Iron Man & Velvet Glove (See Front Cover.)
A tall impetuous Teuton held the Reparations stage in Paris all last week. Speaking for Germany in gruff, rasping English, he seemed to epitomize the Nietzschean commandment, " Behard!" As a matter of fact anyone who has been spoken to for five minutes by Dr. Hjalmar Schacht, President of the German Reichsbank, and, today, Chairman of the German Delegation to the Second Dawes Committee in Paris (TIME, Feb 11), knows that the man is as drastically metallic as his pistol-shot name—Schacht!
For four hours a day or more, last week, the famed "Iron Man" of German finance faced the fiscal representatives of six creditor states,* thrusting at them reasons why Germany must not pay, either quickly or in full, the bills they have presented. With a studious, almost pugnacious restraint Dr. Schacht stopped time and again on the brink of saying, "Germany cannot pay." His manner bristled with the confidence that this conclusion would be reached by anyone not a nincompoop. Hour after hour the U. S. Chairman of the Committee, Owen D. Young, sat slightly reclined, with his long lawyer-legs comfortably crossed. He puffed a pale cigar. He let Dr. Schacht talk.
Was not Germany, asked Iron Man Schacht, like a sick man recently taken to the seaside, whose suntanned skin gives a false impression of renewed strength and abundant vitality? With an adverse trade balance of $240,000,000, how can Germany be really strong? Granted that the British taxpayer is paying $1,250,000,000 a year, the French $800,000,000, and the German only $600,000,000, even so, said Dr. Schacht, it is paradoxically true that Germany is the most heavily taxed country of all. Reason: while the Briton's and the Frenchman's tax money is spent at home, to his indirect enrichment, the German's tax payments are largely wrested from the Fatherland in the form of Reparations thus impoverishing instead of enriching, as all other nations' are.
Perhaps the most ingenious argument advanced by the Iron Man, last week, sought to prove that the huge U. S. loans made to Germany since the War provide not the best reason why Germany must pay her Reparations debt in full, but rather one of the best reasons why she should not pay. These U. S. bonds, reasoned Dr. Schacht, saddle Germany with the necessity of paying $240,000,000 interest, every year, and that stupendous charge obviously curtails the Reich's ability to continue paying the present $595,000,000 annual scale of Reparations.
Thus the Iron Man craftily raised the slumbering issue of whether U. S. holders of German bonds or the allied powers would have first claim upon the resources of the Reich. From the standpoint of the U. S. and Germany—and from their standpoint alone—the payments of both bond and reparations indebtedness are of approximately equal importance. The allied governments could watch Germany default on her U. S. bonds with relative unconcern; but any representative of U. S. interests must take care that the whole burden imposed on Germany is not too heavy for her to bear—even if that means somes calling down of reparations.