Evening Post. THURSDAY, JULY 9, 1931. DEBT SETTLEMENT REACTION

Evening Post, Volume CXII, Issue 8, 9 July 1931, Page 8

Evening Post. THURSDAY, JULY 9, 1931. DEBT SETTLEMENT REACTION

If the prosperity and the security of France are dependent upon the perpetuation of the misery and the insecurity of Germany she may be congratulated on the success of her stubborn opposition to the benevolent diplomacy of President Hoover. For ten days the Government of M. Laval—a weak and nondescript Government but strong on such an issue in the virtually unanimous confidenceof the French nation—has kept Germany and the rest of Europe on tenter hooks while it resisted the proposals for the relief of Germany which the other Governments directly concerned had approved. But when the suspense was ended by the announcement that the Franco-Ame-rican negotiations had ended in a settlement the news was received almost everywhere with a sigh of relief. The general satisfaction was immediately indicated by an impartial and'unsentimental authority in each of tlie three chief capitals of Europe. According •to a message dispatched from London on the day after the receipt of the news,

there was an immediate response on the Stock Exchange, which was well maintained during the day. Reports from Paris and Berlin show -a similar strengthening of the market position. General satisfaction is expressed in London that an agreement has?been reached, and now that the plan is in force as from Ist July confidence is felt that the financial situation in Germany will at once be - eased. A favourable effect on world economic conditions will, it is hoped, soon reveal itself. ft.' .•

But though the Paris Stock Exchange shared in the favourable reaction reported from London and Berlin, the "heartfelt relief" attributed to Germany would not correctly describe the attitude of France. As a Paris message of the same date informed us, the newspapers hail the Hoover Settlement Plan as a. diplomatic achievement of great benefit to the world, but the majority consider that Franco sacrificed too much for Germany and fear that the decision will lead to the ultimate destruction of the Young Plan. Better evidence of the combined effect of the master-passion of France, which is her hatred of Germany, and her boundless egoism in blinding her sense of proportion and her sense of humour could not be desired. While one German paper complains that "petty, narrow-minded French commercialism" has riddled Mr. Hoover's plan, and another that "France wishes to bleed us white," and independent opinion confirms the criticism, the only fly in the ointment of French self-satisfaction is the fear that in the desire to confer "a great benefit on the world" the cosmopolitan philanthropy of France may have been carried too far to be just to her own interests! Such a naive obsession of self-conceit is not often encountered except in early childhood or on the stage. When an Englishman conversing with a French friend referred to the blinding effect of the national patriotism which led an Englishman to think of London as the centre of the world and a German to think the same, of Berlin, the point was fully appreciated. But when he proceeded to tax the French with the same weakness the Frenchman's answer was, "But, you know, Paris is the centre of the world." This would doubtless be a joke without a point for the patriotic French editors who are now lamenting the reckless philanthropy of France.

Further light is thrown on the French perspective and the French sense of humour by the fear that any concessions made to Germany under the Hoover proposals might be spent on armaments. Dr. Bruening's emphatic assurance in a Note to the United States Ambassador in Berlin that no such expenditure was intended or would occur shows that this fear must have found official expression during the negotiations in Paris. But that the gospel of disarmament which t France is so anxious to apply to her almost unarmed neighbour has no application to herself: is shown by the rate at which she continues to dig herself in both on thfr German frontier, and on others. The apprehensions of France were probably already under consideration in Berlin when the determination of France to take no risks further illustrated by the following report from Paris:

The Senate passed an additioual. appropriation of £20,000,000 for fortifications on the Belgian, German, and Italian frontiers, upon which £11,500,----000 already had been spent. The scheme comprises amazing concrete trenches and works wherein whole regiments can be housed.

Until this tremendous programme has been carried out one cannot expect France to feel 100 per cent, safe, but in the meantime she may surely be satisfied that the very slight relief which he has agreed to concede to Germany will not.make the military position any worse. And the fear that on the economic side this concession will do Germany so much &eow3 ihs* "Eranjes aaG&i*

need 100 much" seems likely to prove equally groundless. The excellence of the first impression made by the news of the settlement as represented by the response on the various Stock Exchanges lias not been maintained in the country where it most matters. On the contrary the warning note sounded by "The Times" in a leading article which was reported yesterday seems■ to be already justified. Indeed, whereas it was only "any vision of general improvement" which "The Times" deprecated as premature until international action on a much wider scale had been taken, doubt is now thrown even on the immediate value to Germany, of the relief conceded. Yesterday the "lengthy nightmare from which Germany had suffered while her fate was being determined by the negotiations in Paris was represented as at an end, and a Government manifesto described President Hoover's statesmanlike initiative as having been "crowned with success." To-day some of the worst features of tlie nightmare are reported to be still as active as ever, and even from London comes a note of pessimism.

Financial-authorities express the opinion; we are told, that the delay in the 'acceptance of President Hoover's plan, and the qualifications now contained in it, have minimised the full gains which would have followed a prompt, all-round acceptance. Funds have left Germany which might have been retained. It is difficult now to stop the exodus, and the tasks of the central banks have-been, made harder by .the action of France.

The reports from Berlin on which this diagnosis is based describe the flight of the mark in the form of withdrawals from the Reichsbank to foreign currency reserves as continuing "unabated,':' and says that on Tuesday these withdrawals amounted to £3,500,000. How long can Germany stand this strain? And if the settlement announced on Monday brought no relief on Tuesday, what reasonable ground was left for expecting anything better on Wednesday?"

The public-spirited offer of 1000 business, men*) industrialists, and bankers to 'guarantee ,£25,000,000 with- - the .- German Gold Discount Bank may have sufficed to stem the rush, but at the time of writing the result has not been reported. If it succeeds Germany will certainly have convinced'the World, that she is, in Dr. Luther's words, "making a great internal effort to re-establish herself financially." But;,if the effort fails, British experts are clearly of opinion that the blame must be laid on the success of France in delaying and reducing the .relief proposed by President Hoover, and it will be no satisfaction that France herself will share with the rest of the world in the aggravation of every malady—political, social, industrial, and economic

—which will inevitably ensue: