Germany and her Creditors

King Country Chronicle, Volume XXVI, Issue 3439, 5 March 1932, Page 9 (Supplement)

Germany and her Creditors

The basic principle of British policy is that the reparation settlement must be final and permanent. Argument about the priority of polittjcal or commercial claims is regarded as largely academic. Separation, if ever P a *d again, will be paid because Germany's credit has been saved, and that credit can be saved by the faithful service of the commercial debt.

The key of the situation lies in Germany and nowhere else. British trials and hardships, heavy as they 40 *s#y be, are nothing in most respects ."k> those now pressing on the German people. They are passing through a grim winter in circumstances that might well drive a less disciplined and virile people to stark desperation. No people in Europe to-day are more worthy of the sympathy and friendship oi other nations; and no Government existing deserves more respect than Dr Bruning's. Faced amongst all living statesmen by the harshest and most perilous task, the Present German Chancellor has shown the true stuff of capable heroism. The grand old man-, President Hindenburg, is -as truly the " father of his country" as Washington. Without him the position would have become impossible.

Pessimistic speculation dwells upon the possibility of chaos in Germany—even of civil war. We are satisfied that there is no fear of it. Let us distinguish between the political and the economic aspects and take the former first.

* * * * Herr Hitler alarmed the world by his explosive interview with the British and American journalists. He seemed to suggest that the " Nazis" might seize power at any moment. His more inflammatory followers proclaimed that defiance of France would follow. Chancellor Bruning replied without hesitation that any attempt at revolution would be crushed by constitutional dictatorship. President Hindenburg's support and authority are the guarantee that this strong warning would be made good at need. No one must under-estimate Herr Hitler. He is passionately sincere. When he revolts from the subjection of his country under the Treaty of Versailles he speaks for the inextinguishable soul of Germany. By violence in the temper of civil war he would repel utterly the British, American, and other sympathies which would bo attracted and strengthened by courses more moderate in method, however determined in spirit.

This presumption does not mitigate any point of view the gravity the economic situation. Dr Bruning has issued his famous and rigorous decrees. His latest is the most drastic ukase in an unsparing series. Following other successive decrees, the further reductions of wages and salaries cut now to the bone. On the other hand, prices, rents, interest charges of all kinds' are forced down. In a very different spirit and with quite another purpose—National, not methods of Soviet Russia are temporarily but unflinchingly applied to the control of daily life and habit. We may say without exaggeration that the German people, oyer 65,000,000 of them, have been placed under the economic equiva-. lent of extreme martial law. This is the last word of contrivance and endurance. On these lines Germany can do no more. * * * *

THE EGREGIOUS DEADLOCK. From bow forward the question is

WAR DEBTS AND REPARATIONS. THE WORLD'S ECONOMIC PROBLEM. A CRAZY SYSTEM OF FINANCIAL CROSSPURPOSES. (By L. J. Garvin in the London Observer.)

what the other Powers are going to do in their own interest. Whether we like it or not, there is no other practical ground of appeal or argument. No Power will make a sacrifice not shared by the others. France is the principal "political creditor." America and Britain as the principal " commercial creditors " are in a very different and more ironic or even ludicrous position. On ordinary business security, as they supposed, they made large loans to post-war Germany for re-building and development. At present they cannot get back their money, which they never would have lent could they have foreseen the §§•* quel.

Their credits, meant to be recoverable at their early convenience, are hopelessly " frozen " now and for the near future—to the particular and heavy embarrassment of London. By themselves America and Britain cannot liquefy their claims. On the other hand, their money for years has been largely used by Germany to repay reparations to France. Otherwise, the whole crazy system of financial cross-purposes since the war would have broken down long ago. The egregious deadlock to which all the four nations chiefly concerned—the exenemy, two ex-Allies, and their exassociate—have come at last is one of the great tragi-farcical episodes of all history.

FRANCE BEGINS TO SEE IT. America desires that France shall take the lead, at least in the first stage of a tenacious and protracted negotiation. This wish may be wise. No one is concerned to dispute it. French policy until recently threatened to be altogether impracticable. But the situation has been deeply changed. It is useless to ask from the Reich in return for financial aid formal terms of political capitulation or humiliation such as no German Government could accept and live. This method could only lead to passive resistance by Germany at any cost; and to a serious alienation of civilised sympathies from France.

The real French programme insists on three things. First, Germany shall resume the payment of reparations to some extent as soon as her conditions sufficiently improve. Second, commercial debts owing to America and Britain shall have no priority, although they represent solid money lent under post-war conditions by the unfortunate English-speaking creditors. Third, that any permanent reduction of reparations shall be accompanied by an equal reduction of war debts. Chiefly addressed to Washington, the last condition is reasonable, and almost Certainly it is the key to the solution, or, at least, the mitigation, of the whole problem. * * * *

On the basis of the impossible treaties and the subsequent agreements, moderated but still injurious, the French claim to some degree of prolonged tribute from Germany is theoretically strong. Practically it is weak. It becomes weaker year by year. Nothing on earth can prevent its collapse before the world is very much older.

Without the flow of American and British commercial loans to Germany, the latter could not have paid reparations to France. So far ? Germany has not paid them. America and Britain, have paid them in addition to remitting a vast part of the original French debts. Fact is not only stranger than fiction. It may be far more quizzical.