Schacht to a Piggery

"I will now become a country squire and raise pigs. . . . My resignation as President of the Reichsbank is absolute and final." Thus to flabbergasted Berlin reporters last week spoke Germany's famed "Iron Man," her financial champion at every Reparations conference in recent years, Dr. Hjalmar Horace Greeley Schacht.

Instant results: The whole list of stocks on the Berlin Borse went off an average of six points, shares of the Reichsbank itself tumbled 15 points. Strongest industrials could not resist the blow. Salz-detfurth Potash lost 13 points, and the gigantic firm of Siemens & Halske (comparable in Germany to U. S. General Electric) was knocked for a loss of twelve. If the Director of the Reichsbank did not sell short before he handed his resignation to President Paul von Hindenburg, he resisted titanic temptation, proved himself indeed an "Iron Man."

"Is it true, Dr. Schacht," asked the representative of a Berlin socialist daily last week, "that as long ago as Feb. 20 you told your friends in Wall Street and Mr. Owen D. Young what you intended to do?"

Slowly the face of the "Iron Man" grew livid, but he controlled himself, answered evenly: "Aside from the damnable insinuation that a man like Mr. Young might use information, if given, for purposes of speculation, the report is absolutely false. I desire to assert emphatically that not even the German Government, but only President von Hindenburg, knew of my intention to resign."

"Don't call it the Young Plan!" Squarely and consistently Dr. Schacht took his stand last week on the same "high moral ground" which he mentioned at the second Hague Conference (TIME, Jan. 13, et seq.). He charged then that the original Owen D. Young reparations plan, drawn up at Paris by world's greatest financiers (TiME, Feb. 18, 1929, et seq.), has now been so modified by politicians like Philip Snowden and Andre Tardieu that it is no longer the same thing. "Don't call it the 'Young Plan' any more!" snapped Dr. Schacht last week. "At the second Hague Conference the Young Plan was annihilated entirely!"

Because the Young Plan which was scheduled to come up this week for ratification by the German Reichstag is not in his view the Young Plan he signed at Paris, Dr. Schacht considered it his duty to resign last week.

"But--but--" sputtered a correspondent who did not find this line of reasoning easy to follow, "But, Dr. Schacht, is there any particular point to your resignation?"

Instead of flying into a temper, or sinking into a dignified sulk the "Iron Man" answered crisply:

"I simply didn't want to resign too late. I made up my mind to resign before the final vote in the Reichstag, not because I expect my action to influence the vote one way or another--I don't care what the politicians do; that's their worry, not mine --but because I don't want anybody to say afterward, 'Oh, but if we had known you were going to do that we would have acted differently.' My act has nothing to do with politics; it is merely the moral act of a self-respecting man."

Sanctions v. Confidence. In judging whether Dr. Schacht was right or wrong about what the Young Plan is today two facts are pertinent. The Plan has not been altered in the broad sense that it still fixes for the first time the total Germany must pay in reparations, fixes the sums to be paid annually for 57 years, and sets up as a "cash register" the new bank for international settlements. But there have been profound changes in the spirit of the Plan. It was conceived as a business plan, and business today rests heavily on such vague but vital things as "confidence" and "goodwill." Dr. Schacht was talking truth when he said last week: "After the second Hague Conference nothing remained of mutual cooperation, nothing of confidence in Germany, nothing of helping Germany to carry out the difficult task prescribed in the Young Plan. ... I am even now willing to accept the Young Plan in the Young spirit. What is now before the Reichstag I call the Hague Protocol. Sanctions [the right of the Creditor Powers to punish Germany if she defaults] have been introduced again. . . . Germany won't be a free agent after all, although Young . . . wanted this. Sanctions have nothing in common with the Young Plan as conceived in Paris."

"But, but!" again sputtered the same correspondent, "don't you know that Foreign Minister Julius Curtius [who signed the Young Plan for Germany at The Hague] considers that what you call the 'Hague Protocol' does not permit the applications of sanctions against Germany?"

This time Dr. Schacht took a swift and angry puff at his cigar, did not bother to remove it before speaking.

"Nobody outside of Germany," he shot back, "believes in Curtius' legalistic interpretation!" In fact, as everyone knows. Prime Minister Andre Tardieu is popular at Paris very largely because Frenchmen believe that he obtained the right of sanctions at The Hague. On the other hand, Foreign Minister Julius Curtius, who was matched against the shrewd Tardieu and the stubborn little Snowden, feels that he came off with the best deal possible under the circumstances, and is never tired of reminding his fellow Germans that France has agreed to take sanctions only in case the world court has first ruled that Germany is willfully defaulting on her reparations payments.

This is the "legalistic" safeguard which cigar-puffing Dr. Schacht scorned.

Virtuous Schacht v. Virtuous Young. Most correspondents cabled their belief that the Reichstag would ratify the Young Plan, despite Dr. Schacht's moral performance. The board of the Reichsbank prepared to meet and elect Dr. Schacht's successor, were expected to pick one of the following: Dr. Hans Luther, twice Chancellor and perhaps Republican Germany's most famed economist; Dr. Carl Melchior, the Hamburg banking tycoon; Dr. Franz Urbig, partner of Disconto-Gesellschaft. Terrific was the sensation caused in Berlin by a story (impossible to confirm) that Owen D. Young told the German Ambassador at Washington two weeks ago of Dr. Schacht's intention, and that in this way the German cabinet (as distinct from President Hindenburg who is above the cabinet) learned ahead of time of Dr. Schacht's intention to resign. The angle put upon this story was that Mr. Young was shocked by the opportunity for profit offered him, refused to embrace it, and gave Dr. Schacht away to the embassy out of a high sense of honor. Whatever one believed Virtue still seemed to be triumphant.

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