Quickly Done

"We are not here to enforce or to defeat or to humiliate; we are here to understand and to consider our own problems objectively, to remember how closely, in essentials, we depend upon each other. . . . There can be no question about the inherent strength of the German economy provided that it has the capital resources that it requires. . . . But I think our first step is to decide with the greatest possible expedition the means by which this shall be definitely carried into effect. I emphasize: The greatest possible expedition.

"Time is against us. Every day adds to the risk of a collapse which will be outside human control."

Thus Ramsay MacDonald, his Scotch voice trembling with emotion, welcomed the ministers of six other nations to a conference in London last week to decide what could be done to save Germany from a collapse that would almost certainly drag down the rest of Europe.

All but the French were just as well aware as Scot MacDonald that what must be done must be done quickly. There were two possibilities. Scot MacDonald ticked them off in his opening address:

1) A long term loan to Germany by the central banks of Britain, the U. S. and France.

2) An agreement among the creditor nations to continue their present short-term loans to Germany, to exert pressure on their own private banks to stop the draining of German credit.

German delegates had insistently repeated that the long term loan was vital. France had the ready cash for the loan, but immediately the conference was faced with the stone wall of French political demands which it might take weeks to scale. By that time it would probably be too late. Thus the conference was not 24 hours old before observers realized that the two alternatives were rapidly getting down to one.

In this state of affairs the Italian delegates, the Japanese delegates, the Belgian delegates looked very owlish and did nothing whatever. The French, sure of their own position, did nothing either, but took pains to be exceedingly polite. Realizing that France and Germany must come to direct terms sooner or later, the French and German delegations stayed at the same hotel, the Ritz. Junior attaches breakfasted together publicly. Swart Premier Laval and stoop-shouldered Brer Briand were always willing to see reporters. On the crucial morning of the conference Brer Briand posed amiably for reporters even though he had just gashed his cheek open while shaving. Nerves of the U. S. delegates were frazzled. For two days wires sputtered with details of a ruckus between shock-headed Secretary of State Henry Lewis Stimson and his assistant in Washington, William R. Castle.

"Hoover Plan." Suddenly from the Washington office of Assistant Secretary of State Castle came the full text of a message the President had sent to Statesman Stimson in Paris the week before, and news of a grand "Hoover Plan" which Mr. Stimson was supposed to have presented at the conference. Reporters rushed to Stimson.

"I presented nothing of the sort at the conference," said he testily. "I see I shall have to establish a bureau of denials. I don't know how in the world that story got about. I certainly talked, but I made no fresh proposals.

Bathtub Situation. "The situation we are faced with," continued Statesman Stimson, "is something like a bathtub. The stopper has been out and the water has been running out rapidly. It is necessary first to put the plug back in the hole. Then it is necessary to examine what water is left and to see if it is sufficient for the purposes at hand. If it is, well and good; if it is not it may be necessary to put more water in it. . . .*

"The plan we have been working on is as much a product of British thought as American and most of the other nations contributed suggestions. . . . I personally have never been able to understand why statesmen rather than bankers were summoned to this conference. Perhaps it was thought that statesmen are not so busy as bankers."/-

Plaisanterie. Of Germany's outstanding short-term loans, about 60% are held in the U. S., about 30% in Britain, only 5% in France. Philip Snowden, British Chancellor of the Exchequer, made an ingenuous attempt to persuade France to take over a larger proportion than this. Premier Laval could scarcely believe his ears.

"C'est de la plaisanterie, hein? [You're joking, aren't you?]"

"London and New York bankers did not lend that money for the humanitarian purpose of saving Germany," said he. "They lent as ordinary business and banking transactions, to make a profit. They borrowed a good deal of it from France at a low rate of interest and lent at a high rate. There is no reason now why France should assume a part of these burdens."

Nobody tried to make the French do anything else. Next day the Hoover-Stimson-MacDonald Plan was adopted in a communique signed by Scot MacDonald. It had four features:

First, the $100,000,000 emergency credit to the Reichsbank was to be extended for another three months.

Second, concerted measures should be taken by the financial institutions of different countries with the view of maintaining the volume of credit they already have extended to Germany."

Third, the Bank for International Settlements was asked to set up a committee to study the possibility of converting short term German credits into long term.

Finally the conference recalled that two weeks prior, just before President of the Reichsbank Luther made his historic rundfahrt begging loans for Germany, 1,000 German firms had offered the German Government a credit of some $125,000,000 (TIME, July 20). The conference suggested this as "a sound basis for the resumption of the normal operation of international credit."

Moral Future. If the delegates did nothing else, they established a record for speed in international conferences. Within 72 hours after the conference started, the delegates, having approved a paper plug for Germany's leaking tub, adjourned to the royal garden party at Buckingham Palace where flunkies handed them large bowls of fresh raspberries with cream.* World stock exchanges signalled the event by going into a gentle decline.

British and U. S. efforts to aid Germany did not end with the end of the conference. Much-traveled Mr. Stimson was off again on an "unofficial" visit to Berlin. Scot MacDonald and British Foreign Secretary Arthur Henderson promised to follow him at the earliest opportunity.

Before returning to Paris Premier Laval explained himself to the Press:

"I believe I have taken the proper course. . . . Will the measures which have been adopted or recommended prove sufficient to withstand the evil? We must hope so. As to the remedies which will act more profoundly . . . these remedies demand, above everything else, an evolution of a political and moral nature."

Premier Laval let it be understood that some time soon he would go to Berlin and continue with Chancellor Bruning the brotherly conversations by which they hope to speed "political and moral evolutions," draw France and Germany together. Meantime, things happened which strengthened M. Laval's new financial mastery even more.

Old Lady Drained. Whether under political orders or not, French bankers were calling home gold from England at a steadily increasing rate. From the Bank of England went $145,500,000 of bullion in 13 days. In one day alone losses were $16,911,700 (chiefly bar gold) the greatest drain the Old Lady of Threadneedle had known in all her 237 years.

*For news of a real bathtub situation, involving Secretary Mellon, see p. 42.

/-Most renowned U. S. banker J. Pierpont Morgan steamed into Southampton water last week on his yacht Corsair after a record Atlantic crossing (7 days, 7 hr.), the Corsair's second this year. He laughed when asked if he had hurried to participate in the London Conference, said he would spend a few weeks at Wall Hall, his Hertfordshire estate, shoot a few grouse in Scotland. In 1926 a Morgan loan helped save the French franc from collapsing. In 1925 a Morgan bond issue of $100,000,000 helped pull Italy from grave financial difficulties. Four months ago a $60,000,000 international loan, engineered by Morgan, was offered to Royalist Spain to bolster the peseta. The House of Morgan underwrote part of the German Government 5 1/2s in 1930. But in all the conferences, statements, interviews about Germany's greatest crisis, the name of Morgan has not once appeared.

*Proudest of the 10,000 raspberry eaters at the garden party was Arthur Barlow, an ironmonger's clerk from Derby. Because he has raised thousands of pounds for the Derby hospital by organizing charity concerts, Mr. & Mrs. Barlow were invited by George V. Mrs. Barlow gave up her summer vacation so that Arthur Barlow might attend properly accoutered in topper, frock coat and high button shoes. "I wish my wife could have gone too," said he last week, "she would have enjoyed it so much. I saw tears in her eyes as my train left Derby."

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