REPORT OF THE AGENT GENERAL
FOR REPARATION PAYMENTS
BERLIN, June 10, 1927

.

[IV. b.] 3. Detailed Analysis of the Budget Statements.

The comparative table which appears above on page 27 has necessarily given a much condensed statement of the revenues and expenditures entering into the budget of the Reich. It remains to present a detailed analysis of the important items in the principal classes of revenues and expenditures over the four-year period.

.

(a) Revenues.

The revenues from taxation, of course, constitute the main resource of the German budget, though, as the tables show, there are also important administrative and other revenues. Of these, the most important single item has been the gain realized from seigniorage on the coinage, which must be regarded as a windfall resulting from the necessity of recoinage after the stabilization of the currency and not as a permanent source of revenue.

The tax revenues for the four years under review present a specially interesting field for analysis because of the many changes that have been made in the tax laws during this period. The detailed discussion which follows, and the comparative tables that are given for the various revenues, are designed to show the effects of the various changes and to facilitate a comprehensive analysis of the revenue side of the German budget.

The following diagram shows graphically the yield., during the four years under review, of the tax and other revenues of the Reich:

(1) Income, corporation, and turnover taxes, etc.--- The revenues in this group, taken together, showed a diminution of 180 million reichsmarks in 1926-27, due almost entirely to reductions of rates and increases in exemption limits. The budget for 1927-28 anticipates a reversal of this tendency, and shows total estimated revenues in this group of 5,305 million reichsmarks as compared millions in 1926-27, with actual collections of about 4,713 millions in 1926-27.

The following table gives the details of this group of revenues for the four-year period:

Revenues from income, corporation and turnover taxes, etc.
(in millions of reichsmarks)

1924-25
actual

1925-26
actual

1926-27
actual

1927-28
estimates

RECURRENT TAXES        
Income tax:        

salaries and wages, amount deducted at source

1,331.6

1,367.8

1,094.8

1,200.0

interest and dividends, amount deducted at source

19.2

82.3

94.4

120.0

general assessment, after above deductions

862.5

803.2

1,064.5

1,300.0

Corporation income tax

313.9

186.6

381.9

400.0

Tax on real and personal property

498.9

270.4

359.5

470.0

Succession duties

26.1

27.3

34.6

100.0

Turnover tax:        

ordinary

1,798.5

1,338.3

865.0

900.0

luxury

119.3

77.7

10.8

---

Tax on real estate transactions

29.1

30.7

28.1

25.0

Tax on the movement of capital:        

company tax

39.1

40.1

58.3

54.0

tax on securities

5.1

9.2

23.5

30.0

tax on Bourse transactions

112.8

40.3

82.9

66.0

tax on directors' fees

11.5

13.8

0.7

---

Bourse tax

2.9

---

---

---

Automobile tax

51.6

58.4

105.2

130.0

Insurance tax

32.0

40.2

46.0

45.0

Race-betting and lottery taxes

49.3

65.8

66.2

70.0

Tax on bills of exchange

69.6

62.6

36.4

45.0

Transport tax

312.6

318.3

312.0

325.0

Totals

5,685.6

4,833.0

4,664.8

5.280.0

NON-RECURRENT TAXES        
Taxes imposed as a consequence of the occupation of Rhine-Ruhr district

34.8

12.9

3.0

---

Tax imposed upon industrial companies in respect of paper mark bonds issued by them and now revalorized (Obligationensteuer)

44.2

46.8

45. 1

25.0

Totals

79.0

59.7

48.1

25.0

Grand totals

5,764.6

4,892.7

4,712.9

5,305.0

It will be observed that the portion of the income tax on salaries and wages which is deducted at the source declined in 1926-27. In the early part of 1925-26, the tax exemption limit was raised from 720 to 960 reichsmarks per annum, and on January 1, 1926, it was further raised to 1,200 reichsmarks. In both cases family allowances were increased by corresponding amounts. Due partly to these successive reductions and partly, no doubt, to unemployment, the yield of this portion of the income tax fell materially, to a total of 1,094.8 million reichsmarks. An increase of over 100 millions is estimated, however, in the yield for 1927-28, which brings the estimated yield up to 1,200 millions, the maximum permitted under the present law. Should this maximum be exceeded the law contemplates a further legislative raising of the exemption limit. The increase of 260 millions in 1926-27, and of a further 236 millions in 1927-28 in that portion of the individual income tax received through the general assessment reflects the improvement in general business conditions.

