New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1922-07-06
Berlin Financiers Declare
Nation Faces DebacIe;
Allies To Be Told 5O,-
600, ,OOOCannot Be Paid
Insist Only Loan
Can Avert Panic
Big Bankers Here Pessi-
rnistic and Agree Mark
M ust Be Stabilized
BY Joseph ShapIen
By wireless to The Tribune


BERLIN, July 5.-The German
government is preparing what
amounts to an official declaration of
bankruptcy, according to reports in
the highest financial circles of
Berlin.
Because of the continuing catas-
trophic decline of the mark, the gov
ernment also is preparing a note to
TIE Allied Reparation Commission,
setting forth Gernnany's inability to
meet the 50,o00,o0o gold mark pay
.mcnt, due on July Is. While these
reports are not confirmed in govern
ment circles, their source commands
serious consideration.
While the mark showed a slight
Improvement to-day, being quoted at
the close of the Boerse at 430 to the
dollar, an extremely panicky atmos-
phere prevailed both in money and
securities transactions.
A high British official very close to
Lloyd George to-day told the Tribune
correspondent that Germany was fac
ing an industrial and financial debacie
unless the powers come to her assist
ance in the form of a short loan or
postponement of the reparations pay
| ments.
Has Reached Danger Point
The mark has now reached the dan.
ger point where immediate action by
the powers is necessary to prevent
Germany going down to the condition
of Austria and Poland" he said. "To
wait until October may be fatal IL
the whole reparations problem had
been more judiciously handled at the
| outset Germany would have been in a
position to-day to meet her obliga-
tions If remedy for the decline of
the mark is not found quickly Germany
! may be unable to make any payments.
Immediate action in the form of
smsll loan or postponement of the pay
ments is necessary. If Germany gets
a breathing space she can balance her
budget and stabilize the mark
ALREADY the tax receipts for April
and May are above the estimates, but
! each new reparations payment leads
to flooding the market with fresh paper
money with which she must purchase
foreign currency. This threatens to
make Germany's economic recovery i'm
possible. Sterilization of the mark is
essential and the figure at which it is
stabilized is a secondary consideration.
| This process is quite feasible with the
| help Of the other powers"
! In financial circles to-day reports
were circulated that the mark was
being artifcially forced down in Lon
don and New York, the object Of Brit
ish and American fnanciers being TO
bring pressure on France to abandon
ton by upholding a vision of Ger
manys ruin before her, with all the
consequences this implies to France.
The German government has ad-
| dressed a note to the Allied committee
OH guarantees making the extraordi-
nary offer to purchase coal from Eng
land with which to meet the arrears
in her coal deliveries to the Entente.
Big Bankers Pessimistic
Since the collapse some weeks ago
of the plan for an international loan
to Germany, as result of the un-
Willingness Of the French government
to consider modification of repara-
tions terms, international bankers
here have been pessimistic regarding
the imm mediate economic future of Ger
many A member of one of the prin-
cipal banking firms last night re-
| marked that a panic or crisis in Ger
many seemed inevitable and would have
| to be gone through before a real set
tlement of Germany's relations eco
| nomically with the Allied countries
could be evolved.
| Since Germany's supply of free gold
has been depleted to large degree
and in view of the fact that Germany's
ability to sell her deprecated marks
| for other currencies has been greatly
| interferred with by the latest decline
| Of the mark to the lowest level in his
| tory, bankers expressed no surprise
at the report that Germany would ask
the Allies for postponement of the
| payment of the next installment on
reparations account.
| Regarding the declaration Of national
| bankruptcy, bankers and economists
are in doubt as to what this term
means. Bankruptcy applies to indi-
| yidGais, rathe- than to sovereign
! states. The nearest approach to
national bankruptcy is in states which
| default on their external debt obliga-
| tions and which have to submit to the
| indignity of letting foreign debtors,
acslHg virtually as receivers, come IN
to collect customs.
| Approach to Insolvency
| In the case OF Germany the decline
of the mark to four for cent, instead
Of the normal parity of four for 3
| dollar, reflects an approach to insolv-
ency. Official acknowledgement Of the
| condition might be expressed in stop
| page of interest on the internal debt,
| which is now being paid through the
/ free and unlimited printing of marks.
Another manifestation of insolvency
might conceivably be repudiation of
marks. Germany's principal external
debt consists of her reparations ohli-
cations to the Allies
A banker in close touch with the ter
man government expressed the opinion
obligations, saying that she has al
{ ready some foreign exchange ready for