Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-10-25
BY VISCOUNT CECIL OF CHEL
WOOD.


WOOD.
THERE is strange superstition
that the foreign affairs OF the
world are directed by an inf
L = nitely able and maleyolent being
called an international finan-
cier. He is depicted by certain ferVent
;maginations as plotting all sorts of
world wars and disasters in order to NIL
his pockets, it apparently being be-
lieved that nothing suits him better
than the wholesale destruction OF credit
and confidence, which is the inevitable
consequence of war. OF course, this is
pure nonsense. Any one who likes TO
read such a book as the history OF
the house of RothSchild will learn that
those archetypal international imam
ciers spent their time in trying to keep
world peace. Indeed, If Napoleon III
had not deserted them for more ma
tionalistic houses, it is doubtful II the
War of 1870 would ever have taken
place.
But this does not mean that finance
is not of international importance. Like
other departments of human activity, 1t
tends more and more to transcend ma
tional boundaries and to depend on in
ternational politics. The present crisis
is an example of this tendency. A
Vienna bank INDUCES in a rash system
of industrial finance. 1t lends largely,
and perhaps Unfortunately, to Aus
trian industries at high rate OF inter-
est. To obtain the funds necessary for
these transactions, it borrows money at
a lower rate of interest in foreign coun-
tries.
Every One Demands Cash.
Then comes the slump. The indus
tries cannot pay interest on their Dor
rowingS and the banks consequently
cannot satisfy its foreign creditors.
These in turn are pressed by their cred
itors and something like a financial
panic ensues in Berlin and Budapest,
spreading thence to other countries. All
the phenomena of a run on a bank
quickly develop. Everybody begins to
lose his head and demand cash 1mmedl-
ately.
Bank after bank gets into Difficult
ties. Governments intervene and are
themselves swept along in the torrent
Of suspicion. Soon the affair which be-
gan with the local difficulties OF single
bank assumes international proportions.
The public credit Of various states Is
shaken, currency is threatened, foreign
exchange is disorganized. Political ma
from one capital TO another, confer
ences are held, solemn-though rather
platitudionous-reso are passed
and international payments are sus-
pended
What lesson are we to draw form all
this? 1 am not competent to express
any opinion on the technical aspects of
the question. I do not pretend to know
whether the gold standard Is to blame
or If bimetallism would be remedy.
To me it seems that fundamentally 1t
Is a psychological question; that public
confidence has never really recovered
from the war and its consequences;
that what is required Is not only ma
terial, buff one may say so-spiritual
economy also. 1 believe that until the
nations and their rulers realize that in
diligence in the pre-war pastime of in
ternational pickering and pin pricks is
too expensive a luxury for our present
resources, we shall not re-establish
prosperity.
However that may be, one thing il
clear. and that is the closer and closer
interdependence of all countries
Financially the world has shrunk ever
more than it has intellectually and so
ciaIly. In Europe at least we are al
one entity. M. BRAND is quite rtghi
about that But are his countrymer