne


:EPlgian authorities

by' real,counterfeitin

of payment.

Lalaat::dri;:ced cutting of completely

printed sheets into pieces, from the completion of such
pieces by printing

rhem illegitimate signature types

and false numberin2 and from giuing into circulation
of the cut as well as of the already complete note forms
to the own making of Berman paper money in prioate prin sing houses by aid of Ierman printing plates and, fUrther-t

to the ma;-:ing of ?ernan paper money in 2Prench

offices - is but a small step. The difference is merely
if a ..1.1,opernment begins

n paper money, such a

ion and evoke retorsions

er the monetary relations

nd even r,:aife them im-

ransactions of the

no more be tier
1, maintained,

o ma.4:e in a striking

d in large paper mills

ac an

of technical





d11 eo-t62 by 2S to

ti!, liberty 0:

t!:6 AdiL.2 :ete Lcra.
O., t7 it



to fo!..r(7,2n1

it to











C1 n




1(ttP:- ond

obliged to


ti? is





ant:, .violcnay


Ly the troops of occupat_ion

=Place of th- zsizure

5 200 000

LYichnark at

12. (. 1GC 000




rav Hagan

1 L.:0 coo 000

,..;0 000.000


Railwa, Station

near Rbchst

:0 450 000


,o OCJO (.,00


Cfic. Duisurz,

:thine 7,:cidp-s. 11:r




on a iiessian 1-overn-

ment steaner by the
of Reicr.:.sbankstelle
at Mayence to the


17. 4.

1-.,,if_thsbaTkneben11.:: at ":orn.4;,seie^ loy

27 106 750 000
75 000 000



,ount,taken away
by the French from
tne safe of the
Coblentz,after having brOken up the



1Jz v;i14dow of the safe.

000 000

Taken- away from
the safe of the
having been kept
violently open,by
?rench detectives
and troops.

12., 5.


000 000 000



000 000 COO


26. 5.

:2 000 000 COO

;-.7ichsbank at
Cob, cntz

Reir.:hsban:c in



= Ifrin.,"`.44 AV,/

V-1. 4..







BerltnIthe 18


the 6 tit

of Apri:, 1923.


ti-oors invaded the printinghouse of E.Harks in 111217).eiT. tRuhri ,en.t.r.u.,:ted by thc. Reichsbank,
o f


21r_. -i

with tie i-rintirig of ti:)en-tythousand

liar;-..notes,and tool .away:

printng plates,

2i a large


of partially

printed not yet firLshed


600 sheets,finished and numbered

though not get out

into pieces,haring a value or 336 millions Har71,

1,1 a lot of Tiecs

printed,having valu,3 1530

millions Eark.

he printing-plates have been returned
of thf

tlinee,oxcept ohe

:ost important of nem,a plate with texts.

Y'he whereabouts or the same arc unknown.

it has been impossible to obten any inforraion
oheth,,r or not the plates have been in the reanuhtle,
object of abuse, such as the Laking


Out of



seets,on 7ohic;h the print in


begur,41 double-Sheets 7iave not 'Leen returned.

iioaling with the possi;)ility,that our notes tecoe

sub jec.-



(I such

partll, printed pieces which shcie the details or p.:occedings

in pr,.nting notes,is obviously of greatest importance.

seers diffielt


adr.Lt a suspfcion than, the French

right intend tc proceed to 'L/legitt:::ate tritation of our


this reason we aslc 5ou. tc insist 7.L.,th the French

70 the

0 f ri cc







rnn,dnt that

:--2in'7ing plate tog6her with


sheets_on which p:'intin

rned to us,and

has been begun,be ,'orthwith

that the French Government gives to

pl e*"



.!..,OUTO, lc 6 av:ril 1523

Armee Frangaise du Inin

E.M 2eTe Bureau, 5.2.
Service de Si;rete

Secteur de Butsbourg
No. 1122 Dq.

de la sorrv3 de un million huit cent sot.,;ante six

ntiliona (1.866400.000) sataie ce jour 3 l'imvrtmerie...

Mar7fs Ernest.aein,


':pans le but de supplier

ux requisitions auquelles le Couvernement allenand,
contratrement a l'arrangenent rh4nan, se refuse d

Le Comnissatre
Chef Da la Stirete 7rancatse:



Enclosure 3








Duisbourg, le 6 avril 1923
rmee Frangaise du Rhin

'.11 2eme Bureau, 5.2.
Service de Siirete

Secteur de Dui sbourg

No. 1122 Dg.


de la somme de un million huit cent soixante six

millions (1.866.000.000) saisie ce jour a l'imrrimerieL

Marks Ernest,ri,X0heim, 'dans le but de suppler
aux requisitions auquelles le aouvernement allemand,
contratrement a l'arrangement rheiTan, se refuse a

Le Commisstire sp4otal,
Chef de la Sizrete: Francaise:




Enclosure 3

.,,rwieetAnWrgt 7r0;1171477,,





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Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102