Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-07-11
FLIGHT OF GERMAN
CAPITAL RESUMES
Emergency Loan by Corpora
tons Fails to Check Fund
Withdrawals.
Special Dispatch to The Star.

Special Dispatch to The Star.
NEW YORK, July 1.-THE run on
Germany still is going on. That coun-
try lost 50000,0 900 reichmarks Thurs
day, a larger amount than on Wednes-
day. The bulk of it was German capt.
tai seeking a haven abroad. 1t would
seem that if Germany wants the rest OF
the world to have confidence in her she
should first compel confidence at home
The 500 100000 reichmarks guaran-
tee fund, supplied by 1000 German in
dustrial corporations, was an effort to
restore the confidence of the German
people, but apparently 1t was only par
TALLY successful. When nationals get
frightened and send their money abroad
in times of stress 1t seems like selling
their country short, but apparently SELF
interest comes first and patriotism
afterward.
At this time it is imperative that the
Withdrawals of capital from Germany
cease. The flight of German money
simply accentuateS very serious cur
rency problem. The government has
the power to enact an emergency law
forbidding the export of capital. Such
eminent some years ago. But such laws
are easily defied. They bring into being
bootleg exchange markets
Austrian Crash.
Some people think that France
brought on the German crisis in the
first place and by prolonging the dis
cussion of the Hoover debt proposal she
nullified its good effect. The fact re-
mains that if the proposal had become
Immediately effective while the world
was full of hope and enthusiasm many
of Germany'S present financial diff
CultieS could have been avoided.
The crisis in Germany was precipi-
tated by the crash in Austria and there
are those who accuse France of bring
Ing on the disaster in Austria by the
withdrawal of credits as gesture
against the Austro-German economic
treaty.
Effect Of Depression.
Official figures of the Department of
Commerce show what the depression
has done to the trade of the United
States. There was a decline of about
$4,000 100000 in international pay
ments to and from the United States
in 1880. Payments were Sl7,O50,-
600 .000 compared with $50, 185, 900 900
in 1929. If the postponement of debts
will help to bring back some OF this
lost money the holiday will be well
worth while.
Kreuger e. Toll may be given the
match monopoly in Colombia. thereby
easing the financial difficulties in that
country. In return for the match
monopoly the company may grant the
Colombian government S20,OOO,UoO
loan. Making loans to governments Is
an essential part of the business OF
the Kreuger & Toll Co.. which is an
~ ronnrol financing cor
poration. 1t is the largest single stock
holder in the Swedish Match co. and
its American subsidiary, the lnterna-
tional Match Co.
The loans are made to governments
In return for the right to make ana
sell matches in the interested country.
In 1929, Kreuger g. Toll acquired $l2o,-.
600, 900 German 6 per cent bonds ana
$50. 000. 900 bonds of Rumanla. In 1879
it bought $4,000 900 Hungarian ana
S22.000.000 Jugoslavia securities. In
1880 the French government repur-
chased a $75,000.000 long term 3 per
cent loan granted by Kreuger d Toll
and its group of companies.
Last year, also. the Greek govern
ment borrowed S5.00o,00O through the
companies, the Turkish Parliament ratl-
fed a 100000 loan from the same
source and monopolies were reported in
Spain, Italy and certain Balkan states.
Kreuger's Career.
The head of Kreuger e. Toll. War
Kreuger is an extraordinary man who
has become one of the worlds greatest
capitalists in the last few years. He has
Just passed so and has had an adven-
furious life Before he was 81 he had
built railroads in America, bridges in
Mexico and a colossal hotel in Johannes
burg. South Africa. He entered the
Swedish match business in 1913.
Realizing that he could not scale the
tariff walls of various countries, he
planted his factories inside those walls.
Knowing that he could not fight power
full governments, he bought their friend
ship with financial aid. He controls an
match trust with 225 sub
salaries.
The Swedish Match Co. has an alb
solute monopoly in Poland, Peru, Greece,
Ecuador, Esthonia, Hungary, Jugoslavia,
Latvia and Rumania, and almost COM
plete control in Germany, Great Britain,
France, Italy, India, Japan. Turkey and
in several South American coun-
have borrowed almost $500, 100000 from
the match trust.
Debt Problems.
The statesmen and bankers commit
ted to the task of making the Hoover
debt plan success are finding them
selves up against many serious prob
lens. It cannot be said that yesterdays
events made the picture any brighter.
One of the greatest problems is to find
a ay to stop the stampede of German
capital out of the country. So far, the
outward flow of German and foreign
capital has completely obliterated the
benefits Germany hoped to get out of
the debt holiday.
1t was hoped that Germany would
in the years holiday get the temporary
use of something like $450,00o,0 900. In
the last two weeks she has lost in gold
and foreign exchange somewhere be-
tween $500, 900, 900 and $500, 900, 900.
The task now is to bring this money
home again.
The great German middle class, COM
pletely uprooted in 1922 and 1923 by
the deflation of the mark, apparently is
determined not to risk another such
disaster and is turning it's money into
foreign currency. Actually Germanys
fate hinges on what this class decides
to do.
u. s. Stake Enormous.
This much is certain, the United
States is now nopeleSSly Douno up IN
German affairs, and there is nothing
left for it to do but put its shoulder to
the wheel to pull Germany out of the
mud. If Germany needs credits, this
country will nave to extend them,
The United States has an enormous
stake in the game. 1t is estimated that
its short term credits in Germany
amount to about one billion dollars.
This does not take into consideration
the enormous sums proffered to Ger
many by American investors in long
term loans. The complete collapse of
Germany is out of the question: so far
Is the United States is concerned.