Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-07-21
AIMS SUMMARIZED
BY BRITISH CHIEF
Credits and Confidence in
Germany Called Main Issues
of Conference.
CONTINUED From First Page

tNOllIluucO FTOIl FuSI FARe.D
on their people, but they felt bound to
declare last month that they could &c
no further and that they would have to
use their right to declare a postpone
ment of their liabilities under the Young
plan unless the situation improves
This alarmed foreign lenders, upon
whose support Germany has been large
ly dependent during the last six years
and Withdrawals of short-term credits
ensued on very large scale
by June ID their position appeared
almost hopeless, when the whole face
of the world was changed in half an
hour by the dramatic announcement
Of President Hoover'S offer. History
will pronounce this decision as an act
OF rare courage and craftsmanship. It
is no small thing to ask the people of
the United States, far removed as they
are from Europe, and themselves at
grips with a domestic slump of I'M
precedented severity, to suspend for q
year all their claims in respect to
belief, 1t was also a stroke of sound
business. Its effect at the outset was
startling; not only did the value of
securities rise with a bound, but even
the price Of commodities advanced.
Hoover's Action Aids.
war debts and reparations are not
self-liquidating obligations like loans
made for productive purposes. They
can only be paid by exporting goods tc
the creditor countries or, in SO far as
there are obstacles to the movement OF
goods, by the export of gold. Thus the
payment Of reparations and war debts
in time Of economic depression pre-
Sents peculiar difficulties, and the knowl-
edge that these difficulties exist weakens
the confidence Of investors and this in
turn enhances the original difficulties, Sc
that vicious circle is created The
Gordian knot was for the moment sue
cessfully cut by the Presidents benef1-
cent sword; but foreign credits in Ger
many continued to be withdrawn
TT has been stated by the German
minister Of finance that from $50 900 00C
to 200,000,000 pounds of foreign ex-
change have been lost by Germany re-
Gently. colossal sum, representing, as
1t does, more than the eQuivalnt of two
years OF reparations payments. The
trickle OF exchange purchases became a
stream, the stream a river, and the river
a torrent, until the inevitable break
down occurred.
Thus we have now not merely to
consider the measures necessary to
carry into effect President Hoover
proposal. but we have to add to that
the urgent emergency that has since
developed in Germany
Our position, therefore. in a word,
Is to restore the confidence of the
foreign investor in Germany. Clearly
the problem has both political and
financial sides, but the mind Of this
conference Is to be concentrated on the
latter
The fact that we have all met
here is in itself demonstration that
on every side desire for the mainte-
nance Of cordial relations exists. Z
Let us admit first of all to our.
selves, and confess it in our conferences
that there are some things which on,
or the other of us cannot do, because
the public opinion to which we mus
be loyal will not allow 1t.
Two Main Alternatives
eve are not here to enforce or 4
defeat or to humiliate; we are here Il
understand and to consider our owl
problems effectively. to remember how
closely in essentials we depend upor
each other and, therefore, to accom-.
modate and to agree to something
which each of us can take to our vari.
Gus Parliaments. explain and get &C.
cepted as an agreement. feel thai
each OF us can do that, and that an
agreement here, even il in every item
We do not like it. will reinspire our peo-
pie with confidence and courage to face
the heavy responsibilities which are to
be the lot of all governments during
the immediate months ahead Of us.
LAS regards the financial aspect of
the crisis, the question of what can be
done must largely be reserved for bank
ers and financiers. I can only speak
in general terms. There seem to be
two main alternatives. The one is to
find the means Of providing new loans
or credits to Germany. That Is a mat
ter that I understand has been under
consideration in Paris. I am told that
there are difficulties which would have
to be surmounted before any loan could
be obtained in the market here.
THE other way would be to attack
directly the question Of whether by
strengthening the internal position OF
its stability to the outside world so as
not only to prevent the capital that is
already in Germany from being with
drawn, but to enable it to be be aug
mented
There can be no question about the
inherent strength of the German econ
omy, provided that it has the capital
resources it requires. It is for this pur-
pose that President Hoover proposed
the suspension for a year of all debts
and reparations. This represents for
Germany a very real and important re-
lief It may not prove to be sufficient
that is q point we can examine later
but think our first step is to decide,
with the greatest poSsible expedition
the means by which this shall be def
nitely carried into effect"