Transfer Frauds

Agents of the efficient Surete Generate (French Secret Service) ferreted out, last week, a series of amazing frauds, perpetrated by smart French and German merchants to swindle their governments in connection with the "payment in kind" of German Reparations.

Such payments are the keystone of the Dawes Plan and offer the only possible way that Germany can transfer credits so huge that their movement, if made in gold, would disrupt international exchange. The frauds detected, last week, amounted to giving "short measure" to the reputed extent of $12,000,000. To understand how this was done, recall the normal method of paying reparations in kind.

Problem: to transfer gold from the German to the French government through the sole medium of hops.

Procedure: 1.) German Hop Grower makes contract with French Hop Merchant to ship hops at the supposedly current price per hop; 2.) Payment to German Hop Grower is made by the German Government, which is credited by the Reparations Commission with having paid this sum to the French Government; 3.) French Government eventually receives payment from French Hop Merchant after he sells the hops.

At all points in this transaction the element of fair price and value is vital. German swindlers were proved, last week, to have shipped hops, coal, and seed in short measure to French swindlers who crooked their books to represent these shipments as full measure. From the ultimate sale of such goods the French Government thus realized only a short change value-- a value whose spuriousness passed for long unnoticed, due to the immense complexity of reparations accounting.

Although investigations had barely begun, last week, the German Government pledged its every endeavor to stamp out a species of corruption which means that Germany has been credited with transferring $12,000,000 to France which was not received, but instead was divided between overpaid German swindlers and their French accomplices.