The decreased yield of the turnover tax in 1926-27, was due to the further reduction of the tax rate on April 1, 1926, to three-fourths of 1 per cent. In the first half of 1924-25 the rate had been as high as 2 1/2 per cent. Since then it has been lowered by four successive stages to its present level. For 1927-28 an increase in the yield of the turnover tax is anticipated, in consequence of the increasing volume of business.

In the case of the tax on real and personal property, though the rates applicable to small properties were substantially reduced at the beginning of 1926-27, the yield for the year increased, and a further increase of over 100 millions is anticipated in 1927-28. Another interesting change is the progressive increase of the revenue from the automobile tax in both 1926-27 and 1927-28. An increase of 65 millions in the succession duties in 1927-28 is anticipated as a result of more effective methods of assessment and the collection of large amounts now in arrears.

(2) Customs and taxes on consumption, etc. --- In 1926-27 the total revenue from this group of taxes increased by about 498 million reichsmarks, to a total of 2,462.1 millions. All of the assigned revenues except beer showed substantial increases, rising from a total of 1,851.3 million reichsmarks in 1925-26 to a total of 2,405.8 millions in 1926-27, an increase of over 554 millions in this class alone. The other revenues in the group, consisting mainly of taxes on various articles of consumption, fell by about one-half, largely because the taxes on salt and non-sparkling wine were abolished at the beginning of the financial year.

The largest increase was in the revenue from customs, which increased 350 million reichsmarks, owing in part to the heavy volume of imports and in part to an increase, beginning August 1, 1926, in the tariff on cereals as a protective measure to the agricultural interests.

For 1927-28 the total revenue for this entire group of taxes is estimated at 17.1 millions less than in 1926-' 27, largely owing to an estimated drop of 50 millions in the revenues from customs. The only revenue to show an appreciable increase is that from beer, the tax on which was increased one-third on January 1, 1927.

The following table gives detailed figures of the revenues from these taxes for the four-year period:

Customs and taxes on consumption, etc.
(In millions of reichsmarks)

1924-25
actual

1925-26
actual

1926-27
actual

1927-28
estimates

ASSIGNED REVENUES        
Customs

356.6

590.5

940.3

890.0

Tobacco tax

513.7

615.5

712.4

700.0

Beer tax

196.5

256.0

240.8

335.0

Sugar tax

219.2

236.2

285.1

275.0

Spirits monopoly

141.4

153.1

227.2

210.0

Totals

1,427.4

1,851.3

2,405.8

2,410.0

OTHER REVENUES        
Tax on wines

94.1

80.1

24.1

8.0

Tax on acetic acid

2.2

2.2

2.2

2.0

Salt tax

5.2

6.9

1.4

---

Tax on matches

10.0

9.7

13.6

11.4

Tax on lighting apparatus

7.1

7.5

9.3

8.0

Tax on playing cards

1.4

1.5

2.1

2.0

Statistical dues

1.8

2.6

2.9

3.0

Sweetening substances monopoly.

