The Waterbury Democrat., 1939-01-20
sCHACHT HAD WARNED

London, Jan. 20.-(UP)-Dr. Hjal- mar Schacht,s dismissal from the presidency of the German Reichs- bank came after his own warning that Nazi extremists" were gaining ascendancy and would plunge Ger many into dangerous new adven- lures unless "moderates" were strengthened, it was understood to- day.
 Schacht came here last month. He pleaded with British leaders that such men as he and Field Marshal Hermann Goering, Nazi No. 2, must be strengthened by the granting of economic and commercial conces- sions by foreign countries
 During his visit, Schacht con- ferred with Montagu Norman, gov- ernor of the Bank of England; George s. Rublee, American director of inter-governmental refugee work, and British leaders including Sir Frederick Leith-Ross, chief eco- homie adviser to the government.
 He pleaded with them to aid in stimulating German exports, to lend some kind of economic support to the German government.
 Norman was reported to have been impressed Ey Schacht's warning and 1t was said he wanted to do some- thing to strengthen the so-called moderates.
 Thought It Trick But the government men, and some others who talked to Schacht or were advised of his plea, were in- clined to consider the warning trick to obtain concessions for the Nazis.
 The dismissal was expected to have most important political and economic consequences.
 On the political side 1t seemed likely to strengthen the so-called extremists, as diplomatic quarters saw it-men like Paul Joseph Goeb- bels, propaganda minister, and Heinrich Himmler, chief of the dreaded Gestapo, or secret police.
 On the economic side, 1t was re- garded as likely to mean the con- tinuance, even the intensification of Germany's self sufficiency policy.
 It was understood here that Schacht and Goering favored a slight liberalizing of German trade policies, ard would have wlecomed trade accord with the United States.
 Funk, however, was regarded as favoring barter agreements like those he negotiated several months ago on @ tour of southeastern Eu- rope. Funk was said to feel that Germany did not need to better trade relations with the United States.
 Tn financial circles, the Schacht removal was sensation.
 One of Its most striking features was that there was a leak of some sort yesterday, apparently. Some- one was able to sell German bonds heavily on the London market, as well as German marks, which weak ened mysteriously in the afternoon.
 German young loan bonds slump ed three points yesterday at 25 1-2, the lowest price since the Munich agreement last September. Dawes bonds slumped 1-2 points to 35 1-2, unsettling the whole market.
 British government war loan was down 3-16th of a point at 97 9-16. Old Consols were down 1-4th of a point at 69 7-8. U. s. Steel was down 7-8th of a point at 68 3-8 British quotation levels)
 There was no explanation then. Bomb Shell Game Today
 This morning came the bomb shell.
 Reichsmarks opened weak at iI.74 to the pound sterling.
 Young loan bonds went down fur- ther to 24, then 23; Dawes loan went to 33 and then to 32 1-2. In market quarters, those most as- tonished were the men, forming small but powerful group, known as the Trust Schacht" school. They believed Schacht was @ real power, and that all was well because he would guide Germany,s financial course.
 Some market msn thought Schacht was dismissed because his negotiations here last month failed: others that there was going to be a German spring drive of some sort one that would be a European If not a xr,nr1d ay.sat tl1x,