THE New Zealand Herald AND DAILY SOUTHERN CROSS MONDAY, AUGUST 1, 1932 A CRITICAL HOUR IN GERMANY

New Zealand Herald, Volume LXIX, Issue 21249, 1 August 1932, Page 8

THE New Zealand Herald AND DAILY SOUTHERN CROSS MONDAY, AUGUST 1, 1932 A CRITICAL HOUR IN GERMANY

Interest iii the German elections is intensified by the fact that Germany is still the storm centre of Europe, and so of the world. If the outcome should be a triumph for rabiu nationalism, much that has been done to give peace and hope to Europe may be undone, and the whole weary continent be forced by circumstances to undertake anew the task of international adjustment. There is reason to fear that this rabid nationalism may assert itself sufficiently to embarrass, if not oust, the moderate forces that have been struggling to direct and impose governmental policy. They have maintained their position but have been compelled to adopt unusual means in so doing. This necessity has increased the risk of popular reaction against them. What has happened is so vastly different from British experience that it is difficult to justify, difficult even to understand. Political development in Britain and Germany has taken opposite directions. In Britain the national crisis produced a closing of the political ranks ; in Germany there has been a widening of the gulf between leading parties. This has been associated with a weakening and discrediting of parliamentary rule. The Reichstag, theoretically the repository of democratic government in the federal republic, has been virtually out of action for more than a year. In 1930, the elements opposed to the Government won so large a number of seats that its stability was threatened. Instead of allowing the battle of purposes to be fought out in the regular arena, the Government chose to fall back on the promulgation of emergency decrees, with tho aid of Marshal yon Hindenburg's exercise of decisive powers vested in him as President. To complete the failure of parliamentary rule, the extreme nationalist group deserted the Reichstag, preferring to conduct an intensive campaign throughout the country. In the present elections the battle is again joined between this faction and the existing regime. A momentous conflict thus comes now to a critical hour. The more or less barren controversy in the lleichstag gives place to a trial of strength at the ballot-box, and the main issue is between narrow nationalism and international co-operation. It is not so clear-cut, however, as such a general description may imply. From the forecast published to-day it appears that tho parties regarded as likely to emerge with any considerable strength compose a'medley of cross-purposes. Yet certain definite aims can be distinguished. The Centre Party, which has supplied the last two Chancellors, Dr. Bruening and Herr von Papen, the latter belonging to its right wing, has a moderate policy, marked by a readiness to engage in international cooperation. In this it has had the support of the Social Democrats, although they earlier joined with the Communists in opposing the emergency decrees and thus brought about the dissolution of the Reichstag in 1930. It is this moderate policy, with its international implications, that has aroused the antipathy of Hitler and his National Socialists, generally known as the Nazis. They take an extremely nationalist attitude, as do some other parties of the Right. Between these divergent policies, when judged by their outlook on foreign affairs, the gulf has widened of late, although it is not so long since Hitler was endeavouring to persuade foreign Powers that he was prepared to be entirely friendly. There is now no doubt that, should he be successful in his bid for office, or even have a following strong enough to dictate terms to the Government, the prospect of prolonging German co-opera-tion in Europe and in the League will be seriously diminished. His party has been rapidly increasing. From a registered membership of 293,000 at the elections in September of 1930, it grew to over 800,000 by the end of last year; but outside the registered membership is a huge political following and this also has grown—from six and a-half millions iri 1930 to more than double that number now. These figures provide a reasonable basis for the expectation that the 110 Nazi seats in the last Reichstag will be increased to 220 in the next.

The trend of recent events shows that the strongest opponents of Hitler's furious nationalism are the two parties of the Left—the Social Democrats and the Communists— -for the moderate parties of the Middle and Right have been practically eliminated, although from some oi them have come leaders personally strong enough to attract diverse support. Hitler has endeavoured to keep the peace with the Social Democrats, numerically stronger than his own party, but an unabated feud rages between the Nazis and the Comrnunists. This has been chiefly icsponsible for the constant turmoil, leading to riotous bloo/lshed, that has extended in this election campaign. Utterly Marxian in creed, and therefore scorning national boundaries, the Communists decry Hitler's swashbuckling policy and he in turn loses no opportunity of hurling his armed "storm detachments" at their assemblies. He is set on keeping alive the military traditions of Germany and openly derides the pacifism that has made considerable progress among all classes. It would not be surprising if an unprecedentedly violent clash with the Communists takes place in this election, for they are apt to reply in kind. This campaign is evidently more bitter than any heretofore, and whatever the outcome it cannot be viewed without anxiety for Germany and the outer world. It may lead, as is to-day suggested. to no decisive political triumph, and so to a compromise Government, but it may provoke in the process a hurtful reaction of resentment at home and disquiet abroad.

WAR LOAN CONVERSION At a bewildering speed the British Treasury and the banks have kept abreast of the war loan conversion operation, the rush for the month, represented by applications in respect of 2,000,000 holdings, being accounted for by the time limit governing the cash bonus of £1 per cent. Oversea applications will qualify for the bonus provided they have been posted by the final day, July 31, but as far as Great Britain is concerned this offer is now closed. Thus the rush will end. Some 600,000 holdings are not yet accounted for. but the probability is that the majority will be converted automatically, silence in this case meaning consent. The proportion of holdings for which cash redemption was demanded is very small, the last oxact figure being 114,000 out of 1,809,000. The amount represented has not been stated, but in view of the number of large individual blocks of the .stock included in the conversion total the probability is that the proportion of value will be much lower than the numerical ratio. Certainly the sum will not cause the Government any embarrassment under the circumstances. W hen Goschen's conversion of Consols was made in 1888 the principal involved was £592,000,000, of which only £750,000 had to be redeemed by cash. The indications are that an equally satisfactory result may be expected from the present operation. With £2,000,000,000 involved it is the largest of the kind ever attempted, but not by reason of dimensions alone is it unique. The difficulties and uncertainties of the time are a factor which adds to the merit of the general decision to decline to apply for cash.