Evening star., 1936-05-17
German Finances.

Long cherished fears that all is not
well with the German financial structure
are corroborated afresh by circumstan-
tial reports from London that British
banks and insurance companies nave
been warned from high official quarters
to abstain from extending fresh credits
to Germany. They have also been adj
vised, it is stated, to recall discreetly'
wherever possible, all money invested in
the Reich, as new and severe financial
breakdown there is anticipated. The
news comes soon after the bitter clash
between DR.. Schacht, minister OF
economics and president of the Reichs-
bank, and the Hitler regime, resulting
in the clothing of General Goering with
supreme power over banking and COM
mercial matters and corresponding
weakening of Dr.. Schacht's prestige and
authority. The controversy sprang from
Schacht's anxieties over the economic
devastation that is being progressively
spread by the governments vast arma-
ment expenditures. Great Britain evi-
IDENTIFY fears that the disruptive process
is developing with such rapidity that it
will eventuate in a genuine crisis during
the Summer.
British qualms respecting the German
situation find an echo in recent official
publications of the Department of Com
merce at Washington. The departments
representatives abroad have noted
mounting evidence that the German
financial burden is growing and that the
strain on the Reich's finances is inten-
sified. Short-term borrowing during the
past three years practically exhausted
liquid resources of savings banks, COM
mercial banks and other credit houses.
The government encountered such diff
ficulties in rediscounting its employment
and armament bills that contractors and
manufacturers working on official orders
are now obliged to keep these bills for
a specified period and not pass them on
for rediscount to their banks. Coinci-
dent with these conditions, Department
of Commerce reports point out, German
foreign exchange resources, even to pay
for necessary food imports, are scanty,
while the gold reserve recently reached
an all-time low that deprives it Of sig
nif1cance as backing for the currency.
An era of heavier taxation and uncon-
trollably higher prices has been accom-
panied by scarcity of essential COM
modities, practical monopolization of the
capital market for State purposes and
pressure on security values. Unemploy-
ment relief comes only from the stimulus
to industry arising out of rearmament.
All the ingredients for economic coll
lapse are at hand.
German government spokesmen con-
tend that while their problems are grave
and no solution of them is in sight,
there is no reason for immediate alarm.
Barring unforeseen developments, they
claim, Germany can continue on her
present path for at least two more years
before her plight becomes acute. Never
theless, there is beclouded state of af-
fairs that is indubitably disquieting. It
may we'll supply the real explanation for
such diversions" as the remilitarization
Of the Rhineland and other recourses de-
vised to defect the thoughts of the Ger
man people from their domestic eco
nomic woes by arousing their patriotic
emotions over ventures in the interna-
tional realm.