Ein' Feste Burg

(See front cover)

The banker with the Mephistophelian beard, Governor Montagu Collet Norman of the Bank of England, wrote a private letter to Governor Clement Moret of the Bank of France several months ago:

''Unless drastic measures are taken to save it, the capitalist system throughout the civilized world will be wrecked within a year. I should like this prediction to be filed for future reference."

For the past fortnight bankers all over the world have been pondering that prophecy. The greatest economic crisis since the War has arisen in Germany. Was this what Banker Norman was foreseeing? Last week the focus of action swung from Germany to Paris and London (see p. 14). But what was happening inside Germany? What was the German Government doing to defend capitalism?

Germany's new Iron Chancellor 46-year-old Heinrich Bruening, had several things in his favor. The country remained peaceable; there was little rioting. In Duesseldorf, Coblenz and Gelsenkirchen gangs of hooligans threw up barricades, exchanged shots with the police, made desultory raids on food shops. But for the most part people seemed to remember too vividly for repetition the horrors of Germany's other great crisis, the inflation period of 1923. There was no direct parliamentary opposition. For the past year Iron Chancellor Bruening has managed to rule Germany as a semi-dictator, forcing the Reichstag into a three-month dissolution and ruling by Presidential decree.

Behind all his actions has stood, and continued to stand last week, the heroic, the patriarchal figure of Germany's old President Hindenburg.

Reichspraesident. Every German knows by heart the words of Martin Luther's hymn: "Ein' Feste Burg ist Unser Gott" (A Mighty Refuge is Our God). To Germans, both Republicans and Royalists, HINDENBURG is a feste burg too. If, as many thought last week, Germany struggling against disaster was fighting the battle of capitalism, then Hindenburg was capitalism's last prop.

No man had a stranger training to be the mainstay of a republic than Paul Ludwig Hans Anton von Beneckendorff und von Hindenburg. He was born in Posen (now part of Poland), on Oct. 2 1847 and brought up as a perfect little Junker. His father had been a soldier, all his ancestors were soldiers: no other career was considered for him. He never spoke to his father without snapping to attention. When he was three or four he had for a nurse an ancient harridan who had served as a canteen woman in the Napoleonic wars. When little Paul so far forgot himself as to cry. this veteran would bellow "SILENCE IN THE RANKS!" It always worked.

At eleven he went to the Prussian cadet school at Wahlstatt where fierce-whiskered drill sergeants beat all imagination, all desire for originality out of him, taught him the great military virtues: absolute obedience, perfect loyalty, scrupulous honesty. At 18 he saw his first action in the war with Austria and wrote in a letter to his parents:

"At the sound of the first bullets one is overcome with a certain enthusiasm (the first bullets are always welcomed with 'hurrah' by the troops). . . . One thinks for a moment of the dear ones at home as well as about one's old and honorable name, and then one dashes ahead."

In 1870 he served at Sedan, at the Siege of Paris, and--great moment in his life--at the proclamation of Wilhelm I as Emperor of Germany in the Hall of Mirrors in Versailles. Followed 40 years of peace. Hindenburg climbed slowly to a Major Generalship and was given command of the East Prussian frontier. This he decided would one day be a great battlefield. He painstakingly studied every inch of that desolate swampy land and became known as "the mad Old Man of the Lakes" and "General Mud." In 1911, 64 years old, he retired from the army, certain that war would never come in his lifetime.

In 1914 when German armies in the West were plunging through France toward the Marne, the Russian steamroller bit deep into East Prussia. General Hindenburg was jerked from retirement, sent to oppose Russia with brilliant, erratic Erich Ludendorff as Chief of Staff. Followed the most brilliant campaign of the whole War. At Tannenburg one Russian army was annihilated, the other was completely broken up; one Russian General committed suicide. Hindenburg overnight became Germany's hero. His appointment as Chief of Staff was inevitable. Germany burgeoned with wooden Hindenburg idols, stuck full of nails.

