Evening star., 1929-12-01
BANK COL[APSES
ALARM GERMANY
Crashes Assume Grave Pro.
portions as Public Con-
fidenCe Is Shaken.
BY DIR. GUSTAV sToLPER.

/
| BY Radio to The Star.
BERLIN, November 30.-The last few
days have brought reports from al
parts of Germany of the collapse OF
private banks. There has been moth
ins- of this sort for many years. 1t Is
a s.&?non # a critical shaking of con-
fidence, which is assuming grave pro-
! portions.
The source of this alarming condi-
| ton is the collapse of the Frankfurt
General Insurance Co.. which occurred
some three months ago, and the effects
of which are still felt. The fact that
the second largest German insurance
company, on whose board were repre-
sented all the banks, could fail, upset
all the standards of credit.
The people at large do not consider
the details, but generalize instead. They
feel that if the Frankfurt company
could fail, anything is possible. And, in
addition, doubts have assailed foreign
countries, for the Frankfurts creditors
include large English, Swiss and Dutch
banks
BOurSe Crisis Adds Fuel.
Nevertheless, the distrust could not
have assumed large proportions if the
Bourse crisis had not attained such
fearful dimensions. The collapse of
Wall Street followed long years of q
pull period, but the Berlin Bourse has
been pining away steadily for two
years. The level of quotations was low
when the September panic brought the
nrst collapse, and since then, blow after
blow has enlarged the field of ruins.
The Intervention of the banks has
proved powerless, and quotations are
now at their lowest since the middle of
1926.
The losses are fearful and affect not
merely the spectators. but also have
decimated the wealth of industry and
commerce, and thus their credit basis.
The whole economy of Germany has
thus become non-liquid. Accounts re-
ce1Vable cannot be collected, and that
hits the private bankers especially hard,
since they themselves have short-term
debts. Germanys big banks have
branches everywhere and possess great
capital strength. The private banker
can stand. competition only If he DOS
sesses personal connections of long
standing or else underbidS the large
banks.
During the last few years, it appeared
as II the private banks were experience
ing renaissance, since they worked
faster than the giant organizations and
mad good friends abroad. Since the
flow of credits to Germany has been
checked by the Wall street crash, that
source of money has failed. And as a
result the position of many BANKING
flrmS has become weak. And If, in this
period OF general nervousness, some sud-
den rumor starts a run on a bank,
collapse is unavoidable since the ac-
counts outstanding cannot be collected,
stocks are unstable or at best SAL
able only at a heavy loss and new
credits are obtainable only in the rarest
cases.
Thousands Go Under.
AS the result of the war and the in
nation OF property, thousands of such
banks have been wiped out, thus Great
ing Grass disproportion between the
banks own capital and foreign capital.
Reckless or bad management has also
played part. But the crashes occur
In all parts of the Reich and, wherever
lney may be. whether it is In Hamburg,
Frankfurt, Cassell, Stuttgart, Chemnftz.
Magdeburg or Berlin, they are every
where symptoms of the same disease.
They have their roots, In the last
analysis, in political uncertainty and
WI not be overcome speedily.
The second Hague conference to put
through the Young plan has been post
poned to January and the Reichstag
cannot dispose of the plan before the
end Of February. and then will come
sharp struggle over financial reform,
which the present government will
hardly survive even if it remains in Of
fee until then.
The capital shortage can be cured
only by large foreign credits and radical
financial reform, but this latter de-
mands strong government which Ger
many now lacks.