1.2

0.8

0.5

0.6

Tax to ensure the supply of cheap bread

6.7

1.0

0.2

---

Totals

129.7

112.3

56.3

35.0

Grand totals

1,557.1

1,963.6

2,462.1

2,445.0

(3) Administrative and other revenues. --- The increase in the revenue from State undertakings and investments in 1926-27 is mainly accounted for by the surplus of 12.1 million reichsmarks from the Post Office, an increase of 16.4 millions from repayments of loans made for productive relief, and a special surplus of 85.5 millions from the Reich Grain Office. This latter organization has now been liquidated, and the Reich has advanced 60 millions of the surplus for the promotion of agricultural production and reinvested the balance of 25.5 millions in a semi-official cereal company known as the Getreidehandelsgesellschaft. For 1927-28 the budget estimates indicate an expected surplus of 70 million reichsmarks from the Post Office. Substantially larger repayments of loans made for the relief of unemployment are also expected. The increased dividend on the preference shares of the German Railway Company which is carried in the 1927-28 estimates reflects the larger holdings of these shares by the Reich, while the cessation of interest on public funds is due to the reduced volume of surplus funds and to the procedure recently adopted of offsetting interest received against interest paid.

The total revenue from fees, licenses, penalties, etc., shows an increase of 2.5 millions in 1926-27, but an estimated decrease of 59.5 millions in 1927-28.

The 1926-27 revenue from seigniorage on the coinage originally estimated at 294 million reichsmarks, but the revenue from this source during the year proved to be only 149.1 millions. This shrinkage was no doubt due to the tendency of the small coinage to become redundant. The Government is now embarking on a programme of new coinage which contemplates, first, the substitution of 5 mark silver pieces for the 5 mark Rentenbank notes now in circulation, and, second, the substitution of nickel 50 pfennig pieces for the present bronze pieces, which have proved to be unacceptable owing to the number of counterfeits which have appeared. It remains to be seen how far new coins in these denominations will have to be minted to meet the demands of the circulation, but on the basis of its present programme the Government is estimating a revenue from seigniorage during the budget year 1927-28 amounting to 190 million reichsmarks.

The following table shows the administrative and other revenues in detail:

Administrative and other revenues
(In millions of reichsmarks)

1924-25
actual

1925-26
actual

1926-27
provisional

1927-28
estimates

RETURN FROM STATE UNDERTAKINGS AND INVESTMENTS        
Share of the Reich in the profits of the Reichsbank

55.6

12.2

4.2

(not estimated)

Surplus from the German Post Office.

---

---

12.1

70.0

Surplus from the Reich Grain Office .

---

2.7

85.5

---

Redemption of and interest on debts:        

debt of the Post Office

60.4

---

---

---

State funds

---

46.6

34.9

---

productive relief loans, building loans, etc

20.4

4.9

21.3

68.1

Dividend on preference shares of the German Railway Company

---

---

3.0

51.1

Miscellaneous

10.7

10.8

14.8

14.3

Totals

147.1

77.2

175.8

203.5

FEES, LICENSES. PENALTIES AND OTHER ADMINISTRATIVE REVENUES        
Fees and fines of the financial administration, law courts, etc.

38.4

45.0

36.5

31.5

Canal dues etc

26.0

25.9

31.9

24.5

Patent licenses

14.6

13.7

11.9

11.8

Reimbursement of administrative expenses and miscellaneous receipts of the Ministry of Finance

51.2

36.8

59.5

39.3

Miscellaneous

58.0

65.9

50.0

23.2

Totals

188.2

187.3

189.8

130.3

SEIGNIORAGE ON' THE COINAGE

99.9

213.6

149.1

190.0

Grand totals

435.2

478.1

514.7

523.8

.

(b) Expenditures

The budgets of the Reich for the our financial years under review have been characterized by a steady increase in expenditures. The budget estimates for 1927-28 carry total expenditures of 9,130.2 million reichsmarks as compared with 7,220.2 millions in 1924-25, an increase of over 1,900 millions; and the Finance Minister of the Reich has already stated that additional appropriations will be necessary.

