Evening star., 1931-12-20
GERMAN CREDIT DEFAULT
FORESEEN AS CERTAINTY
Reputation of Obligations Forecast
Seven Years Ago Being Carried
Out Now, Writer Says.

any hope of any recovery in Germany
which would enable the payment OF
$3.50, 100000 on account of commercial
debts.
Moreover-and this is the cardinal
point-precisely the moment the
reparations debts are scrapped-aSsum-
ing that this takes place-the mass OF
the German people are bound to see
in the private debts exactly the same
form OF tribute. The whole German
people are IN a mood in which they
are dominated by delusion of perse-
Cution, by resolution to escape foreign
payments. which in the case OF the
private debts represents to them an eX-
ploitation of their misfortunes. They
are Sullen, deSpairing, literally in re-
volt against the burdens of all sorts
which the war and postwar years
have fixed upon them.
Even to meet the private debts now
the German people would have to con-
sent to a very serious lowering of the
standard of living and to the most
rigid economy. And control in Ger
many is about to pass from reasonable
to unreasonable men, from statesmen to
demagogues The Hitler crowd is a
motley mob backed by certain buSi-
ness and financial elercntS who are
more concerned with driving the Social
Democrats cut of power and abolish
ing the social legislation Of the post
war years than with anything else.
To put Germany on her feet now, to
start her again SO that she could even
undertake the task of paying her COM
mercial obligations, needs new capital.
She needs it the more because ever
since the moratorium German capital
has been in flight from the mark. The
Germans have themselves rushed all
available funds across the frontiers.
The gold reserve in the Reichsbank Is
sinking steadily to the vanishing point.
Must Quit Gold Standard.
Despite all reports to the contrary
financial circles in New York have &C
cepted the fact that Germany must go
off the gold standard shortly.
Only very considerable new loans
could save the ReiChsbank situation
Only large loans could enable Ger
many to start again lndustrlally.
Neither is available. In the eyes OF
the world Germany has become bad
risk Again, no loan could be forth
coming while the French are op-
posed They have the enormous veto
power of their legal rights under the
Young plan.
The arrival of Fascist control in
Germany may come peacefully or NAV
be accompanied by a revolution. All
Will depend upon the dccis on made in
Moscow which controls the German
Communists But in either event The
arrival of the HltleriteS will produce
an enormous reperCussion in both
France and the allied states of Poland
hnS Sl Will
an apprehension and unrest politically
which must render even more acute
the financial crisis in Europe
Fascists TO Stop Borrowing.
When-and if-the Fascists get con-
troll there is nothing that they can do
about the economic and financial
But their very coming will abolish the
chance of new foreign borrowings
They will find themselves masters OF
Germany they have promised to res
cue. without the least chance Of get
ting the means to improve the situa-
tlOn. The flight from the mark will
continue. The resentment Of the Com
munlst and Social Democrats. even if
1t does not take the form of open re-
sistance. will be consistent and GRIP
pllng. A passive. If not an active. civil
war is assured
Before Germany emergeS on the one
hand from the consequences of do
mestic political upheaval and on the
other from the effect of the world eco
nomic depression both political and
economic factors will have made it
next to impossible to reopen the ques-
ton of the present commercial debts
There is going to be real and COM
plete bankruptcy of the German ma
ton, unless every present sign proves
lneXact. In my Judgment the day is
not very far distant when German
securities both governmental and pri-
vate, will have no other value than
that which in my childhood attached
to Confederate securities and Fenan
Dor ds.