INTERNATIONAL: Underlining, Creating

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Germany was not the only country affected by her economic plight last week. All banks closed in Hungary for three days. In Vienna the great Mercurbank, largely owned by Berlin's closed Danat, shut its doors and begged for a six-month moratorium. Other banks suspended in Danzig and in Riga. The fire was coming dangerously close to France's allies in Central Europe: Poland, Jugoslavia, Czechoslovakia, who must be saved to preserve French military supremacy. Had France overstepped the mark by demanding, as the price of a further loan, political concessions from Germany which no German Cabinet could accept and remain in power? The world press seemed definitely anti-French last week. French editors received a little of the scorn they have heaped on the U. S. these many years, and it stung. Swarthy Premier Pierre Laval, the butcher's son who gave up extreme Socialism to be a disciple of Tardieu and Briand, complained:

"France is no Shylock. She merely demands some concrete expression of good will."

Britain was worried. The pound sterling fell to $4.83⅞, lowest since Britain's return to the gold standard in 1925. A conference of experts had already been called to London to settle technical details of the Hoover Moratorium. The Labor Government supplemented this with a call for the Premiers or Foreign Ministers of Britain, France, Germany, Belgium, Italy, Japan and the U. S. to meet in London in an effort to avoid a world crisis.

Washington broke a 12-year precedent by officially delegating Secretary of State Stimson, Secretary of the Treasury Mellon, Ambassador to France Edge to the conference. Ambassador Dawes was ordered to leave Evanston, Ill., get back on the job in London as soon as possible (see p. 9). The world press hailed this as the breakdown of U. S. Isolation.

It was France's turn, and she moved, as usual, shrewdly. She waved not a 300-million, but a 500-million-dollar loan in the face of Germany, but she insisted that German Ministers must discuss this loan in Paris first before going on to the London conference. The gist of the French offer:

The U. S. Federal Reserve Board, the Bank of England, the Bank of France would collaborate on a Reichsbank credit of $500,000,000. Since this must be a temporary loan it would be guaranteed by a covering loan from the Governments of Great Britain, France, the U. S., Belgium, Italy. The loan would be repaid in ten years, and would carry a mortgage on the receipts of the German customs*

New Conditions. France was willing to stop talking about the Austro-German customs union and pocket battleships, for the nonce. Instead she phrased her political demands a little more politely:

Germany must pledge not to increase her military budget, directly or indirectly, until after repayment of the loan.

Germany must agree to observe a "political moratorium" for the next ten years; i. e.. there must be no more agitation for revision of the Treaty of Versailles, return of the Danzig corridor, return of German colonies, etc. etc.

Germany must agree to resume Young Plan payments immediately on the cessation of the Hoover Moratorium.