To London last week for a “private visit” went Adolf Hitler’s financial magician, clammy-handed, high-colored Dr. Hjalmar Schacht. President of the Reichsbank. Dr. Schacht is the only German bigwig who is persona grata in British financial circles for, despite the way he has kicked around the laws of economics, British bankers like to think that he has done so under political compulsion, that fundamentally he is a sound financier who may eventually lead Germany back to respectable financial methods: His host last week was his old friend, hoary-bearded Montagu Norman, Governor of the Bank of England.
Dr. Schacht had been dispatched to England: 1) to persuade those interested in getting the Jews out of Germany to pay a “ransom” in the form of increased purchases of German goods; 2) to stave off Britain’s threat to “fight Germany at her own game” for the trade in Central Europe and South America; 3) to get Britain to buy more from Germany than she has been doing.
The reason for Germany’s desperate need to sell more goods abroad was clear last week when Germany’s foreign trade figures for the first nine months of 1938 were published in Berlin. In 1937, largely due to Reichsbanker Schacht’s barter trade methods and subsidies to export industries, Germany was able to build up a favorable balance of 422,000,000 marks ($168,000,000). In 1938 this favorable balance has been wiped out and Germany’s imports have grown to 398,000,000 marks ($159,200,000) more than her exports. Over half of this deficit was due to Austria’s annexation, the remainder partly to the world-wide anti-German boycotts, partly to the huge imports of war materials.
Desperate for ready cash* in the till—without which she cannot continue to import the raw materials necessary for her military machine—Germany month ago turned to systematic spoliation of her Jews. Unless her foreign trade position improves, she may next squeeze the vast holdings of the Catholic Church and perhaps the wealth of the upper middleclass.
The general impression in London was that Dr. Schacht returned to Berlin at week’s end emptyhanded. (His “private visit” had included a secret conference with U. S. Lawyer George Rublee, director of the Intergovernmental Committee on Refugees.) If Dr. Schacht had any hopes that Britain would call off her trade war with Germany, he must have been disap pointed when the House of Commons unanimously advanced through its second reading a new Export Credits Bill, which raises from $250,000,000 to $375,000,000 the amount of obligations the Government can incur in “insuring foreign trade” and provides a special $50,000,000 “fighting fund” for subsidizing trade “valuable to Britain but not justifiable as sound commercial risks.”
*Also short on cash are: 1) Italy, where the 1939-40 budget last week revealed that during the next fiscal year Italy will suffer an unexpected 4,755,000,000 lire ($237,750,000) deficit, largely due to arms expansion; 2) France, where the Chamber of Deputies last week worked on the greatest arms budget since the World War which, in its ordinary and extraordinary appropriations, upped last year’s budget 36%.
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