"Air & Sun"

Fifteen years ago the diplomatic bricklayers at Versailles raised many a high wall around Germany. Since last year Nazi persecution of Jews and Communists has raised several new ones. Last week Prussia's Premier Hermann Willhelm Goring shouted: "The German nation needs room if it is not to suffocate. Germans, too, need air and sun."

Trade Wall. Sir Robert Mond, chairman of the British boycott committee, said last week at Samuel Untermyer's Yonkers, N. Y. home: "The boycott is highly successful. It is a stupendous uprising of outraged humanity. . . ."

How high this trade wall has grown was shown last week in a speech by Nazi Minister of Economics Kurt Schmitt. First he wheedled: ". . . The outside world should recognize that the gigantic efforts the German people and its leaders are making arise from great distress. It would be better if the searchlight were not thrown on our alleged mistakes and shortcomings. . . . Not through mutual throttling of trade or secret joy that things are going worse with our neighbors will the world be put right again."

Next came a double-barreled threat: "If foreign markets remain closed, not only shall we be unable to continue payment of the service on our foreign debts, but the outside world will not be able to sell to us raw materials in such amounts. Germany will find ways to make a virtue of necessity [i. e., paper clothes, acorn coffee, etc.]. Given the present state of our technical methods, it will be not a temporary measure of alleviation but a permanent transformation with immense consequences to world markets."

An angrier note was struck by Reich Commissioner for Justice Hans Frank before Berlin's American Chamber of Commerce: "No boycott will force us to our knees and the world might as well make up its mind that it is no longer dealing with the Germany of Versailles. . . . We have been called Huns and barbarians because we wanted to expand our constitution. Germany does not intend to interfere with the constitutions of other peoples and she will not tolerate foreign interference with her constitution."

Ignoring increases in internal production costs and in raw material imports, boycotters found in Germany's balance of trade figures proof that their campaign was working well. In January Germany's balance of trade showed a deficit of 22,200,000 marks; in February this had mounted to 34,600,000 marks; in March Germany stopped the decline with a small favorable balance, 3,400,000; but in April the deficit showed again, bigger than ever -- 82,000,000 marks. Meanwhile the Reichsbank's gold coverage had dwindled to 4.6%. Last week the Nazi Government, responsive to the adverse trade pinch, reduced once more its total allotment of foreign exchange to private German importers. First fixed at 50% of the 1930-31 figure (one-half of normal) early this year, it had been cut to 35% for April, to 25% for May. Last week it all but vanished in the 10% figure for June. At the same time the Government was reducing utilization of reimbursement costs from 70% of the 1930-31 figure for April to 50% for May and last week to 20%.

Excluded from these allotments were importers of goods Germany must have: wool, cotton, hides, furs, basic metals. But these importers are under direct Government supervision. Hence, last week's reductions at once set up a counter-wall against the boycott and tightened Nazidom's hold on private German business.

Red Wall, Last week a mammoth trial of in Communists on charges of "preparing to commit high treason,'' opened at Breslau. Soviet Russia's mounting resentment against Nazi abuse of Communists and Communism was reflected to a certain extent in the total of Russian imports from Germany in the first quarter of 1934: 21,000,000 marks as against 181,000,000 marks for the same period in 1932.

Debt Wall, Bound up inside Germany are long and medium-term private debts owed to foreign creditors of some 8,000,000,000 marks ($3,140,000,000 at current exchange) and an annual interest bill of about $195,000,000. Last week one of Germany's smartest bargainers, Reichsbank President Dr. Hjalmar Schacht, lowered the debt wall again at the end of a month-long haggle with representatives of Germany's U. S., British. French, Swedish, Dutch and Swiss creditors.

Dr. Schacht had boldly asked for a complete moratorium. He got one for six months, and considerable savings afterwards. He had tried desperately but failed dismally to bring the Dawes and Young plan loans into the haggle.

The new formula gives German creditors the choice of: 1) funding their due bonds at full value; 2) cashing them at 40% of the coupon value (subject to Germany's ability to pay anything at all), or 3) holding the original coupons with all original rights and the dim hope of cashing them some day.

Creditors' victories: 1) The funding bonds will be issued in the currency of the holder; 2) the German Government guarantees eventual payment in that currency.

Dr. Schacht's victories: 1) the 40% cash value figure was just half what U. S. creditors first demanded: 2) the creditors recognized the principle that Germany wants to pay but cannot.

Thoroughly dissatisfied, the representatives left for home to get the necessary approval of the creditors. President J. Reuben Clark of the Foreign Bondholders Protective Council called the new formula "not fair, just and equitable to the American bondholders," charged that certain European governments still had a chance to bargain for full servicing on their bonds. The Swiss and Dutch creditors flatly rejected the formula.

The German Press caught Dr. Schacht's cue and straightway began to howl against the exclusion of the Dawes and Young loans from the agreement and in favor of stopping the 'immoral" payments entirely after July 1.

Frontier Walls-- A fine ceremony in Berlin last week transferring the ''tradition'' of the former German East African police troops to Prussia's state police reminded Germans of their lost colonial possessions. Shouted Premier Goring: "We say, very openly, that Germany needs colonial territory in order that she may not suffer internal suffocation." Louder rose the voice of an old warhorse, president of the German Colonial Warriors' League, Nazi Statthalter for Bavaria, General Franz von Epp: "We oldtime colonial soldiers keep alive the memory of the colonies of which we were robbed. . . . This 'tradition detachment' is to assure the task of fighting the battle for 'German room.' This task extends far into the future. Germany cannot get along without those colonies."

Thus, for the first time, Nazi leaders openly pounded on a wall that the rest of the world has ignored for 15 years. Most valuable of her colonies was German East Africa and particularly stubborn was the German Wartime defense of it, which was still going on when the War ended.

Last week Premier Goring, warming too well to his subject, went on to make a bad blunder: "The task of the police is not only to guarantee the security of the State against all enemies but also to be ready, when the hour of danger strikes, to defend the Fatherland at its frontiers." 'Since Germany has always claimed that her 110,000 police, quartered in barracks, should not be counted in her soldier totals, the Nazi publicity department hastily inserted in Goring's sentence the phrase "in 'common with all Germans."

Same day a Paris Le Soir reporter badgered Nazi Foreign Minister Baron Constantin von Neurath into an equally damaging admission: "That we have factories that can change to the manufacture of arms is a well-known fact in Europe. But in that respect we are still far from equality with other nations."

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