Mark Hangs High

Germany outstripped even the U. S. in exports last week. On the basis of trade statistics covering the first ten months of 1931 Deutschland became uber alles the world's leading export nation. Her surplus of exports over imports ("favorable trade balance") for the year thus far was $561,240,000.

On international exchange the German mark rose approximately to par* last week for the first time since last May. During the July crisis, when President Hans Luther of the Reichsbank flew like a distracted June bug from Berlin to London to Paris to Basle seeking funds (TIME, July 20), the mark knelt at a low for the year of 20-c-.

Normally a Great Power whose currency is at par and whose exports are equaled by no competitor would be rolling in riches, able to pay her debts twice over. Not so the Fatherland. In Berlin last week stern Chancellor Heinrich ("Iron Cross") Bruning took that famed "initiative" which President Hoover and Premier Laval recently agreed should be taken toward securing a further reduction of what Germany must pay (TIME, Nov. 2).

Writing to the Bank for International Settlements (custodian of the Young Plan at Basle, Switzerland) the German Government politely hailed President Hoover's "farsighted initiative" in arranging his One-Year Moratorium, but continued with asperity: "The hope that this . . . would mean a definite turn in the world crisis did not materialize. . . . The Hoover year alone was unable to dispel the danger of a collapse."

The new initiative, now needed finally to dispel the danger of a collapse, Germany took like a bashful Bruennhilde last week with these coy words: "The idea has come more and more to the front of ... convoking a special advisory committee. . . .

"In accordance with the Young Plan, this proposal requires a declaration on the part of the German Government to the effect that 'it has arrived at the conclusion in good faith that Germany's exchange and economic life may be seriously endangered by further transfer in part or in full of the postponable portion of her annuities.'

"In making this declaration the German Government must point to the fact that such a declaration does not do justice to the present state of things ... an unprecedented crisis."

To do justice to the present state of things, Germany's note trespassed upon and overstepped Premier Laval's contention that the "non-postponable" German payments under the Young Plan are positively non-postponable, and that neither they nor German private debts and short term credits are within the competence of a committee called under the Young Plan.

President Hoover was supposed to have agreed to this "French thesis," and Premier Laval has been repeating it with insistence to German Ambassador Leopold von Hoesch at Paris (TIME, Nov. 9 et seq.). But in flat contradiction the German note declared last week that the new Young Plan committee "must examine the problem in its entirety" both as to non-postponable and postponable annuities "and must especially take into account that the question of Germany's private indebtedness must be newly regulated in good time before the end of February 1932."

Significance-- Laymen who could not understand why the German mark should almost touch par last week while the German Government claimed to be weltering in an "unprecedented crisis," were enlightened by their bankers. They also learned why Germany, having outstripped all competition in exports, remains hard-pressed, unable to meet her obligations.

Breaking down the German export surplus of $561,204,000 for the first ten months of 1931, one sees that nearly half this surplus consists of exports to Soviet Russia and of "payments in kind" to the Reparations' creditors of Germany. The latter, of course, are a drain on Germany, not a gain. The exports to Russia are a story in themselves (see p. 20). Unlike other German exports they were sold on the longest of long export credits. To furnish these credits, German banks and the Reichsbank in particular have been drawing on available credit resources to the limit. Last week the Reichsbank's resources of gold foreign exchange further declined.

That in such circumstances the German mark should touch par last week, wise-acres attributed to speculative confidence springing from the fact that Germany had at last taken the Hoover-Laval "initiative" and seemed on the way to a new easing of her threatened fiscal position. But for the Dawes Committee the post-War mark could never have been stabilized on a gold basis. But for the Young Committee it could not have been kept there. But for bright hopes spurting from the proposed new committee the mark might not have hung high last week.

Wiggin to Berlin-- Officials of the Bank for International Settlements announced that the Young Plan committee asked by Germany will meet in their offices at Basle, Switzerland, Dec. 7. Lest this Committee give Reparations priority over short-term credits, the interests of Germany's short-term creditors will be protected by a special bankers' committee announced last week to meet Dec. 10 in Berlin. Potently on this committee will sit Board Chairman Albert Henry Wiggin of Manhattan's Chase National Bank.

Normally any banker assumes that "of course" his short-term loans have priority over long-term political debts. But with France assuming that "of course" the non-postponable Young Plan payments must be protected at all costs, conflict loomed between the Berlin and Basle committees.

* Specifically, to 23,800, last week. Par is 23.82%.

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