That the war debt is great is a fact. The government's creditors are all in the country, however, and if need be it can set against them the tax-tired multitude. For that there will be no necessity. The depreciation of the currency has automatically reduced by as much as 25 per cent. on an average all state indebtedness, in so far as capital is a lien against the community's natural resources and labor. But of this more will be said at the proper time.
Early in the summer of 1917 the German and Austro-Hungarian governments were occupied with the question to what extent it would be possible to lighten the burden of the taxpayer. Nothing came of it for the reason that finally it was concluded that the time for financial reorganization was not yet come. Inflated money and high prices would still have to be used to keep the producer at maximum effort and prevent his consuming more than could be permitted.
But the methods of financial reorganization, or we may call it reconstruction, that were discussed are none the less interesting. They involved a reduction of the interest which the government has to pay on war loans, as well as a lightening of the war-loan burden. It was tentatively proposed to either cut into half the rate of interest or to reduce by one-half the principal.
One would think that the Central European bankers would oppose such a step. They did not, however. For the sake of pre-war loans and investments, these men must favor a rehabilitation of the currency, and nothing would do that as effectively as a reduction of the war debt. The mark and crown buy to-day from one-third to one-half what they bought in 1914. With the war debt cut down to one-half they would buy from 60 to 75 per cent. what they bought in that year. As a measure of socio-economic justice, if there be such a thing, the reconstruction proposed would appeal to all who invested money before the outbreak of the war. These people put up money at the rate of 100, while the interest they are getting to-day is worth from 33 to 50. The man who in 1914 invested 100,000 marks would indeed get back 100,000 marks. The trouble is that the mark has depreciated in purchasing power, so that his capital has shrunk to 33,000 or 50,000 marks, as the case may be.
War does not only mortgage the future of a nation, but it also has the knack of tearing down the past.
Tired of hotel life, I had made up my mind in Vienna to find private quarters. In the end I found what I wanted. I ought to have been satisfied with my lodging, seeing that it was the comfortable home of the widow of a former professor of the Vienna university.
I never experienced such mixed feelings in my life as when I discussed terms with the woman. She was a person of breeding and tact and considerable false pride. How much did I want to pay? She did not know what she ought to ask. She had never rented rooms before.
We arrived at an understanding. I moved into the well-furnished flat and the old lady into her kitchen, where she lived and cooked and slept, together with a parrot, until I turned over to her the bedroom and occupied the couch in the parlor.
Before the war the woman had fared better. She was getting a small pension and had a little capital. The income had been large enough to give her a servant. When I moved in, the servant was gone long ago, and I suspect that since then there had been days when the old lady did not have enough to eat. Still, she was getting the same pension and her little capital was bringing the same interest. The difficulty was that the income bought but a third of what it had formerly secured.
There were thousands of such cases, involving pensioners, widows, and orphans. In their case the world had not only stood still, but it had actually gone backward. The inflated currency left them stranded, and the worst of it was that taxes were growing with every day. The government was levying tribute on the basis of the inflated money. These people had to pay it with coin that was 100 so far as they were concerned.