Thursday, 5 December 1929: Reichsbank President Schacht Blasts Germany's Leadership

Berlin:  

A broadside hits the German political landscape relative to support for the Young Plan, and it comes from an unexpected source.  Reichsbank President Hjalmar Schacht surprises nearly everyone when he releases tonight a memo to Chancellor Hermann Mueller and to the public – at the same time.  The memo blasts both Germany’s political leadership, and other nations’ political leadership, for failing to do what is necessary to make the Young Plan successful. 

First, the surprise: Schacht was supposedly the chief German delegate to the Hague meetings that negotiated the Young Plan.  Yet press reports coming out in the wake of this development are pointing out that Schacht hardly participated in those meetings, showing up for only a few days, and never seeking private audiences with other government officials to whom he might have made these views known.

 

Second, the content of Schacht’s broadside:  Schacht’s memo says both the German government and foreign governments have failed to follow the procedures necessary to make the Young Plan successful.  Foreign governments, he says, have not stuck with the Young Plan as it was originally presented – they’ve changed the terms as the negotiations have gone along, thereby placing additional burdens on Germany that will make it harder for her to pay the debts.  This while the German economy has lost the prospective revenue of hundreds of millions of marks in private claims against Poland arising from the World War, which Germany agreed to abandon. 

The German government, for its part, has not taken steps to get its own financial house in order, which will be necessary if Germany is to meet the terms of the plan.  Schacht says Germany’s posture relative to the Young Plan was predicated on stimulating economic production, thereby increasing the country’s ability to pay, and settling once and for all the way revenues are shared between the federal government and the municipalities (which are accused of spending too freely).  But Schacht says nothing has been done, either to stimulate economic output or to settle the revenue-sharing arrangements.  As a result, the revisions of the Young Plan, far from reducing Germany’s debt burden, won’t even address the deficit already envisioned.  As a result, Schacht says, he cannot be held further responsible for prospects of the Young Plan within Germany.  He says Germany’s creditors won’t approve the loans to Germany that they’re contemplating, and yet they bear part of the blame for it.  

Schacht evidently discussed his views with members of the Mueller cabinet earlier in the week, but reportedly received a cool reception.  The Berlin stock market drops sharply after his memo is published. Adding to the confusion of Schacht’s memo is the way he chose to disseminate it – releasing it simultaneously to Mueller and the public.  Press observers are saying it is without precedent in German political history. 

China:  

The troop mutinies that started at Pukow are spreading, with more troops in more regions reportedly revolting to join the rebels.  Five provinces, including large parts of the Yangtse River Valley, are reporting unrest.  The rebels fire on British gunboats in the Yangstse River at Ichang.