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civil budget for the fiscal year 1918. The sphere of taxation, altho expanded on these occasions, was necessarily too restricted for the needs of the imperial government.1

The second reason for the delay in setting up a sound policy of war financing was that from the beginning of the conflict up to the time that a change in the fortunes of war took place, German statesmen entertained the hope of speedily gaining a decisive victory over their adversaries, crushing one or more of them completely and exacting heavy indemnities. German militarists considered it highly probable that they could force their vanquished enemies to bear the burdens of war and consequently hesitancy was displayed on the part of the imperial government in revising its financial policies. This illusion was gradually dispelled by the turn of events and facing the alternative of incurring heavier and heavier deficits, the only expedient of increasing the revenue from taxation was followed. The tide was not, however, stemmed to any large degree.

The results of the first seven war loans are here given. While the boast of German officialdom that war loans had become increasingly popular may be justified by a glance at the number of subscribers in each class, a study of the amounts subscribed seems clearly to indicate that the contrary is true. The ratio which subscriptions of a million marks or more bore to the total was 19.5 in the case of the first loan, dropping to 12.8 in the second and rising thereafter until in the seventh loan it amounted to 25.2. In every case, the number of these

1 For the fiscal year 1919, the rates of the imperial income tax as proposed vary from 5 per cent on the first 10,000 marks to 50 per cent on the excess above 200,000 marks and the rates of the war tax on property, from 1 per cent on the first 200,000 marks to 5 per cent on a million marks and above. L'Economiste Européen, July 12, 1918, p. 29.

subscriptions was practically negligible. Subscriptions of 100,000-500,000 marks rose from 37.3 per cent in the first loan to 51.1 per cent in the seventh loan, while at the same time the amount of subscriptions of 2000 marks or less, comprising 91.8 per cent of the total number of subscribers in the last loan, fell from 16.5 per cent in the first to 12.0 per cent in the seventh war loan. The first seven classes all show declines, altho the decreases are neither alike nor continuous in every instance. The greatest per cent of increase in the amounts subscribed is exhibited by the last class, embracing subscriptions of a million marks or more, and following closely are subscriptions between 100,000 and 500,000 marks. All these facts point to the conclusion, therefore, that greater and greater reliance was being placed upon banking credit and that popular subscriptions, altho increasing in number, were contributing progressively less and less to the total.

The sum of 139 billion marks was voted by the Reichstag up to July, 1918. In October, 1918, the government stood in need of more funds and requested 15 billion more. This amount was refused and the government resorted to note issues as a result.

According to a speech recently made by Dr. Schiffer,1 erstwhile Minister of Finance, the daily expenditure during the war rose from 49 millions in 1914 to 135 millions in 1918. The yearly expenditures were as follows (in billions of marks): 1914, 7.5; 1915, 23; 1916, 26.6; 1917, 39.5; 1918, 48.5. In addition credits were opened by Germany to her allies to the extent of 9.5 billions, and treasury bonds were issued to the extent of 6 billions, making a total war expenditure of 160.6 billion marks. If to this amount, there is added the pre-war

1 New York Times, February 18, 1919.

debt, as of October 1, 1913, 4,897 million marks,1 the present indebtedness of the German Empire may be put roughly at 165 billion marks.?

AUSTRIA-HUNGARY 3

The expenditures of Austria alone for civil and war purposes were 10,706 million crowns in the fiscal year ending June 30, 1915; 15,726 millions in 1916; 18,788 millions in 1917; and 22,170 millions and 24,321 millions, as estimated in the 1918 and 1919 budgets, respectively. The declaration of the armistice and consequent demobilization will in all probability greatly reduce the latter figure.

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The Budgetary Committee of the Reichsrat estimated for the year 1917 the ordinary revenue to produce 3,890 million crowns and extraordinary taxation 304 millions, a total of 4,194 millions or 18.9 per cent of the expenditures. In the 1919 estimates the revenue is placed at 4,885 million crowns or 20.1 per cent of the disbursements. These deficits are covered partly by advances from the Austro-Hungarian Bank and partly by inter

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1 Statistisches Jahrbuch für das deutsche Reich, 1915, p. 359. This figure may be taken as indicating the maximum state of the debt during the period, October 1, 1913, and the beginning of the war, since the tendency had been to reduce the amount outstanding during the few years prior to October 1, 1913.

2 This estimate coincides roughly with that of Sir Edward Holden, London Economist, February 1, 1919, pp. 142 et seq. Under date of March 27, 1919, the New York Times published a statement made by Dr. Schiffer at Weimar to the effect that total war expenditures to the end of 1918 were 186 billion marks, and revenues 17 billion marks or 9.1 per cent of the former. The war debt was placed at 157 billion marks and the interest on the debt, at 7.9 billion marks. Annual expenditures for the future were estimated at 14 billion marks as against 2.4 billion marks before the war.

