Evening star., 1931-12-21
BY LOUIS p. LOCHNER.


(Copyrieht, 1881, by the Associated pressD
BERLIN. December 21-Briefiy In
the month of June Germany rode the
crest Of wave of hope, for President
Hoover had declared a one-year holi-
day in debt payments. But it was short
lived. In July hope had given way to
despair and the flight from the mark"
brought the nation perilously close to
the mtserieS of the inflationing period
which followed the war.
The specter of unemployment stalked.
Political unrest increased. Heavier
taxes became inevitable and holders of
German investments began to worry in
earnest
The German financial policy of pyr-
amiding short-term credits. in combi-
nation with the short-sightednesS of
foreign investors who rushed to over
subscribe German loan issues, brought
the total outstanding private debts. long
and Short-term, to an estimated 23500,-
100000 marks at the end of July More
than half of it. for all practical pur-
poses, represented virtually demand
notes.
Situation at Last Revealed.
At last the financial situation was
unmistakably revealed. Responsible
persons had seen it coming, and earlv
in 1881 the finance minister warned
that the country'S economic position
was untenabie, that reparations were
the curse of the economic world and
that Germany would have to retrench
There were killings in street fights
which grew out of political demonstra-
tions. Unemployment mounted, and
these were the shadows cast by the
coming avalanche of emergency DEGREES
which made the Bruening government
a dictatorship in fact, if not on paper
Seeking shelter from the storm which
was about to break, the chancellor and
his foreign minister went to England
where they talked with Ramsay Mac
Donald. It was the first of series of
trips by them and other diplomats in a
sort of "vagabond diplomacy" which
sent statesmen scurrying from capital
to capital all through the Summer
Selling Wave Hits Exchange.
The financial structure continued to
crack. A selling wave on the Stock
Exchange washed out SO per cent of
security values. Foreigners stampeded
to draw their money out Of the coun-
try and the Reichsbank lost a billion
marks in gold and foreign exchange in
five weeks. sending the coverage of note
circulation down from 598 per cent to
less than 30 per cent.
Then came the Hoover holiday.
But the time which elapsed before the
French approved 1t reduced the nations
financial resistance. Hope gave way to
fear
The World Bank threw 100000, 900
into the breach It damned the food
for the moment, but the demand for
foreign currency could not be stem
med. Foreign Withdrawals Jumped to
100000 marks a day.
Great Pool Failed.
A thousand industries and banks.
with assets running into billions,
banded themselves together in an eff
fort to borrow s125,ooo,ooo. They
failed. England could not help, for
she had troubles of her own, and
France imposed conditions which Ger
many felt it could not accept.
Nordwolle, the great weaving COM
bine, crashed, carrying down the Danat
Bank, one Of the biggest in Germany.
The government guaranteed the banks
creditors, declared a moratorium on its
obligations and moved swiftly to avert
the threat to the country's whole bank
ing system.
There were midnight meetings. The
f1rst OF the emergency DEGREES was is
sued. Drastic restrictions were i'm
posed upon the expenditures of nation,
state and individual. The stock mar
ket was closed and the country waited
70 see what would happen.