A EUROPEAN CRISIS.

Auckland Star, Volume LXII, Issue 166, 16 July 1931, Page 6

A EUROPEAN CRISIS.

Yesterday it Avas reported from Switzerland that tlie governors of the Bank of International Settlements had been in conference with Dr. Luther, president of the Keiehsbank, and that the Powers had agreed to provide substantial financial assistance for Germany. This news had a most salutary effect, steadying the nerves of the German people and encouraging the hope that the crisis of the financial storm had been safely passed. But to-day the omens for stability and security are once more unfavourable, Apparently France is pressing the demand for "political guarantees," and if she insists upon conditions too rigorous for the self-respect of the German nation, the negotiations for the Moratorium may break down. In that case, the whole financial system of Germany would probably collapse in ruins, and the effect upon public credit, to say nothing of international commerce throughout the world, may be disastrous in the extreme.

Originally the difficulty in the way of arranging the conditions for the Moratorium arose out of France's demand that Germany, to secure the postponement of reparation payments, must cease to strengthen her fleet and must abandon the proposed Customs union with Austria. The Germans might possibly have been induced to swallow their pride and accept these terms, but now France is reported to have put up her price. Her latest demand, according to the "Daily Herald," is for the abolition of the Steel Helmets, the great military organisation which has so long threatened the existence of the Republic and conducted a vigorous crusade in favour of the restoration of monarchy and the abrogation of the peace treaties. No doubt the activities of the Steel Helmets infringe the spirit, if not the letter, of the Versailles settlement, and France is fully justified in urging the German Government to check or suppress them.

The spccial reason for a revival of the agitation against the Steel Helmets just now alliance lately concluded between their leader, Dr. Hugenberg, the greatest newspaper owner in Germany, and Hitler, head of the Nazis. As Hugenberg holds, with the Nazis, that the Treaty of Versailles should be torn up and that republicanism is a farce, and as he has the powerful Steel Helmet organisation solidly behind him, France may well regard this readjustment of forces in Germany with grave anxiety. But it would be a very serious error in judgment to press such demands at this particular juncture. Such a policy would, as the "Times" has warned us, imperil the chances of a settlement, and quite conceivably induce President Hoover to withdraw his Moratorium proposals altogether. However, the latest news is to the effect that France has now offered to forgo the "unconditional" payments from Germany for the Moratorium period, and this generous and amicable gesture may have the effect of smoothing away all difficulties and enabling Germany and Europe to weather the financial storm.