Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-07-26
DEBT HOLIDAY is HELD
BUT MERE PALLIATIVE
Pause Between Crisis and Catastrophe
Is French View-Political Agreements
Necessary to Saving Germany.

fidence CT the foreign investor.
Many people would ask, why, II a
loan could help substantially the Ger
man situation, has not Great Britain
and the United States Joined together
and given Germany the three or four
hundred million dollars so badly needed.
After all, this Is not such a tremendous
sum when one thinks that the Anert-
can investors alone have a little over
two and a half billion dollars in Ger
many already. The answer seems to
be that the money market In London
and New York cannot absorb today
another three hundred million dollar
loan for Germany.
Great Britain's Position.
The financial situation in Great
Britain is difficult. The budget is in
red and the exchequer will probably
be compelled to borrow from the pub
lie in order to make up this years
deficit Furthermore, the French are
pressing Great Britain hard. Since
1928, when France started on the up
grade financially, that country has on
the London market Short-term notes
amounting to some six hundred ana
fifty million dollars. In the last three
what they can do, have started with
drawing almost daily the short-term
credits from London, bringing them
back to France. If one glances over
the financial reports from London one
finds almost every day that another
ten or fifteen million dollars in gold
has been transferred by airplane from
London to Paris. The pound sterling,
which has been like rock ever since
its sterilization some seven years ago,
has begun to shake and Is depreciatmg
rapidly. The Bank Of England was
compelled on Thursday to raise the
rate of discount by l per cent, to the
great detriment Of British trade ana
industry. Consequently, although the
sum required by the Germans appears
modest for a rich nation ike Great
Britain, in the present circumstances
1t is too large.
much better There is, Of course, great
deal of liquid money on the New YORK
market But our bankers have to keep
in mind the requirements OF this ano
other countries outside Germany. IN
this coming Fall the New York market
may be called upon to PROVIDE sums LOT
the refinancing Of The railroads: II keeps
in mind the possibility OF assisting in
some way or other the farmers Sltua :
ton, Uncle Sam may also be compelled
to draw on his bankers and II the gen.
eral economic situation does not improve
it is possible that New York may have
to provide money to assist in some
scheme of helping the unemployed TINS
year. Besides these possible require
ments it Is not unlikely that the British
may want to transform the short credits
they still owe France into long-term
credits in America.
South American Situation.
Besides these possibilities there is the
difficult situation of South America,
which though potentially rich Is passing
at present through a severe CRISIS and
our bankers may be compelled to come
to the rescue of some OF the South
American republics, which may not be
in a position this year to pay the In
terest on money borrowed from the
American public. In addition to these
possible necessities there is serious
situation in regard to the German n1u-
nicipal loans. The towns which have Dor
royed large sums in America in recent
years may not be able to pay their in
terest. A suspension of payments OF
the interest on those loans may create a
harmful panic among the American
bond holders. To avoid this it Is said,
the banks may be compelled to give the
German municipalities SUFFICIENT money
to pay the interest due in the course CT
the next few months. Consequently
neither the American nor the British
banks are anxious to pour new money
into Germany especially when the po-
Iitical situation between France and the
Reich is obscure.
France Could Lend Aid.
France. Of course, is today in posi-
ton to help out Germany financially
without batting an eyelash. France
is comparatively as rich as the United
States. It has more gold than any other
country. with the exception of the
United States, and has less frozen assets
than any other country in the world
Frame knows her strength, but Is not
willing to move unles- she can get a
political bargain which would insure
her a permanent hegemony in Europe
After a few seeming defeats such as
her failure to prevent the German-Aus-
TRAN tariff debt holiday, she wants a
spectacular. political victory. She has
Germany in the hollow of her hand. At
the London conference this week her
finance minister, Ptetr1, informed those
present that she was willing, II neceS-
sary, to take 80 per cent Of the $780,
100000 Germany needed provided
that and he enumerated the
guarantees Germany would have to give
were COlQ LIN-C II
were not Immediately assisted there
might be trouble in that country and
that France herself might be infected
should civil war break out in Germany
France was told that internal trouble
is contagious and, Germany is too close
to Frances border for her to remain
Indifferent to what may happen across
the Rhine. The French shrugged their
shoulders and replied: You all know
what to do If you want our money"
What could the representatives of the
ing with magnificently optimistic
speeches and press communicates and
offer Germany relief by extending the
short-term credits, which she could not
have paid us or anybody else in any
case.
Political Understanding Needed.
Everybody who attended the London
Conference left with the conclusion that
the situation cannot, be cleared up, I'M
less there is a political understanding
those in close contact with the recent
developments realize, although they
may not openly say so, that,in a higher
plane economics and politics meet and
cannot be divorced from each other
Our public men now realize this and
the administration, through its agents
at present in Europe, is doing its best
to help the two antagoniStic European
nations settle their dificulties. But we
can do nothing but give advice and ACT
as friendly mediators between the two
governments. We cannot encourage
Germany to take decisions which might
prove fatal to its present system Of gov
eminent, neither have we the power Of
asking France to renounce her political
ambitions, which in the mind of every
good Frenchman mean assuring the Sc
curity of his country.
The nations Of Europe which have
lived next to each other for centuries
and have been fighting each other for
the same length of time cannot be con-
WINGED that security can be obtained by
friendly intercourse. They still believe
that their security lies In heavy arrna Z