The following summary illustrates the increases, expressed in millions of reichmarks, that have occurred during the four-year period in the principal classes of expenditure:

 

1924-25
actual

1925-26
actual

1926-27
provisional

1927-28
estimates

Payments to the States and communes

2,770.4

2,595.6

2,625.6

2,892.9

General administrative expenses

1,660.3

1,967.4

2,323.1

2,439.7

Execution of' the Experts' Plan

---

291.3

537.0

831.2

Unemployment relief

35.8

163.6

392.3

580.1

War and civil pensions

1,066.8

1,428.7

1,462.3

1,474.8

Payments in respect of revalorized debt.

---

1.1

240.8

356.8

Investments, loans, etc.

111.6

390.9

473.6

235.9

Totals

5,644.9

6,838.6

8,054.7

8,811.4

The only principal category of expenditure that has shown a material decrease over the period is that covering internal charges arising out of the war, which has steadily fallen from a total of 1,136.7 million reichsmarks in 1924-25 to 352.6 millions in 1925-26, 304.7 millions in 1926-27, and 177.3 millions in 1927-28.

There follows a more detailed analysis of some of the principal classes of expenditure, showing the individual items in which the increases have occurred.

(1) Payments to the States and communes. --- By far the largest item of expenditure carried in the budget of the Reich consists of payments to the States and communes. These chiefly take the form of transfers of revenue collected in the first instance by the Reich, but there are also supplemental grants from the Reich to the States and communes for various special purposes.

The payments to the States and communes over the four years are as follows:

1924-25, actual 2,770.4 million reichsmarks, or .35.7 per cent of the total revenues of the Reich.
1925-26, actual 2,595.6 million reichsmarks, or 3.5.4 per cent of the total revenues of the Reich.
1926-27, provisional 2,625.6 million reichsmarks, or 34.1 per cent of the total revenues of the Reich.
1927-28, estimated 2,892.9 million reichsmarks, or 35 per cent of the total revenues of the Reich.

These figures do not include sums paid by the Reich to the States. and communes for special purposes, as, for example, the payments to the States for the cost of the police. These payments in 1927-28 are estimated to amount to about 190 million reichsmarks, and payments in much the same amounts have been made in the previous years.

It will, of course, be observed that the estimated transfers of revenue to the States and communes show a substantial increase in 1927-28 as compared with. similar payments in the preceding years. This increase takes place under the provisions of the new law of April 9, 1927, which makes a new provisional settlement between the Reich and the States and communes for the financial years 1927-28 and 1928-29. Under this law the States continue to draw from the Reich 75 per cent of the income tax and corporation tax and 30 per cent of the turnover tax collections, while the Reich guarantees to the States and communes for each of the two years a minimum payment of 2,600 million reichsmarks front the yield of these three taxes. The new law retains the provision for special transfers to some of the smaller States to make good on guaranties of minimum participations in the income and corporation taxes. In addition it provides for special payments to certain of the States out of the yield of the beer tax, to a maximum of 70.7 million reichsmarks for 1927-28. Like the previous law, the new law also gives to the States and communes 96 per cent of the tax on real estate transactions, the automobile tax and the race-betting tax, and 50 per cent of a portion of the tax on companies.

The previous law on the subject of the financial settlement was enacted on August 10, 1925, and as stated in previous Reports had been intended to prepare the way for a definitive settlement. It contained a guaranty from the Reich to the States and communes that their share of the income, corporation and turnover taxes, should be not less than 2,100 million reichsmarks, and a special guaranty that they should receive not less than 450 million reichsmarks as their share in the turnover tax alone. Thereafter there were successive reductions in the rate of the turnover tax, and as a result the Reich in 1926-27 had to make good to the extent of 187 million reichsmarks on its special guaranty to the States and communes. This special guaranty of the yield of the turnover tax expired by its own terms on March 31, 1927. Naturally enough, it was not revived in the new law.

