Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-07-14
CHAOS IN GERMANY
SEEN WORLD injury
Foreign investments Total
Six Billion DolIars-Half
Is American.
BY DIR. MAX WINKLER,


NEW YORK, July IA (N.ANA0.-
What economic chaos in Germany
would mean to the rest of the world
generally and to the United States in
particular. may be readily imagined If
we consider that foreign investments
in Germany amount to about $6,000,-
0Oo, 900, of which the United States ac-
counts for about one-half.
The figure pertaining to American
investments includes Doth German
bonds and shares sold to and neld by
American investors. as well as direct
investments.
In this category belong investments
made in German enterprises by Gen
e,al Electric, General Motors, Wool
worth and numerous other American
corporations.
Payments Become Heavy.
Germany's payments on account of
reparat!ons and large private debts
were rendered burdensome by the de-
cline in commodity prices which
greatly reduced the purchasing power
of the world This resulted in
shrinkage of Germanys foreign COM
merce, and although exports last year
appreciably exceeded imports, the
countrys favorable" balance of trade
was brought about at the expense of
Germanys purchases abroad. and was
not sufficient to take care of the
country's invisible items, notably debt
charges and reparations payments.
The German economic machinery
threatened to collapse, and foreign in
vestors, fastened to withdraw the
greater part of their funds in German
institutions.
1t was realized however, that owing
to the size of such investments
Americas own economic structure would
materially suffer. 1t was felt further
that a collapsed Germany might easily
become a fertile field for Communism
and thus create a menace not alone to
Europe but to the whole world. Hence,
President Hoover is last in coming forth
with his message, suggesting deferment
for one year of all so-called political
debts.
Plan to Halt Bankruptcy.
It Is obvious now that If the Hoover
plan had not been announced Germany
would have taken advantage of that
clause in the Young plan permitting
postponement of certain payments for
Two years. 1t is equally obvious that
the plan was evolved to large degree
to save Germany from bankruptcy and
incidentally to protect the hundreds of
millions of American funds invested
there. The unqualified acceptance of
the Hoover plan would have meant that
Germany would not have to pay to her
various creditors during the current
year. the sum Of about 1,750,00O, 900
ReichSmarkS.
Most nations affected hailed the plan
as most constructive and far-reach-
ing measure. France heSitated, prob
ably because her pride was hurt, Presi-
dent Hoover having sprung the plan
suddenly without previously consulting
the interested parties. Due to France S
hesitancy, Withdrawals from Germany
not only continued. but greatly in
creased
Within relatively short period of
time, two billion marks were withdrawn,
or more than Germany would save this
year with the Hoover plan in operation.
Extension Of new Short-term credits
and renewal Of existing ones by one
group were offset by raids on German
institutions on the part CT other groups.
The pressure became too great, and
one great institution has Succumbed.
The Darmstaedter und National Bank,
commonly known as "Danat," has
closed its doors. 1t survived the war
and had weathered the collapse CT the
German currency, but the continuous
drain during the past few weeks proved
too much for the 78-year- old institu-
ton, which at one time was headed BY
Hjalmar Schacht, former president of
the Reichsbank.
At the beginning of this year, the
Danat had an outstanding capital of
about $l5,000,0 900; its surplus amounted
to the same and deposits totaled more
than $545, 100000 Its Affiliations
abroad include the following prominent
institutions; Bank for Commerce and
Industry in Danzig, International Bank
Of Amsterdam, Mercurbank of Vienna
the German South American Bank and
the German Bank for the Orient.
Will the difficulties of the parent in
stitution spread to it's affiliates and
thereby create grave economic disturb
ances which may prove difficult to adj
just? The entire capitalistic system is
involved and 1t Is within reason to ex-
pect that the Bank for International
Settlements, formed for just such emer-
gencies, will Immediately evolve a plan
to arrest further Withdrawals of funds
from Germany, and restore confidence
in Germany's willingness to DISCHARGE
her obligations provided her creditors
are willing to give her an opportunity
to do so.
(Copyright. 1881 by the North American
Newspaper Alliance, Incl