Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-05-24
BY WILLIAM HARD.


Events In Europe this last week COM
pietely preoccupied Washington. I'M
portant developments occurred as to
the relations between the United States
and the foreign world. These develop
ments, it is believed, will profoundly
affect American internal economics and
politics.
In the first place, another separating
wedge was driven into the so-calle0
cooperation" between the United
States and the Bank for International
Settlements at Basel, Switzerland. That
bank, otherwise known as the World
Bank, Is owned by the central banking
systems of % foreign countries and has
been anxious from the. beginning to en-
list the direct participation Of the Fed
eral Reserve System of the United
States. In the absence Of such partic-
ipation, which was declined by our
State Department, the Bank for Inter-
national Settlements has desired "co-
operation" which our Federal Reserve
Bank In New York City seemed disposed
strongly to grant.
%&**
Inquiries in New York. City indicate
that the Federal Reserve Bank there
was extremely willing, for instance, to
send a representative to the stockhold-
ers' meeting Of the Bank for Interna-
tional Settlements this last week at Basel.
Nevertheless, no representative Of the
New York Federal Reserve Bank or of
any other part of the American Fed
eral Reserve System was present at that
meeting.
The conclusion is irresistible that the
wishes OF the directors of the Federal
Reserve Bank of New York City were
in ~ 30
ton at Basel by national policy imme-
diately declared to them from Wash
ington. The United States Government
now most emphatically and definitely
demonstrates that It does not wish to
be implicated in the operations Of the
Bank for International Settlements,
which, through its dealings with Ger
man reparations and with numerous
other related European difficulties, is
profoundly involved in European poll
tics. The stockholders of the Settle
ments Bank went deeper into such poll
tics this last week through dealing with
the problem Of the money to be loaned
to the Austrian State Bank on the
political condition that the Austrian
government should not join itself to the
German government in a customs union.
1t was precisely the fear of such min
gltngs Of economies with politics on the
european continent that led our au-
tnorities at Washington to discount
tenance all American official repre-
Sentation at the Basel bank assemblage.
4 + +
It can accordingly be set down as a
currently established American govern
mental principle under this admins
tration that European financial recon-
struction, in so far as it is based upon
european political considerations, will
not In fact have any Corporation"
from American oflcial governmental
financial quarters. Americans in their
private capacities may and do become
officers of the Bank for International
Settlements. Americans in their pri-
vate capacities may and do visit Basel
and confer with the banks officers.
The American governmental Federal
Reserve system, nevertheless, as a sys-
tenn, holds strictly aloof from the banks
affairs. The consequences are numer-
Gus and vital both for the United States
and Europe.
Momentarily the financial ascendancy
OF France on the European continent
Is assured. France has been able for
the time being to Illustrate the Ger
man-Austrian customs union through
political use Of its present vast supplies
Of gold. 1t weakened Eastern European
interest in the union through large
loans to Poland, Czechoslovakia, Ru-
mania and Jugoslavia. It weakened
Austrian insistence upon the union
through making it clear among the
financiers assembled at Basel this last
week that it would help to finance
Austria in its immediate acute eco
nomic distress only If Austria would
cease from negotiations for the union.
1t had its way at Geneva in the Coun-
Gil Of the League Of Nations in the
matter Of the union primarily because
it dominantly now holds Europe's
purse strings.
It now will continue to be the chief
operator Of those strings in the man
agement Of the new European Interna-
tional Agricultural Credit Bank lust
voted into being by the League. It is
French capital that will largely finance
that bank. It is French policy that
will largely thereupon sway that bank
The purpose Of the bank is to assist
the agriculture Of Eastern Europe-of
Esthonia, Latvia, Lithuania, Poland,
CzechoSlovakia, Rumania, Hungary,
Jugoslavia, Bulgaria. 1t is the purpose
Of French political craftsmanship to
weld as many Of those countries as
possible into q special amity with
France to counter the power on the
one hand Of Russia and on the other
hand Of Germany and Italy.
This French political purpose was
abundantly revealed In the course of q
recent grand tour of Eastern Europe
performed by the French finance minis
ter, M. F1andin. French financial activ-
ity abroad Is Importantly directed by the
French finance minister both through
accepted custom and through his power,
for instance, to control the listings of
foreign securities in the French stock
market. French finance now through
the new European International Agri-
cultural Credit Bank VIII tndnhlahly