Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-07-07
GERMAN CRISIS HELD CAUSE
OF DEBT MISUNDERSTANDING
Hoover's Hand Forced by Collapse of Aus
trian Bank Before Mellon Gould
Confer With French.
BY CONSTANTINE BROWN.

BY CONSTANTINE BROWN.
The Hoover plan. which aimed first
to give Europe a financial respite for
one year and second to demonstrate to
a Skeptical world that there still is a
spirit OF international cooperation, was
accepted in principle by the most i'm
portant European governments The
discussion which led to the acceptance
by France of this plan will undoubtedly
remain in the annals of American
diplomacy as an example of one OF
the most dramatic and misunderstood
negotiations an American administra-
ton had to carry on with a foreign gov,
eminent in recent years.
The idea that Germany may have to
be succored was realized by the admin
istration last Fall. In September, 1880,
DR.. Hjalmar Schacht arrived in WASH
ington, as a private individual. His
reputation as one of the outstanding
economists was we'll known here. He
spent only two days in the Capital
During his short stay he had an Oppor-
tunity of meeting all the men of conse-
quence here. He was received and had
long conversations with the President
the Secretary of the Treasury Andrew
Mellon, and the Secretary Of State
Henry l.. Stimson.
| ADle 10 LAX FREELY
In his private capacity he was able
to talk more freely and plainly than
any official representative of the Ger
man republic He told everybody that
Germany will not be able toe carry on
with the present reparation payments
after this Spring, and warned those
who wanted to lister to him that the
situation in Germany could not be rem
edied any more by palliativeS and that
something more drastic must be con-
templated. He created a, certain amount
of impression, but not sufficient to in
| duce the administration TO consider
any comprehensive plans to save Ger
many.
Early this year the governor of the
! Bank of England, Montagu Norman, ar
rived in Washington on a holiday.
AS it is usually the case with Mr.. Nor
man, his visit here was something OF
mystery. He. too, had protracted con-
servations with Mr. Mellon, Ogden Mills
and Eugene Meyer. 1t may be said
now that among the various important
subjects touched upon by those men
was the question of pending financial
collapse of Germany.
Impressed Financial Leaders.
Mr.. Norman is reported to have been
! financial leader and his melancholy sur
vey of the situation in Europe was
later confirmed by American bankers
and economists who returned from
Europe with gloomy tales, especially
about Germany.
The high treasury officials realized
that We may be confronted with very
serious situation sometime during this
Summer and consequently started work
ing at various plans which might meet
a critical situation. The prognostica-
arise sometime between the middle OF
July and the end of August.
Then Mr.. Mellon decided to 60 to
| Europe as he had planned last Win
| ter. He intended, or was advised, to
take up the matter of Germany with
the British government who had first
| hand information about the situation in
the Reich, because Herr Heinrich
Bruening and Herr Curtius had just
left London. After having discussed
the situation with the British. Mr.. Mel
lon intended going over to France and
! discuss our various schemes TO help
Germany with the French government
Discussions Interrupted.
In this manner We intended to in
form the most interested nations about
cur plans and hoped to perfect them by.
taking into consideration the French
and the British point of view. In this
| way. when the crisis arrived We would
have had a comprehensive scheme
| ready and the administration could
have sprung it on the world with the
gertrude that neither France nor Brit
ain would have any objections to it,
Unfortunately, events did not allow
us to complete these talks. Late in
June the Austrian Credit Anstalt. one
Ct the most important banks in Central
Europe became insolvent. This was a
serious situation. 1t was the first
breach on the economic frcnt Of Eu-
rope. Thinking that this financial dis
aster could be localized the principal
British, French and American banks
rushed to its support, hoping that with
$40 600 900 a panic could be averted.
The reaction all over Central Europe
and Germany was terrific. The entire
credit structure, not of Austria, but OF
Germany was endangered. Private in
dividuals. as well as foreign bankers,
began Withdrawing their monies from
Germany, and the great German crisis
became imminent. At that time
Mr.. Mellon was still in London.
On Tuesday. June Is, he cabled
Washington that the situation in Ger
many was becoming desperate and that
unless something was done at once the
German Reichsbank would have 10
close its doors next Monday, June %.
Stimson Calls CIaudel.
The cable was communicated to the
President. who was on his trip in the
Middle West. The Presiden| returned
On Thursday, and the very same after
noon the Secretary sent for the Frcnch
Ambassador. Paul Claudel, and informed
him ahead of any other foreign dlplo-
mats that the President intended to
proclaim debt and reparation holiday
1t was fully realized in administration
circles that France would balk at the
Presidents proposal. not because they
were not acceptable to her by their ma
ture. but because France had not been
informed in advance of what the Presl-
dent was planning to do.
Since the London naval conference
in 1880 there has been widespread
feeling in most French political ana
newspaper circles that the Anglo-SaXon
countries, Great Britain and the united
States. had come to an agreement 10
dictate their will to the rest OF the
world. The London naval conference
failed to be the success everybody was
entitled to hope for Just because the
French were under the impression that
President Hoover and Mr.. Ramsay Mac
Donald had fixed up everything before