The Washington herald. [volume] (Washington, D.C.) 1906-1939, 1922-01-08
SPECTATOR HIT
HARD in BERLIN
BY MARKS RISE
U. S. Rate of Exchange
Incurs Bitter Losses
By Heavy Slump.

BERLIN, Jan. THE American
rate of exchange has come down to
$50 from about SOC; changing at
one blow the aspect of the German
business world. The Spectators
have experienced bitter losses.
These losses have had an immediate
effect on a large part OF the public,
in a degree not to be foretoId.
Some lineage a large part Of the
German population became used TO
the large gains accruing from The
rapidly repeated rising Of quota
tions. and these gains were counted
upon as a matter Of course and a
SURG thing. The inner ring Of ex-
change people, and especially the
great Berlin bankers. had tried re-
peatedly during the last months to
put a check on the excessive spcou-
lation. and to. show the specializing
public that dealings with the stock
exchange are not quite without
danger for outsiders. Still. the
large number of outside spectators
proved TO be stronger than the
banks. The publis kept a firm
hold on its shares and foreign bills
and made fun Of the so-called ini-
tiated experts.
Speculation Restricted.
Even when, in conjunction with
the first news of Hugo SHINES
journey to London and later, Of
Hathenau's conferences with impor-
tant managers of the Bank of Eng
land. the American rate of exchange
began TO decline visibly. the public
did not grow uneasy. 1t began to
get FESTIVE as the depression con-
tinued. and the banks restricted
credit for the spectators in rather
a severe form.
The branch offices OF the banks.
which. in Berlin. are to be found at
nearly every street corner, were
forced by the management to liqui
date the engagements of the private
spectators. IL necessary by force
aud now only did the latter begin
to see that the situation was rather
precarious. As the speculative
gains Of the last year had for the
greater part been spent in furni-
ture or articles de luxe. the specu-
lators now found themselves with
out a penny. On the day after the
decline of quotations more second
hand motor cars were thrown upon
the market than were offered for
sale all the year round.
situation ON Exchange.
was worse still. Quite a number
q o.,
but old and solid houses. appeared
to be endangered. Suddenly. the
catastrophe Of the ''Pfalzische
Bank" struck the business world
like bolt from the blue. This
bank had its Offices in Ludwig
shafen. near the Bavarian- Ba dene sc
frontier. 1t did not possess more
than 100000, 900 marks of capital
but it had many branches in the
south of Germany, and was reck.
oned a very solid institution. Sud
denly it appeared that one of the
clerks had entered into bill specU-
lations in Munich to such an extent
that a net loss of 100000. 900 marks
was the result. The clerk had en-
gagged himself In foreign bills in
hopes of a decline. Only he hit
upon the time of the widest iuctu-
ati"ns and oscillations. and driven
into panic. so had to fulfill his
engagements during the short time
in which the foreign bills had
showed a tendency to rise.
Nobody can say how the falling
OF the foreign bills will affect the
remaining private business.
No Decline of Prices.
no chance Of noticing a decline of
prices. because the power of pur-
chase Of the mark does not accom-
modate itself to the value of Ger
man money abroad as quickly as
the rates of exchange vary. Con-
scqucntly the prices for the i'm
p"rtant articles of daily consumg-
ton have still got rising ten
dcnty in Germany.
As. however, l mentioned here
some time ago. a panic of buying
had been setting in during the last
weeks in Berlin and other large
German towns. In many cases tire
shops were even taken by storm.
This movement has stopped COM
pletely. For many years the Christ
mas business has not been so slack
And il was for this very Christ.
mas business that many. especially
the big wholesale merchants, had
prepared. When the rise of the
dollar began they took in as much
stock of foreign goods as they
could in the hope of getting rid Of
them before Christmas at huge
prices to the retail dealers. Now
they sit lamcnting over their ex-
pensiVe goods like the ancient Jevs
at the waters of Babylon. 1t is
apparent even today that the rising
Of the mark, so anXiously desired
by many, will not be without dam
ger Tor Gtrmany's national econ
omy because of its unlocked for
speed. Who can tell what is -
happen when once prices and wages
will have to be reduced?
Danger in French