Thursday, 12 December 1929

Germany:

Berlin:  Chancellor Hermann Mueller presents his package of financial reforms to the Reichstag today and calls for a vote of confidence in his government.  The package would mean an emergency increase in the tobacco tax and unemployment insurance contributions, as well as borrowing 78 million marks immediately to cover the country’s spending needs, which Mueller says would run Germany’s deficit to 1.3 billion marks at Dec. 31.  But he says without the loan, Germany will default on its obligations before month-end.  It’s a high stakes game: the socialist, peoples and centrist parties have reportedly already informed Mueller they will not accept the program. 

However, in the evening, Reichsbank President Hjalmar Schacht communicates to Finance Minister Rudolf Hilferding that these measures won’t be enough.  Schacht says U.S. banks contemplating loans of 400 million marks to Germany under the Young Plan won’t go through with them unless more is done to shore up the nation’s finances, and predicts that U.S. banks will not loan Germany money in its current economic state.  This only adds to the furor he created with last week’s criticisms of the Young Plan.*

Probably in an attempt to coerce reluctant legislators into voting for the plan, Mueller paints a dire (though not inaccurate) portrait of the country’s finances, saying Germany has a “catastrophic" cash situation.  But his efforts may have had the unintended consequence of fulfilling the very predictions made by Schacht, as press reports out of the U.S. state that the banking community took “deep interest” in Mueller’s comments – if anything, the comments made their reservations even greater.  “Should the government not obtain a clear vote of confidence in the Reichstag meeting Saturday, the meeting of The Hague conference is questionable unless a new government is formed in short order,” Mueller says. 

Meanwhile, the storm started by Schacht’s comments among bankers and industrialists in Germany is spinning up.  Meeting in a special session on the same day in the same city, the League of German Industrialists cheers Schacht’s comments, and thanks him for making them.  One attendee sums up their views on the situation thusly:  “Talk is often heard in foreign countries of the German miracle, and our newspapers here try to convince us of this miracle.  To me, the German miracle has always been the unlimited confidence with which the creditors of foreign countries, during all these years, have given us so much capital – this although they observed with sharp eyes, as proven by the report of the reparations agent, that we handled the money without the necessary solicitude for our creditors.” 

Meanwhile, at the municipal level in Berlin, today is the first day of the newly elected municipal council, and it is greeted by a near-riot.  A crowd estimated at 200 people, mostly communists, force their way into the city hall and join the 57 communist members of the council in trying to shout down the social democrats, who hold the largest block of seat.  The 13 newly elected nazis in the chamber join in the shouting as well. 

Wiesbaden:  British forces withdraw from this town in southwestern Germany, which they have occupied since shortly after the World War, touching off celebrations by the townspeople.  The British flag was hauled down from the Hotel Hohenzollern at 2 p.m.  At the same time, a small British detachment was departing Bingen as well.  The Inter-Allied Rhineland High Commission, however, decrees that the zone evacuated by the British will be occupied by the French instead. 

To view a photo of the Royal Fusiliers marching through Wiesbaden. 

China:  

The forces of nationalist government head Chiang Kai-shek report big victories on three major fronts: Canton, Honan and Anhwei.  Rebel forces attacking Canton are said to have lost half their force and are retreating.  However, Shanghai is reported in panic at the threat of a rebel attack, and Nanking, the capital, is still threatened by rebel forces.