INTERNATIONAL: Gold Over Europe

1930

May 9: The Young Plan adopted, puts Reparations & War Debts on a "business basis" — fiscal skies serene.

1931

May 14: First thunderclap of the present crisis: collapse in Vienna of Kreditanstalt, colossal Rothschild bank, which is taken over by the Austrian Government, shaking confidence in related German banks.

June-July: A rush to withdraw credits from Germany becomes frantic as France blocks the Hoover One-Year-Moratorium-to-save-Germany for 15 days (June 21 to July 6), but signs Moratorium Accord July 6.

July-Aug.: Germany "saved" by agreement of her creditors (under U. S. impetus) to leave their short term credits "frozen" in the Reich.

Sept. 21 : $650,000,000 credits extended to the Bank of England by U. S. & French banks nearly exhausted, and the pound Sterling ($4.8665) goes off the Gold Standard, declines to $3.45, recovers to $3.92 (in October).

Sept.-Oct. : Attacks on the U. S. dollar and gold hoarding in Central Europe.

In Vienna last week Chancellor Karl Buresch of Austria grimly fired from their jobs 25 of the 28 directors of Kreditanstalt. Cried Dr. Buresch:

"These men — these directors — dealt Austria a greater blow than they can ever answer for! For months the condition of their bank has influenced every decision of the Government, by reason of the necessity of advancing and guaranteeing huge sums to save the Kreditanstalt from bankruptcy.

"My Government's investigations of these men will be continued, and those found responsible will be brought before a judge and forced to pay compensation! My Government's action in dismissing 25 of the 28 directors was made necessary by their continued refusal, even up to now, to accept cuts in their directorial salaries."

Reported the Vienna paper Stunde "on high authority": Chancellor Buresch expects to force President Louis Rothschild of Kreditanstalt* to make "enormous personal restitution."

But, however that may be, when the Baron tendered his resignation as president, it was refused. Of the three Kreditanstalt directors still holding their jobs two are recent Government appointees and only one is precrash, honest Dr. Alexander Spitzmüller-Harmersbach.

Bankers Warm. The Bank of France last week tried a threat on Wall Street. So, at least, some U. S. bankers thought. Their patriotism, kept sternly in check on ordinary occasions, was abruptly aroused. What was called the "French threat" was this : the Bank of France told Wall Street banks with which it had short term balances of some $600,000,000 that their rate of interest (1½%) was "unsatisfactory."

That was all. But when any depositor says such a thing to his banker, he means that he is thinking of taking his money somewhere else. Could Wall Street stand, last week, to lose $600,000,000? In Europe, especially in Berlin, editors took the line that "Wall Street must yield to the Bank of France" (i. e. must persuade the French to leave their deposits in Manhattan by offering higher interest).