It was as a War God that he first gained popularity. It was with Germany in defeat that he entered the hearts of his countrymen. The Kaiser fled to Holland, Ludendorff fled to Sweden. Old Paul stayed on with his troops, ready to take what was coming to him. There came another retirement for Old Paul until 1925, when Junker and Royalist factions decided that the way to restore the monarchy was to elect Old Paul, most faithful of the Kaiser's servants, President of the Reich to succeed President Ebert. They did, but they forgot the old man's sense of duty. When he took the oath to defend the German Constitution he meant every word of it. He has not deviated. Germans mistrust their politicians but they trust Old Paul. They know he is incorruptible, ein' feste burg. That Iron Chancellor Bruening is a Hindenburg disciple is his greatest strength.

In Action. Back from his red brick summer home in Neudeck, East Prussia hurried the 83-year-old Reichspraesident last week to his official Berlin residence, the greystone rococo Palace on the Wilhelmstrasse. He did not leave the premises. Three times a day, his shepherd dog, Rolf, by his side, he tramped the gardens in back for a constitutional, the rest of the time spent with his ministers, signing decrees that Chancellor Bruening suggested. They closed the stock exchanges and for two days, to avert headlong panic, all the banks. They selected a Federal Commissioner of Finance or "Money Tsar" before reopening the banks partially, to pay salaries, wages and taxes only. (Unemployed persons not on the dole were allowed to withdraw $12 each.) A rousing, purely Hindenburg proclamation called upon the people to be calm, be "sporting."

Correspondents were amazed at the meekness of those two professional firebrands, Fascist Adolf Hitler and his backer Alfred Hugenberg. These two made no move to start trouble last week but contented themselves with harmless mutterings about what they would do when they got in power. Suddenly the news spread that Hugenberg owed $5,000,000 to the Danat bank which failed fortnight ago. Then was seen some of the shrewdness of the old man in the President's Palace and his keen-eyed disciple. By letting Danat fail, Bruening and Hindenburg had muffled Hugenberg. Munich authorities, on orders from Berlin, suppressed Hitler's paper Voelkischer Beobachter (People's Observer).

Schmitz. Chosen as Federal Commissioner for Finance to try to pull German banks and industries back on their feet was Hermann Schmitz. Herr Schmitz is little known in the U. S., but his appointment seemed obvious to German editors. President Hans Luther of the Reichsbank could not take the job; he had far too many other things to do. Because of the intricate politics and jealousies of German finance, no professional banker could be appointed. Herr Schmitz is the next best thing. He is the financial adviser, the banking counsel of the largest corporation in Germany, the German Dye Trust. As a director of the German Nitrogen Syndicate, Herr Schmitz played a central part last week in the breakup of the international nitrate conference at Lucerne (see p. 18).

Finance Commissioner Schmitz's influence was not enough to prevent the J. F. Schroeder Bank of Bremen, a $7,000,000 house (not to be confused with Anth, Schroeder & Co. of Hamburg), from closing its doors despite every effort of the City of Bremen to come to its rescue.

Press. Two other important decrees passed over Old Paul's desk before Chancellor Bruening went off to the Paris conference. German newspapers were ordered to print "the full text of any statement or correction which the Government orders to be published without any editorial comment in the same edition and on any page that the Government may select." This was to prevent party organs from garbling official decrees to suit their own ends. "Any periodical endangering the public safety" continued the decree, "is liable to confiscation."

Foreign Exchange. A rough-hewn plug to caulk the constant draining of German capital abroad was the following order: "Whoever owns foreign exchange or has claims for foreign exchange shall offer the claims or the exchange to the Reichsbank on the ordinary business conditions, and upon demand shall sell or transfer them to the bank."

Every German, in other words, must declare exactly what foreign money or foreign securities he possessed, and must sell them on demand to the Reichsbank at market rates.

Confidence. Final evidence of President Hindenburg's stabilizing power upon his country was seen when the Council of Elders of the Reichstag met on the eve of Chancellor Bruening's departure for Paris. Mere mention of the possibility that Old Paul might resign was sufficient to squelch all talk of convening the Reichstag, to force a vote of confidence in Old Paul's man Bruening.

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