The Finance Minister has emphasized that the new provisional settlement includes an agreement with the States and communes that in consideration of the increased guaranty from the Reich they will reduce their real estate and trade taxes. He has stated also that before arranging a definitive settlement it will be necessary not only to enact an outline law covering the principles to be observed by the various taxing authorities in assessing and taxing real estate, rents, and trade, but also to receive from the States and communes the financial statements required of them by the decree of February 9, 1926.

(2) General administrative expenditures.---The expenditures for the general administration of the Reich have increased steadily from year to year, and are carried in the present budget at 2,439.7 millions of reichsmarks as compared with 1,660.3 millions in the budget of four years ago, an increase of 779.4 million reichsmarks. About three-quarters of this increase, or 655 millions, falls under four main headings, as follows :

 

1924-25
actual

1925-26
actual

1926-27
estimates

1927-28
estimates

Army and Navy

458.6

587.7

674.6

701.1

Finance Department

345.4

394.6

430.2

439.5

Social expenditure

272.6

401.3

435.3

531.2

Communications

98.4

109.0

154.0

158.2

Totals

1,175.0

1,492.6

1,694.1

1,830.0

The increase of 272 millions in Army and Navy expenditures over the four-year period is about equally divided between the two services. In the Army increase of 121 millions, the large items of increase are 50 millions for wages, subsistence and barracks, and 35 millions for munitions and material.

In the Navy increase of 121 millions, the large items of increase are 70 millions for the construction of ships and armaments and 35 millions for fuel and material.

Included in the miscellaneous expenditures for 1927-28 there is a further item of 60 millions for increased housing compensation which is principally absorbed by the Army, Navy and Finance Department.

The increase of 259 millions in social expenditures is caused principally by successive legislative increases in the amounts to be contributed by the Reich towards disability and old age allowances and pensions for widows and orphans.

The increase of 60 millions in expenditures for communications is devoted to the maintenance and improvement of canals and waterways and the encouragement of air transport.

The detailed figures of the various groups of expenditures are as follows:

General administrative expenditures
(in millions of reichsmarks)

1924-25
actual

1925-26
actual

1926-27
estimates*

1927-28
estimates

President and Parliament, etc

5.9

9.9

7.9

10.7

Foreign Affairs

38.8

46.8

54.2

55.8

Interior:        

Cost of police (paid to the States)

187.1

189.3

210.0

190.0

Other expenditure

12.3

16.7

65.3

41.1

Finance:        

Collection of taxes

328.6

378.3

412.7

418.3

Central Administration, Auditing Office and miscellaneous

16.8

16.3

17.5

21.2

Public Debt:        

Administration

5.3

11.6

35.4

10.6

Service of interest

12.2

8.5

14.6

47.9

Army and Navy:        

Army

359.0

438.7

476.4

480.3

Navy

99.6

149.0

198.2

220.8

Social expenditure

272.6

401.3

435.3

531.2

Communications

98.4

109.0

154.0

158.2

Commerce, industry, agriculture

21.2

40.0

43.4

39.0

Education, etc

11.8

23.5

21.0

29.1

Justice

3.8

4.1

4.6

4.4

Occupied territory; expenditure resulting from the war and the occupation, Clearing Offices, etc.

153.6

25.4

42.2

64.9

Miscellaneous

33.3

99.0

74.6

116.2

Totals

1,660.3

1,967.4

*2,267.3

2,439.7

*The provisional figures now available for 1926-27 show total general administrative expenditures of 32-3.1 million reichsmarks. The distribution of this figure among the various headings is not yet available, arid the figures in this column have accordingly had to be given on the basis of the budget estimates.

.

(3) Unemployment relief.---The severe began toward the end of 1925 has necessitated large emergency expenditures for relief not only by the Reich, but by the States and communes as well. The figures for Reich expenditure on this account are as follows:

1924-25 actual 35.8 million reichsmarks
1925-26 actual 163.6.........."
1926-27 provisional 392.3.........."
1927-28 estimates 580.1.........."

