462.00R296/4101
The British Ambassador (Lindsay) to the Secretary of
State
Washington, June 16, 1931.
My Dear Mr. Secretary: Since I saw you this
morning I have received from Mr. Arthur Henderson the text of a
telegram concerning
[Page 22]
the
German situation, which he sent yesterday to the British Ambassador
in Paris. Having been authorized to communicate a copy of this
telegram to you, I enclose one herewith.
Believe me [etc.]
Aide-Mémoire
There is no doubt that the situation in Germany is exceedingly
critical. It is in fact more critical than at any time during
the last six years. During the past few days and in part at
least for psychological reasons the situation has rapidly
deteriorated and has now become gravely alarming. The Reichsbank
has lost over £30,000,000 during the past ten days mainly due to
withdrawals of foreign money. If the movement extends to German
capital it may involve collapse of the mark with disastrous
consequences not only to Germany but to Austria and to Hungary.
As you know the Reichsbank on Saturday raised its discount rate
by 2 per cent and it is hoped that this may have a steadying
effect. But as the movement is due to political rather than
financial causes the increase of bank rate may be ineffective.
Political difficulties of Bruening cabinet or any delay in
settling bank trouble may in any case be sufficient to
neutralize the effect of the increased bank rate. On the other
hand, if as of course we hope, the Bruening Government can
survive their present political difficulties, and the Austrian
trouble is cleared up, an easing of the financial situation may
be hoped for. We are aware that there has been improvement in
the situation today, but financial circles here still feel the
deepest apprehensions. The key to the situation seems to rest
with the United States and France. We should of course be
prepared to join in any action that might be deemed salutary but
it would seem best for the first move for joint action to come
from those chiefly interested, and it is no use disguising our
fear that if confidence is not speedily restored we may be faced
not merely with a complete cessation of reparation payments but
with financial collapse in Germany and Austria involving serious
risk of political and social trouble in those countries and
consequent repercussions on the rest of Europe.
We hope the situation is fully realized by French Government.
Washington, June 16,
1931.
