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Luther's Pilgrimage. German private industry did its best to prop the tottering Reichsbank. One thousand firms headed by the great D banks,* the North German Lloyd and Hamburg-American Line, the Siemens & Halske Electric Company and the German Dye Trust underwrote a "Deficit Guaranty" pledging a private credit of $119,000,000 to the Reichsbank. It was not nearly enough. Hans Luther, president of the Reichsbank, his round face deep-lined with anxiety, boarded a private airplane and disappeared into the blue to go from door to door, begging money to save his country.
At Amsterdam the plane swooped down for two hours. Beggar Luther rushed from bank to bank, but no Dutch money was forthcoming. Into the cockpit he popped again and was off to London.
Waiting for him were Foreign Secretary Henderson and Governor Montagu Collet Norman of the Bank of England, who, with his black fedora hat, his romantic pointed beard, looks more like an Italian impresario than an international banker. They were sympathetic. They perfectly realized how important the success of this pilgrimage was not only for Germany but indirectly for Great Britain, but there was nothing they could do! Great Britain's finances were none too stable. In the Hoover Holiday the Government had accepted an immediate net loss of $15,828,000 without counting the remission of debts to indigent Australia and other dependencies. That very morning wizened Chancellor of the Exchequer Snowden had been forced to announce in the House of Commons:
"His Majesty's Government has no intention of agreeing to any measures in connection with giving effect to President Hoover's proposal which would involve any additional loss to the British Exchequer."
The best Mr. Norman could do was promise that the Bank of England might undertake part of another loan if it were undertaken simultaneously by another government bank, in other words the Bank of France. Last week the general public suddenly realized a fact of which international bankers have been increasingly aware for two years. The world's financial whip hand is not in London. It is no longer in New York. It is in Paris. With all the earnestness of which he was capable Gov ernor Norman insisted that France was Germany's only salvation. Wall Street bankers had secretly let it be known that they had nearly reached the bottom of the sock so far as further loans to Germany were concerned. The time had come, Mr. Norman thought, to mollify French public opinion with drastic political concessions: abandonment of the Austro-German Customs Union, suspension of the German naval building program.
Sadly Beggar Luther climbed aboard the boat train to Paris, and Montagu Norman went with him.
Nach Paris. To be forced to beg from France is to demand the ultimate abasement of a German in public life, but round Banker Luther stoically made the gesture last week. Waiting for him were two Frenchmen with the pleased expression of a couple of sleek cats before a fat defenseless mouse: huge broad-shouldered Pierre Etienne Flandin, Minister of Finance, and chunky Clement Moret, Governor of the Bank of France. During the Hoover Holiday negotiations France had not only world opinion but the interests of Britain and the U. S. to consider. Here was a matter that lay solely between herself and Germany; she could talk turkey. Cats Flandin and Moret delivered them selves of an ultimatum, which went in effect as follows:
France realized the necessity for an immediate German loan, and as it happened France had the money to spare. The Government had already committed itself to a policy of reducing France's enormous gold reserves by well-secured foreign loans. On the very day that Dr. Luther arrived in Paris Minister of the Budget Francois Pietri was able to report in the Chamber of Deputies a treasury surplus for the month of June. BUT French public opinion would never consent to a loan of $300,000,000 such as Dr. Luther asked unless Germany ''oriented itself definitely toward a policy of democracy and pacifism," and agreed to the following conditions: 1) Abandonment of the Customs Union between Germany and Austria. 2) Abandonment of the second "pocket battleship" in Germany's naval program. 3) Adoption of sharper credit restrictions within Germany and official measures to halt the flight of capital abroad. 4) Immediate dissolution of such disturbing nationalist organizations as the Stahlhelm league of War veterans, whose mass meeting in Breslau month ago caused shiverings in the French Press.
Dr. Luther is president of the Reichsbank and nothing more. Even had he wanted to he could not have accepted this political ultimatum. All afternoon, all evening he rushed from conference to conference missing one train after another back to Berlin. Louis Franck, President of the National Bank of Belgium, rushed down from Brussels to put in his oar. Finally at ten the next morning Beggar Luther boarded a plane at Le Bourget and flew back to Germany.
Rumors. All over the world editors stayed close to their telegraph desks. Not since those days of July 1914 when the World War was brewing have potent rumors been so thick.
While tickers spluttered with stories that the Brüning Government and Old Paul von Hindenburg himself were on the verge of resigning rather than accede to "French Blackmail," the German Cabinet had an all-night meeting and decided to refuse the French offer. The second pocket battleship had been ordered to pacify jingoes in the Army and Navy, keep them from deserting to Adolf Hitler's brown shirts. They dared not give it up. President von Hindenburg was an honorary member of the Stahlhelm. To order its dissolution would be an insult to the na tion's hero, might be the spark to set off a Fascist revolution.