Evening Post. MONDAY, JULY 13, 1931. THE DEVIL AND THE DEEP SEA

Evening Post, Volume CXII, Issue 11, 13 July 1931, Page 8

Evening Post. MONDAY, JULY 13, 1931. THE DEVIL AND THE DEEP SEA

.Three weeks ha\e passed since we were informed of President. Hoover's proposal of a year's moraLoiium for all payments in respect of international ,war debts anil reparations, and of its joyful acceptance in all the great countries immediately concerned except Fiance. But it took about 'a fortnight to settle the objections of' France, and in the meantime Germany's drift towards the financial disaster from which it was the President's object to save her continued unchecked, On Monday last, however, he was able to announce that he had made a satisfactory compromise with France, and he described the result as offering a new hope to the world.

'rhc economic loud-, which is iiiost seriously oppressing the peoples of Germany and Central liuropo will bo immensely lightened. While tho plan is particularly aimed to economic relief, yet economic relief means the swinging'of men's minds from four lv confidence, the swinging of nations from apprehension of disorder and 'Governmental eollapso to hope- and" confidence in tho future. It means a tangible aid to unemployment, ami agriculture. But- the fear that there was "a catch in things ■ somewhere" made the world-less ready to rejoice than it had been a fortnight before, and to Germany's:sense of relief-.there iwas a bitter set-off in the terms exacted by France and the serious aggravation of her, position during the long nightmare of the 'negotiations. Regarding .her orifainal reaction to the American offer we were told.— Germany regards' President Hoover's proposal at eomiug not at. the clovcnth hour, but at five minutes to twelve, saving tho country fi'om tho worst crisis since 1923.

The grave news which reaches us to-day suggests thai even this timing was 100 optimistic, that the fatal hour had really struck though the Germans themselves did not hear it, or at any rate that it had struck by the end of the delay interposed by France, though even then it escaped their notice. Though the immediate reaction of the Stock Exchanges of London and Paris and even of Berlin to the announcement of the Franco-American compromise was favourable, there was no touch of optimism in the news that began to come' in on the following day. Berlin reported that the "tonic effect" of the'settlement had been offset by the collapse of the Nor,th German Cotton Company, with' losses. amounting to £11,000,----000,' and with. German banks among < its largest creditors. At the same lime financial authorities in London were quoted as deploring the effects of the delayed and qualified acceptance of the Hoover' Plan in'minimising the benefits which a prompt'and all-round acceptance would have Had. Funds, they said, have left Germany which might havo been retained. It is difficult now to stop "tho exodus, and the tasks of the central banks have been, made harder by the action of France. Reports from Berlin state that the flight from the mark in tho form of withdrawals from tho Roichsbank to foreign currency reserves continues' unabated. Tuesday's with-. drawals id £3,500,000. The fears of these authorities are being fully justified. ,The task which they declared to be difficult is proving to be impossible. On Saturday we were told that the outflow of foreign exchanges from Germany was proceeding al the rate of £2,000,000 to £3,000,000' a clay, and that Dr. Luther, who had been endeavouring in Paris and afterwards in London' to raise a loan of £80,000,000 for the Reichsbank, of which he k President,: had returned empty-handed. To-day's news shows that this failure has now induced him to issue some» thing very like an SOS., Through the American Ambassador ' in' Berlin Dr. Luther has; appealed to the Federal Reserve Bank of the United Slates for ihe reduced amount of £60,000,000, stating 'that financial collapse was inevitable unless credits were granted, with tho utmost speed. If we were dealing with a play and not with a drama of real life, the reply would have to be described as strictly in keeping with the best traditions of tragic irony. The Bank replied that it was adhering to its decision to participate in a"£60,000,000 loan if Prance will take her share of the credit. The reply is more politely put than if il had said that the Bank' adhered to its decision not to participate, unless France would come in, but the effect is the same. We ,arc back in the old vicious circle. Germany is brought to the brink of ruin by the refusal of France to take part promptly and unconditionally in a financial scheme to which other nations have assented from a regard just as much for their own interests as for those of Germany. Though the aggravation of Germany's danger is due in large measure, and according to German opinion entirely, to the. belated and grudging acceptance of France, Germany has not failed to approach the Paris market, among others, for the further help that is needed to enable her to draw any advantage from the relief that has been offered. From Paris, Germany, has turned to London, and from London -to Washington, and Washington's answer .is, "Certainly, if France will lend a hand." There is, as jvc have suggested, an abund-

ancc of humour in the posiiiou, bul the unhappy Germans, who at the best are not strong in humour, may be excused if they uannot sec the joke.

Nor can the most light-hearted humorist outside of France be expected to see much fun in the terms on which she is insisting as the price of her support. The proposed Auslro-German Union, which is now awaiting the judgment of the World Court on' its legal aspect, must be abandoned by .Germany, and so must the;, construction of tho second "pocket" battleship. ■ For the purposes^ of the immediate issue it is guile unnecessary, to consider the merits of either of these demands; It is sufficient that both of them arc so vehemently resented by the substantially unanimous sentiment of Germany that no Government which accepted them could possibly survive. The resignation of ihe-Brucriing Cabinet and a political chaos in which the Hitlerite's would probably regain all the ground they appeared to have lost since the General Election, and even extend it, would be, the consequences of submission to French dictation on these points. Germany stands, therefore, between the devil and the deep sea; arid so, for that matter, does America. It is not to be supposed that even in this unexampled depression American financiers would make 'much of a mere matter of £60,000,000 on reasonable security, but with France in her present temper what sort of security would they get from a loan to Germany in which France did not participate? ..;