The Reconstruction of the German Finances and the Reparation Problem

Abstract

Even if the world-war had ended a year earlier than it actually did and the peace which concluded it had imposed no sacrifice on Germany, the finances of the empire could not have been placed on a sound basis without recourse to a considerable capital levy. I estimated, in July, i9i7,' the levy that would then have been required at 20 per cent. It is therefore evident that the budget, even if there were no payments to make for reparations, could not now be balanced by means of current revenues. However, a general capital levy is at present very unpopular in Germany because the people whose money is invested in war loans, industrial bonds and mortgages have already lost more than 99 per cent of their property by the depreciation of the currency. Even the socialists have therefore lately confined themselves to (lemanding that the commonwealth should be given a share in the tantgible or values (Sachlwerte) and this idea is indeed at first sight enticing enough. For values have hitherto been treated with undue tenderness by fiscal legislation, and the owners of values have in general not suffered at all or only a little by the depreciation of the currency. Indeed, some of them are, if we calculate their property in gold, richer than before the war. Nevertheless on closer examination it appears that a tax imposed on the values alone would be unjust and moreover would not serve the purpose. In the first place, it would prove impossible to define in a satisfactory way the term values : Are, for instance, preferred shares of industrial companies paying a limited dividend values ? Besides, many for instance, tramways, are in a far worse position financially than other kinds of property which are not real values, such as, for example, foreign state bonds or shares in German banking concerns. Finally many investors in values are less solvent than others whose property does not consist of values.2 The reason that so many people at present favor a separate tax on