the difficulties placed in the way of the realization of securities held by Germans are insurmountable, the only two ways remaining of paying for her imports are by exports and by gold.As one of England's objects in taking part in the war has been to prevent the annihilation of small States, the action of such countries in assisting our enemies with food and other commodities appeared ungrateful and suicidal. The exports of Germany in 1913 amounted to about 500 millions sterling, and of this the Allies and their Colonies took about 200 millions, leaving a balance of 300 millions. What proportion of this 300 millions would Germany be able to export? Taking again into consideration that she has neither the same number of ships nor the same number of men engaged in her industries as she had in 1913, and, further, that such proportion of those exports which contain imported raw material will be increased in price, there can be no doubt that her exports will fall off to a much greater extent than her imports, and that the balance will have to be paid in gold. Almost superhuman efforts have been, and are being made, to increase the gold in the Reichsbank. The increase has hitherto been at the rate of about i½ millions per week, apparently from circulation and from other sources. The gold now reached about 106 millions sterling. But in order to pay for their imports through Scandinavia and Holland they have already had to export about 5 millions sterling of gold to those countries. Thus the maintenance of the financial position of Germany will depend on the balance of her imports over exports being small, and on the increase of gold exceeding or being equal to the export of gold. I am of opinion that there be will no cessation of this war on account of the gold position in Germany, at all events within twelve months, and it may be longer. But there might be a cessation of hostilities for other reasons. I should say that the weakness would first show itself, if it has not already done so, in Austria and Hungary.
Austria and Hungary are poor countries in comparison with Germany, and have suffered great losses and great lockups of resources in consequence of the Balkan Wars. The Austro-Hungarian Bank performs the same functions for these countries as the Reichsbank does for Germany. For a considerable time the Dual Monarchy has been in the position that its imports have been larger than its exports; consequently, their exchanges have been against them, and although there has been a tendency for their gold to diminish rather
