Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-07-22
Credit for Germany.

America, having set its shoulder to
the wheel in the financial and economic
crisis threatening stability not only
abroad but in this country, Is not
drawing back. President Hoover mas
followed up his intergovernmental debt
suspension plan, now an accomplished
fact, with a proposal that the bankers
of the nations agree to maintain their
present short-term credits with Ger
many as an essential step to prevent
collapse in that country.
The American Government believes
In the ability of the German people to
pull themselves out of the hole II given
an opportunity. 1t believes, however,
that steps must be taken without delay
to restore the confidence of the bust
ness world in Germany and to restore
the confidence of the Germans them
selves. Mr.. Hoover's new proposal, II
accepted as it is hoped it will be, should
90 far to the establishment of such
confidence. Uncertainty over the situa-
ton of Germany, which developed
rapidly into almost panic proportions
when the conditions in that country
were broadcast, resulted in run on
German credits and the withdrawal OF
gold from that country In great
quantities. The diplomats considering
the case have coined a phrase, the
fight from the mark" to describe what
has been happening to German credlt.
One of the most important steps, from
the point of view of Germany, is to
halt the flight of the German people
themselves from the mark. Too many
of them have sought to invest large
sums of money outside their own
country, in dollars or pounds or francs.
If the latest American proposal Is
adopted, the seven powers now con-
ferring in London as to what may pc
done to save the situation in Ger
many will encourage their banks ana
bankers to maintain their short-term
credits now or recently extended by
them to Germany and to German pusl-
ness. Some of these powers have a
very considerable governmental controi
over their banks and bankers. Here IN
the United States the Government mas
no control whatever over banking, ex-
cept to see that the banks conduct
their affairs according to law and regu-
lation in the interest Of the depositors
However, it is to be expected that
American bankers will give attention to
the advice now advanced by their Gov
eminent. and that they will be willing
to play their part if there is to be
real pooling of credits to Germany by
the nations, with assurance on the part
of Germany that no favoriteS Will be
played. AS a matter OF fact, 1T Is
estimated that one-half, or $6OO,OOO,ooo,
of the short term credits, so-called,
totaling 81 200 OOo, 900, which have been
extended to Germany and German busi-
ness by the banks and business OF the
outside nations are held by Americans.
American business and finance, there
fore, must play very important part
in this effort to re-establish confidence
in Germany.
The run on German credit has been
a threat for weeks. 1t began before
the Presidents moratorium plan was
preached. 1t became evident that steps
must be taken, aside from the mora
forum, to extend further credits to
Germany, or at least halt this drive
on German credit and the mark from
both the outside and the inside of the
country.
President Hoover takes the position
that if the run is stopped, aided by
the suspension for year of her repara-
ton payments amounting to $4oo, ooo,-
600, Germany should be afforded a
breathing spell and in that period
should be able to struggle to her feet
again. And once upon her feet, the
financing of the long-term credits which
may be needed will proceed in normal
way.
Embodied in the new proposal ad-
vanced by the President is an earnest
suggestion that the European nations,
particularly France and Germany, come
to a more friendly understanding, in the
interest not only of permanent peace
but in the interest of an economic
revival. The American Government
makes it clear, however, that in such
matters the European nations must act
for themselves.