SHREWD DR.SCHACHT

Evening Post, Volume CXXIII, Issue 18, 22 January 1937, Page 15

SHREWD DR.SCHACHT

(To the Editor.)

Sir, —With reference to the article in Tuesday's issue regarding Dr. Schacht, the undersigned, who is a personal acquaintance of Dr. Schacht's private secretary, would like to draw your attention to several erroneous statements which . are calculated to convey a certain distorted and disparaging impression on readers. The private loans made by British (and American) bankers to Germany were issued prior to che period of depression during the years 1925-28, when interest and redemption could easily be paid in British currency out of the surplus balance between German exports and imports. When the depression started i there arose simultaneously with the shrinkage of German exports a scarcity of foreign exchange, which was available in Germany exclusively from exports, all gold reserves and foreign investments being attached under the vicious Treaty of Versailles. Still, during the first three years of the depression Germany paid interest and redemption on the loans although the necessary money could not be derived from exports, but was taken from further loans made by the creditors, a situation so utterly unsound and impossible that eventually Dr. Schacht was compelled to retire from the Presidency of the Reichsbank, not being able to agree with the policy of the then Democratic German Government. In due course the financial situation became so threatening that a new and fbrmidable cur- . rency inflation was imminent, had Germany carried on paying her debts. No Government, of course, could dare to be responsible for such a course of events, as the dreadful experience of 1922-24 was still fresh in the minds of the German people, when all private property disappeared by way of inflation and you could not buy a slice of bread for a thousand million marks. Dr. Schacht was, therefore, recalled by Chancellor von Papen and the policy of punctual payment of debts was relinquished, by force of circumstances, simultaneously with the final cessation of reparation payments under agreement with the "official receivers" of Versailles. In order to meet the situation, Dr. Schacht now conceived the idea of withdrawing German currency from all foreign exchanges, again by force of circumstances being drawn of necessity into a policy of financial and economical isolation. The rate of exchange, like the value of all other commodities, being governed by supply and demand and no supply being available, German currency was firmly established on a gold basis, although fictitiously and only of internal value. The position at present is, that foreign creditors can dispose of moneys, due to them, either by accepting German, exports in goods or by spending it in Germany, as no remittance can be made to other countries. This invention of Dr. Schacht has meanwhile been followed by practically all European countries with the exception of Britain and. Norway, so there is nothing unusual in it On the other hand, there is" no idoubt that would immediately presume payments and wipe off her indebtedness if she could increase her exports and if normal economical conditions could be restored, which is exactly what is meant by the proposed new loan to Germany. It appears quite unjustified to confuse this question of a new loan and the re-establishment of normal conditions with German re-armament. Certainly British re-armament, for instance, hais nothing-to do with the unpaid American war loans, why then obscure the whole issue in the instance of Germany, unless with the idea to prevent co-opera-tion between. Britain and Germany as ipso facto undesirable. There is a widespread opinion throughout the Old Country that on the contrary co-operation between Britain and Germany, political and economical, would immediately settle all the present unrest and anxiety in Europe. TJiis, of course, would imply that France is being dropped by Britain, and apparently the time has not yet come for such a policy safely to be carried out, considering all the things France is going to do, when her axiomatic friendship with Britain comes to an end. This also would imply a recasting of frontiers in Eastern Europe, including Hungary's, and the restoration of Danzig and the Polish Corridor to the* Third Reich. It is of no use to close our eyes: there will be no rest and no peace until these questions have been settled, and if they cannot be settled by agreement with the western democracies they will be settled by another "fait accompli." Just think of the preposterous idea that a German who wished to travel from one part of his country to the other, must have a foreign passport in crossing the Polish corridor! It is almost the same as if, for instance, Yorkshire and Lancashire had been handed over to a foreign Power, say Denmark, a situation entirely unthinkable and still in existence today in Europe thanks to the complete absence of common sense and reason in the so-called statesmen wh9 have concocted the Treaty of Versailles. It would be far better to face the facts and freely and voluntarily make good the wrongs of agreements which everybody knows cannot possibly last for another ten years without a further successful coup or another war. —-I am, etc., FINANCE.