Underlining, Creating

Germany was not the only country affected by her economic plight last week. All banks closed in Hungary for three days. In Vienna the great Mercurbank, largely owned by Berlin's closed Danat, shut its doors and begged for a six-month moratorium. Other banks suspended in Danzig and in Riga. The fire was coming dangerously close to France's allies in Central Europe: Poland, Jugoslavia, Czechoslovakia, who must be saved to preserve French military supremacy. Had France overstepped the mark by demanding, as the price of a further loan, political concessions from Germany which no German Cabinet could accept and remain in power? The world press seemed definitely anti-French last week. French editors received a little of the scorn they have heaped on the U. S. these many years, and it stung. Swarthy Premier Pierre Laval, the butcher's son who gave up extreme Socialism to be a disciple of Tardieu and Briand, complained:

"France is no Shylock. She merely demands some concrete expression of good will."

Britain was worried. The pound sterling fell to $4.83 7/8, lowest since Britain's return to the gold standard in 1925. A conference of experts had already been called to London to settle technical details of the Hoover Moratorium. The Labor Government supplemented this with a call for the Premiers or Foreign Ministers of Britain, France, Germany, Belgium, Italy, Japan and the U. S. to meet in London in an effort to avoid a world crisis.

Washington broke a 12-year precedent by officially delegating Secretary of State Stimson, Secretary of the Treasury Mellon, Ambassador to France Edge to the conference. Ambassador Dawes was ordered to leave Evanston, Ill., get back on the job in London as soon as possible (see p. 9). The world press hailed this as the breakdown of U. S. Isolation.

It was France's turn, and she moved, as usual, shrewdly. She waved not a 300-million, but a 500-million-dollar loan in the face of Germany, but she insisted that German Ministers must discuss this loan in Paris first before going on to the London conference. The gist of the French offer:

The U. S. Federal Reserve Board, the Bank of England, the Bank of France would collaborate on a Reichsbank credit of $500,000,000. Since this must be a temporary loan it would be guaranteed by a covering loan from the Governments of Great Britain, France, the U. S., Belgium, Italy. The loan would be repaid in ten years, and would carry a mortgage on the receipts of the German customs*

New Conditions. France was willing to stop talking about the Austro-German customs union and pocket battleships, for the nonce. Instead she phrased her political demands a little more politely:

Germany must pledge not to increase her military budget, directly or indirectly, until after repayment of the loan.

Germany must agree to observe a "political moratorium" for the next ten years; i. e.. there must be no more agitation for revision of the Treaty of Versailles, return of the Danzig corridor, return of German colonies, etc. etc.

Germany must agree to resume Young Plan payments immediately on the cessation of the Hoover Moratorium.

None of these conditions appeared in an official announcement last week, all were reported by British and U. S. newspapers. Even before the German emissaries left Berlin came a blunt statement from London:

"France's demand that control be established over German customs as one of the conditions in French participation in a loan to Germany will not be acceptable to the British Government."

Forced Smiles. The tenseness of the situation was obvious. Editors and statesmen all over Europe adopted the old U. S. device of elaborate optimism in the face of a crisis.

At Berlin's Friedrichstrasse railway station a great silent crowd saw off the first German Chancellor ever to visit Paris on an official mission.* As the Warsaw-Paris express pulled out a few strident voices called hopefully, "Alles Gute! Gluckliche Reise!" ("Good luck; Pleasant Journey!")

On the train Chancellor Bruening and Foreign Minister Curtius insisted to reporters that they were going to Paris with full liberty of action.

"There have been no demands and no concrete proposal," said the Chancellor.

"We would not be on this train if any such demands had been made," added the Foreign Minister.

They staggered down the jolting train to the dining car, paid for their meal with French francs.

"Are you accepting German marks on this train?" asked a correspondent when the statesmen had left.

"No," said the brown-jacketed steward, sweeping cash into his little tin box, "but we will take them today if they're offered."

In Paris Premier Laval, Foreign Minister Briand and a dozen other French officials and the staff of the German Embassy were all at the Gare du Nord clutching the silk hats of diplomacy. There were a few jeers, a few shouts of Vive La France! Many more cried hopefully, "Vive La Paix."

In London, the Hoover Moratorium committee of experts, almost forgotten by newshawks, met and immediately adjourned. There was nothing for them to do while Europe's statesmen remained cloistered in Paris. Just what was happening in Paris reporters did not learn, though the air was thick with rosy generalities.

Smiling hard, Chancellor Bruening had a private interview with Premier Laval. Henry Lewis Stimson had conversations with British Foreign Secretary Henderson and M. Laval, in the course of which he defined the difference between a Conversation and a Conference:

"Mr. Henderson, as I understand it, Conversations are when you wear a blue suit and I a grey one, but a Conference is when we both wear frock coats."

The German delegation called after dinner at the U. S. Embassy. Shortly after their arrival stenographers were hastily summoned. No one wore a frock coat: it was apparently just a Conversation.

On Sunday devout Catholic Bruening attended mass at Notre Dame des Victoires, listened attentively to a sermon on the advantages of peace. Messrs. Stimson and Mellon left for London.

Statement. Monday morning came a joint statement from Chancellor Bruening and Premier Laval. Seldom has an official bulletin said so little so optimistically:

". . . Right now the representatives of the two Governments have desired to underline their desire to create between them . . . conditions favorable to effective collaboration . . . and they have agreed to begin associating their efforts so that credit and confidence may be restored in an atmosphere of calm and security."

Observers interpreted this to mean that both France and Germany realized that this time an agreement must be reached; that it was no longer possible for France to leave Germany completely to her fate.

Both French and German delegations took the same train to London. Public smiles were even broader. Swarthy Laval waved a newspaper over his head and laughed out loud to the delight of photographers. German Foreign Minister Curtius had something real to smile about. Word had just reached him that he was for the first time a grandfather. But gloomy was Scot MacDonald who opened the conference that night. Said he: "If we cannot find a solution to the present crisis it will be difficult to stay the flood before it has overwhelmed the whole of Central Europe, with consequences--social, political and financial --which no one can estimate. . . . Time is against us. Every day adds to the risk of a collapse which will be outside human control."

"France was the only power to make a suggestion," said Premier Laval tersely to French newshawks. But let no one think that "we have come to London to discuss disarmament or revision of the peace treaties."

*Customs are the favorite U. S. security when lending money to Santo Domingo, Haiti, Nicaragua. *Prince von Bismarck, first Chancellor of the German Empire, was in Paris as a conqueror when the German Empire was declared. When he entered the city he was merely Chancellor of Prussia.

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