A BACKGROUND TO THE NEWS

Dominion, Volume 32, Issue 72, 17 December 1938, Page 9

A BACKGROUND TO THE NEWS

Dr. Schacht

Dr. Schacht, president of the lieichsbank, has arrived in London from Berlin accompanied by the president of the Bank of International Settlements in Basle, to discuse financial matters with the British Government. Dr. Hjalmar Horace Greeley Schacht is Germany’s “wizard of finance.” He was born in January, 1877, at Tinglell, in Schleswig. His Christian names. Horace Greeley, are the result of bis father’s great admiration of American democratic tradition, and for Horace Greeley, the greatest of American newspaper editors. The Hjalmar came from the mother, who was a Dane. Dr. Schacht has given his children Danish names. Dr. Schacht studied at several universities, and after obtaining his doctorate began work in the Dresdener Bank as an archivist. His great ability was early recognized and he secured promotion rapidly till, in 1908, he was deputy-director. He left the Dresdener Bank in 1916 to go to the Darmstaedter and National Bank as director. In 1923, on the collapse of the mark, he was appointed Jteichs currency commissioner. He is credited with saving Germany from utterly chaotic conditions by inventing the Rentenmark, which stabilized the currency. For this work he was appointed president of the Reichsbank; he had already refused the finance ministry. He resigned the presidency as a protest against The Hague agreements which implemented the Young Plan. In March, 1933, Herr Hitler appointed him to the presidency of the Reichsbank again. He was also Minister of Economics but resigned because he could not agree with Marshal Goering’s ideas under the Four-Year Plan. < I , Dr. Schacht “is a man of utterly boundless ambition,” says John' Gunther. “He is a complete opportunist.”

Dorothy Thompson (wife of Upton Sinclair) interviewed Dr. Schacht early in 1931. He told her he believed in everything that encouraged German nationalism, and that he would be the man who would run the country financially and economically. Dr. Schacht’s Power

According to John Gunther, Dr. Schacht has no fondness for Dr. Goebbels, Minister of Propaganda in Germany, and-the “Left” extremists. “He knows full well that anti-Jewish nonsense • hurts German export trade." One of the reasons why he is in London at the present time is to arrive at some understanding on questions arising out of Jewish refugees from Germany. He is a very powerful man in Germany as much for his influential friends as for his own financial ability. “Hitler,” says Gunther, “has no interest in economics (which is one of the sources of Schacht’s strength), but economics may be his ruin. The permanent realities of the economic situation in Germany wait upon no Hitlers, no Schachts, no Thyssens. It Schacht fails, Hitler may find another Schacht. But the fundamental difficulties remain. Germany must feed 65,000,000 people [it is more than 70,000,000 now that Austria has been absorbed]; it must borrow or export enough to pay for imports; it lives by the manufacture of raw materials, and no financial hocus-pocus can alter the Inexorable law that goods, somehow, must be paid for. The day of reckoning will come for Hitler—in gold as well as guns.” ‘ Bank Of International Settlements

The Bank of International Settlements in Basle, the president of which is in- London with Dr. Schacht, commenced operations in May, 1930. It was established primarily to furnish a practical and easy means for the. final adjustment and distribution of German reparations and those international debits and credits which remained as a result of the gigantic borrowing and lending in the Great War. The Swiss Government granted a charter for 15 years to the bank. Its authorized capital is 500,000,000 Swiss francs, divided into 200,000 shares of 2500 francs each. All the Central Banks in Europe were invited to subscribe. The bank may not issue notes or accept bills of exchange; nor make advances to Governments nor operate for its own account in currencies.

Its chief duties are: (1) the maintenance of great liquidity inasmuch as a large portion of the bank’s funds constitute the foreign exchange reserve of central banks; (2) the transfer of capital to markets where it may be needed to counteract .a temporary efflux or to level out discrepancies in interest rates; (3) the movement of funds in aid of currencies which may! be temporarily or seasonally weak; (4) assistance in the organization of discount markets in countries where they may be needed. France And Italy

M. Bonnet, French Foreign Minister, has said that France would fight rather than give to Italy an inch of Tunisia, Jibuti, Corsica, or any other, part of the Empire. "Our navy is now strong enough to deal with the united navies of Italy and Germany,” he said. In December, 1937, it was stated that the Italians had four capital ships (with two more building) against the French seven (with two building). The British had 15 capital ships (with five building). . The Italians had seven heavy cruisers the French seven, the British 15. The Italians had 10 light cruisers, the French 37, the British 40 (with 16 building). , , In destroyers the Italians had: approximately the same strength as the French, but the British had at sea and on the stocks 200. ; • The French superiority in submarines was something like 100 to 70. The British submarine strength) was below the strength of the Italians. If Italv and any ally of hers went to war with France and her ally—and this ally in present conditions must almost certainly be the British—then the harbours and foreshores of France would be opened up for the use of the British Navy. Marseilles and Toulon, in France, Tunis, Bizerta, and Algiers on the African coast, would be the links in a chain of harbour-fortresses that would include Gibraltar, Malta, Suez, and Cyprus. Against this overwhelming strength of hostile bases, the more outposts that Mussolini added to his own command, such as Majorca or Spanish Malaga and Melilla, the more hostages he would, give to his enemy, for he would have more points to defend, say the experts. . Germany, Italy's ally, is entitled, by agreement with Britain, to have a navy with a tonnage 35 per cent, of the corresponding British tonnage, except that the submarine tonnage must not exceed 45 per cent, of the British Empire. This latter may be increased in certain mutually agreed upon circumstances.