• German Austria has recently adopted a budget for the period November 1, 1918 to June 30, 1919. A loan of 500 million crowns was issued, consisting of 4 per cent treasury bonds payable within two and one-half years. The issue price was 97 if payment was made in specie, and 99, if one-fourth of the amount subscribed for was paid in Austrian war bonds and the remainder in specie. Cf. L'Economiste Européen, December 13, 1918, p. 383.

L'Economiste Français, January 12, 1918, p. 36.

Neue Freie Presse, September 26, 1917.

nal loans. Practically every source of revenue has been tapped to the maximum limit.

Expenditures for purely military purposes totaled 38,636 million crowns for the first four years of the war, of which 6,327 millions were made in 1915; 9,513 in 1916; 11,453 in 1917; and 11,343 millions in 1918.1

The war debt of Austria on May 24, 1918 was 57,052 million crowns, as given by the Reporter on the National Debt to the Austrian Budget Commission. Of this amount 16,209 represented advances of the AustroHungarian Bank; 29,275, proceeds of internal loans (less conversions); 16,209, advances of Austrian banks; and 3,234, advances of German banks. On October 31, 1918, the total public debt of Austria was 84,097 million crowns, according to the Annual Report of the AustroHungarian Bank, of which 67,955 represented the amount resulting from the war.'

The total debt of Hungary stood at 42,891 million crowns on October 31, 1918, of which 33,091 millions were incurred during the war. Approximately 16 billion crowns represent the net proceeds from loans, about 10 billions are due the Austro-Hungarian Bank and the remainder of the war debt consists of advances by private banks.5

TURKEY

In normal years the national revenues varied from 25 to 30 million Turkish pounds but in 1916, owing to the continual decrease in import and export duties through the interruption of commerce receipts fell to 21 millions. The budget for 1918-19, estimated revenue at

1 L'Economiste Européen, August 2, 1918, p. 77.

? Ibid., June 7, 1918, p. 366 and London Economist, June 29, 1918, p. 1082. L'Economiste Européen, January 31, 1919, p. 78.

• Ibid.

$ London Economist, December 28, 1918, p. 882.

WAR LOANS OF AUSTRIA-HUNGARY 1 (Amounts in million crowns)

AUSTRIA

HUNGARY

2,201 Issued Nov., 1914 at 974, 5 per cent, matures April 1, 1920 at par.

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2,688 Issued May, 1915 at 951, 5 per cent, not redeemable
before 1925.
4,203 Issued Oct., 1915 at 93.6, 5 per cent treasury bills,
not redeemable before Oct. 1, 1930.
4,520 Issued May, 1916 in two forms:

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(a) 5 per cent treasury bills repayable at par,
June, 1923 at 93.

(b) 5 per cent bonds to run for 40 years, at 95.5.

1,175 6 per cent loan issued Nov., 1914 at 974, not redeemable be-
fore Nov. 1, 1920.

1,132 6 per cent stock, issued May, 1915 at 97.5, not redeemable
before 1921. 5 per cent stock at 90.8, not redeemable be-
fore 1925.

1,985 Issued Oct.-Nov., 1915 at 97.1.

6 per cent Rente not redeemable before 1921.

2,025 Issued April-May, 1916.

6 per cent Rente at 96.7, not redeemable before Nov. 1, 1921.
5 per cent treasury bills at 91.4, not redeemable before June
1, 1926.

4,467 Issued Nov., 1916-Jan., 1917, in same form as pre- 2,415 Issued Nov.-Dec., 1916. 6 per cent Rente at 97.2, not re-
ceding loan.

deemable before 1920. 5 per cent treasury bills at 95.5,
redeemable at 105 between 1922 and 1942.

5,189 Issued May-June, 1917, in same form as preceding 2,500 6 per cent Rente and 5 per cent treasury bills.

Issue price 92 and 964, respectively.

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loan.

Issue price 92 and 94, respectively.

SEVENTH LOAN 6,044 Issued Dec., 1917, in two forms:

(a) 5 per cent loans at 91, redeemable at par by
drawings between 1923 and 1957.

3,690 Issued Dec., 1917. 6 per cent Rente at 96.1.

5 per cent treasury bills at 911, convertible at option of gov-
ernment after Aug. 1, 1922.

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(b) 5 per cent bonds at 93, redeemable at par, 1926.
(a) 5 per cent treasury bonds at 95 due Sept. 1,
1924.4

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5 per cent Rente at 91 and 92, according to cash payment or installment. No date set as to redemption.

1 General sources: Statesman's Yearbook, 1917; Fremden-Blatt, December 16, 1917; Frankfurter Zeitung, October 24, 1917; Kölnische Zeitung, November 6, 1917; Neue Freie Presse, October 28, 1917; Bankverein Suisse, Bulletin No. 2, February, 1917.

• Frankfurter Zeitung, as quoted in London Economist, August 3, 1918, p. 146.

• London Economist, September 14, 1918, p. 335.

4 L'Economiste Européen, May 10, 1918, p. 299.

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