Since the beginning of the financial year 1927-28 there have been substantial declines in the number of unemployed receiving relief. The result should be a considerable saving as compared with the budget estimates for the year, but it is still too early to make any definite predictions in this regard.

In addition to the direct expenditures for unemployment relief, the Government of the Reich, in order to create employment, has made large loans and advances to stimulate the construction of canals. the building of dwelling-houses, the settlement of thinly populated agricultural districts, and the extension and improvement of railway lines and services. These expenditures aggregated 260 million reichsmarks in 1926-27, and another 100 millions have been carried for the same purpose in the budget for 1927-28. The resulting loans and advances are classified under the heading "Investments, Loans, etc.", and are further discussed below.

In view of the seriousness of the burden which unemployment relief has imposed on the Reich, the States and the communes, a comprehensive unemployment insurance plan has been prepared and introduced in the Reichstag. It was originally expected that this plan could be enacted into law by April 1, 1927, and on this basis the Reich undertook to relieve the States and communes as from April 1, 1927, of nearly all their obligation to contribute to unemployment relief. This expectation has since proved to be too optimistic, but it is now hoped that the new law can be put into effect by October 1, 1927.

Under the new plan, employers and employees together will share the cost of the unemployment insurance by contributing regularly to local funds which are administered by the States and communes. The Reich undertakes, whenever the funds prove inadequate, to make such advances to them as may be necessary. The States and communes under the new plan are relieved from all contributions towards ordinary unemployment relief. With regard, however, to emergency unemployment relief, which is provided for those who have received ordinary relief for the maximum period allowed by the plan, the communes must provide one-fourth of the funds and the Reich provides three-fourths.

Under the provisional arrangements prevailing up to April 1, 1927, unemployment relief in excess of the amounts contributed by employers and employees was divided between the Reich, the States and the communes in the following proportions: to the Reich 4/9ths; to the States 4/9ths; and to communes 1/9th. It has been estimated by the Finance Ministry of the Reich that on this basis the States and communes were obliged to contribute about 400 million reichmarks for unemployment relief during the financial year 1926-27. The Reich has relieved them of practically all responsibility for unemployment relief as from April 1, 1927, even before the enactment of the new law. It will be observed, moreover, that under the proposed law the Reich, in effect, assumes financial responsibility for periods of widespread unemployment, since the new plan does not profess to require sufficient contributions from employers and employees to provide relief for more than 700,000 unemployed. There is this important difference, however, that whereas the amounts now contributed for direct relief are not recoverable, under the new law the payments by the Reich will be in the nature of advances to the local unemployment funds. These funds will be expected to reimburse the Reich as soon as their resources permit.

Unemployment will have to fall well below its present levels before the new plan of unemployment insurance can be self-sustaining, and it seems likely, therefore, that even with the prospect of the new law the question of unemployment relief will continue to present an important budgetary problem for some time to come. Unemployment in other than its budgetary aspects is further discussed in the chapter on German business conditions.

(4) Payments in respect of the revalorized debt.---The accounts for 1926-27 were the first to include large payments in respect of the revalorized paper mark debt of the Reich. An item of 240.8 million reichsmarks was expended for this purpose in 1926-27, and a further 356.8 millions are provided in the budget for 1927-28. The process of revalorizing the debt will not be completed for some months, but it is estimated that the item of 356.8 millions carried in the 1927-28 budget is somewhat larger than will be required for the purpose in subsequent years, owing to the fact that provision has been made in this financial year for payments which should have been made in the preceding year but which had to be postponed owing to delays in the work of revalorization. The division of the item as between principal and interest cannot yet be stated.

It will be observed from the foregoing figures that the payments on account of the revalorized paper mark debt have now reached substantial figures., and are putting a relatively heavy burden on the current budgets of the Reich. These payments, of course, are all clearly secondary to the reparation obligations of the Reich.

