Hoover to Laval!

Like two perspiring miners pickaxing toward each other from opposite sides of a stone wall were President Herbert Hoover and Premier Pierre Laval of France last week. They yearned, they slaved to clasp hands. From day to day the lessening thickness of the wall of disagreement could be measured in millions of dollars.

$97,000,000, Had France completely rebuffed President Hoover, the wall would have been $97,000.000 thick--that being the total sacrifice he invited France to make (TIME, July 6). But early last week France and the U. S. agreed on a procedure to postpone for one year the "postponable annuities" owed France by Germany. This thinned the wall to ap-proximately

$60,000,000. Next both pickaxmen whanged the "non-postponable annuities.'' a rock which loomed huge when France declared that the Young Plan must be preserved intact and that what was "non-postponable'' in the specific language of the Young Plan must be paid to France and kept by her.

Spitting figuratively on his hands, each pickaxman soon hewed concessions from his own side of the wall. President Hoover conceded that Germany must continue to pay. France conceded that she will not keep what Germany pays but will loan it back to Germany through the Bank for International Settlements.

Fragments remaining to be cracked after this big rock was split were:

Repayment by Germany of her B. I. S. loan should be made to France in how many years? President Hoover and Premier Laval agreed that repayment will be postponed for three years, then paid up fully in the following ten years.

The Central European Allies, proposed France last week, ought to be loaned $25,000,000, this to come out of the B. I. S. loan to Germany. Would President Hoover consent? He would not last week; but the President asked Chairman Eugene Meyer of the U. S. Federal Reserve Bank to see about a U. S. bankers' loan of $25,000,000 to the Central European allies of France.

The Guarantee Fund, a sort of fiscal flying buttress in the Young Plan, was cut out of the negotiations last week by Mr. Hoover, whose State Department announced: "We understand that the French Government now indicates that it can drop this from the discussion." Only a few hours earlier the obligation of France with respect to the Guarantee Fund* had brought the parleys near to a dead end.

By this time the wall of discord, so the hewers said, had thinned to only

$23,000,000, The final rock pickaxed last week was that of German reparation "payments in kind." payments made not in money but in goods.

How the system works: Sclimitz A. G. of Berlin receive an order for $100.000 worth of sausages from Pierre et Cie of Paris. They fill the order. The sausages are shipped from Berlin to Paris. Thereupon the German Government pays Schmitz A. G. $100.000: and Pierre et Cie pay the French Government $100,000. Obviously the eject of this procedure is that the German Government has paid $100,000 to the French Government, although no money whatever crossed the frontier.

France contended last week that contracts already existing between firms like Schmitz A. G. and Pierre et Cie must not be disturbed by the Hoover Holiday, a primary purpose of which is to promote world trade. But on this point President Hoover set his square jaw. His reason: "such deliveries" are in effect "payments." Mr. Hoover let it be known that "the spirit of the [Hoover] proposal" demands that no reparations payments be made by Germany during the moratorium year except such as are reloaned to Germany through the B. I. S.

Unsung Heroes. With a telephone headset clamped on his skull, President Hoover dominated the negotiations in Paris last week almost as completely as though he had been there like Theodore Roosevelt with a Big Stick. French papers again accused the President of roughness, rudeness and big stickery--but their tone was less angry than at first.

Trusty Hoover helpers who scampered sweltering around Paris day & night, popping in now upon Premier Laval, now upon Finance Minister Pierre Etienne Flandin, and now upon "the Old Tomcat of the Quai D'Orsay," slumberous, feline Foreign Minister Aristide Briand, included notably a youngster and an oldster.

Andrew William Mellon, despite his 76 years, vigorously sat up nights with the best, revealed a surprising ability to understand French. (Only one of the French negotiators had any command of English, Finance Minister Flandin.)

Robert T. Pell, young and no member of the U. S. Foreign Service, is said to be privately employed by Ambassador Walter E. Edge to whom he is personal private secretary. Throughout the week Personal Private Secretary Pell played important intermediary roles, chiefly the Great Interpreter. So able was his work that French statesmen called in no French interpreter.

Breaking Through. Goading President Hoover, Tomcat Briand, Secretary Mellon and Premier Laval to efforts which finally succeeded was the desperate state of the German Reichsbank last week.

Fear among capitalists that their money was not safe in Germany produced a "flight of capital," which strained, almost sprained the credit resources of the Reichsbank. President Hans Luther had received a new credit of $100,000.000 from New York and other banks to defend his position. Ordinarily a hard pressed government which receives such a credit is able to stretch it over the requirements of months--as Italy did when she got $100,000.000 some years ago. Last week Dr. Luther found that he had run through the $100.000.000 literally in a few week?! Hoover and Laval must not fail.

Precisely on what basis the two pick-axers at last broke down all barriers and clasped hands they were not in a position to reveal last week. The President's announcement, ringing with triumph (see p. 11), was meagre as to details. But hands had been clasped, a bargain struck along broad lines already well defined, and it appeared that experts limited or experts unlimited would do the rest.

"Without going into technical terms." said Washington, "while certain payments are made by Germany for Reparations accounts, the substance of the President's proposal is retained, and the sums so paid are immediately returned to Germany. . . . The technical difficulties arising from many complicated international agreements ... are now in course of solution by the good will and earnest co-operation of government leaders everywhere."

Quick and spirited in his praise of the I. S. was German Foreign Minister Julius Curtius. Said he: "What Andrew Mellon did is simply grandiose. To think that this fine old gentleman came over here expecting to spend most of his time with his son, and instead plunged into the in- tricacies of this discussion is simply great."

*Should Germany default her Reparations payments this year, France is obligated by the Young Plan to pay $119,000,000 into a Guarantee Fund for the benefit of Germany's other creditors if asked to do so by the B. I. S. The matter was dropped when France received assurances last week that the B. I. S. would not call on her in case of German default.

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