(5) Investments, loans, etc.---The last Report called attention to the close relationship existing between the provisions for so-called productive unemployment relief and the increase in Government investments and grants of various kinds. In 1926-27 outlays of this nature reached a total of 473.6 million reichsmarks, of which about 260 millions were directly attributable to the programme of unemployment relief. For 1927-28 the appropriation has been reduced to 235.9 millions, of which 100 millions are for productive unemployment relief.

The following table sets forth in detail the expenditures of the Reich for investments, loans, etc., during the four years under review:

Expenditures for investments, loans, advances, etc.
(in millions of reichsmarks)

1924-25
actual

1925-26
actual

1926-27
provisional

1927-28
estimates

INVESTMENTS        
Purchase of holdings in:        

The Neckar Company. the Rhine Main-Danube Company and in automobile transport companies

19.0

15.5

12.0

10.4

The Cereal Company (Getreide handelsgesellschaft)

---

---

25.5

---

Purchases of preference shares of a total nominal amount of 231 million reichsmarks of the German Railway Company by means of conversion of loans . to the Company

---

220.0

---

---

Purchase of mortgage bonds of three German shipping credit banks to finance the development of the German inland fleet

---

---

3.0

1.5

LOANS        
For building dwelling houses and settlements

14.6

17.0

7.4

15.0

To the German Railway Company for the execution of agreed programme of works and purchases in order to combat unemployment and stimulate trade

---

---

80.0

---

for the construction of new railway lines already begun

---

---

11.2

30.0

For promotion of agricultural production

---

---

60.0

---

For support of the Upper Silesian iron industry

---

---

18.0

---

For other industries

---

34.5

---

0.2

ADVANCES        
For promotion of agricultural settlement in thinly populated districts

---

---

27.0

50.0

For housing and settlements in the occupied territories (includes also loans)

---

---

---

21.0

To Federal States for mortgages on small dwelling houses

---

---

138.0

---

To vinegrowers --- emergency relief

---

---

15.0

---

PRODUCTIVE EXPENDITURES        
For construction of waterways

34.8

41.7

50.5

65.2

For Printing Office of the Reich

11.0

---

---

---

For building dwelling houses for officials

---

3.5

7.3

10.0

GRANTS        
To Deutsche Werke, United Industrial Undertakings Company , (Vereinigte Industrie-Unternehmungen A. G.) etc.

16.2

19.9

2.1

2.5

To aviation and automobile companies (includes also loans)

---

38.4

15.7

9. 6

Miscellaneous

16.0

0.4

0.9

5.5

RESERVES        
For risk of loss under guarantees given by the Reich

---

---

---

15.0

Totals

111.6

390.9

473.6

235.9

The foregoing table is useful not merely as a summary of the expenditures made by the Reich on these various accounts, but so as a record of the capital resources that have accrued to the Reich in consequence of its expenditures. Some of the expenditures, no doubt, will prove to be of doubtful value, and others may be represented for the time being by more or less illiquid securities. But there must still remain a substantial residuum of valuable resources upon which the Government of the Reich will be able to realize from time to time. In this connection, it should be mentioned that the table does not include the 500 million gold marks of preference shares of the German Railway Company which the Government of the Reich received in the second Annuity year in satisfaction of its right under the Plan to get the proceeds of sale of the first 500 million gold marks of these shares that might be sold to the public. This transaction has never been reflected in the Reich budget and accordingly is not included in the above table. But the 500 million gold marks of preference shares thus received must nevertheless be rated in the first rank of the realizable securities owned by the Government of the Reich.

The table also does not include payments on account of the reserve fund of 100 million gold marks that has to be established in accordance with Chapter III, Article 4 (b) of the Control Protocol, as further security for the budgetary contributions under the Experts' Plan. The sum of 12.8 millions was set aside for this purpose in 1926-27, and a further sum 67.5 millions is provide in the budget for 1927-28.


Section IV, cont'd: IVb4. Observations on the Budget of the Reich

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