462.00R296/4459: Telegram

The Consul at Basel (Cochran) to the Acting Secretary of State

Meeting55 having definitively terminated, following communiqué was given out:

“The Directors took notice of the statement presented by Luther on the situation in Germany and on the satisfactory character of her economic and budget position in spite of the crisis brought about by the withdrawals of short-term capital from Germany. The German Government having approached the various governments with a view to obtaining financial assistance on their respective markets, the Board, being convinced of the necessity for such assistance under present circumstances, declares that it is prepared to collaborate therein and to strengthen the American assistance by all means at the disposal of the Central Banks. In the meantime the Board authorized the President in agreements with the other institutions concerned to renew its participation in the rediscount credit previously accorded to the Reichsbank.”

To summarize:

Directors threw back on treasuries the question of approving the French proposition regarding guarantee fund but with the statement, obviously for the benefit of the Hoover plan and the French position, that they favored it as trustee.
The 100 million dollar credit is being extended for 90 days. Norman wanted this to be for only 15 days and he cannot definitively approve joint agreement until he confers tomorrow at London but the B. I. S. counts on assent.
The Central bankers feel that the difficulties of Germany are now beyond them and must be handled by governments. They are willing to assist further if other measures independent of these succeed but they hold out no promises on this point. The French political objections are understood. Bank of England actually has not enough foreign exchange to permit it to go any further and the British talked today in favor of letting circumstances force a complete revision of existing agreements even including Versailles Treaty.
The question of extending assistance through the B. I. S. to countries such as Jugoslavia that would make sacrifices under the Hoover plan did not come up. This matter was really set up by the French to strengthen themselves in the favor of their Eastern European friends and but little is expected to come of it soon.

The belief is that general moratorium in Germany is imminent.

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National Bank of Hungary today asked the B. I. S. for 400,000 pounds since the Central Bank tonight holds only 15,000 pounds. B. I. S. refused and unofficially advised it to follow Germany’s plan of declaring a holiday of at least 2 days to see what can be done. B. I. S. cannot help further.

Bank of Danzig also requested today 5,000,000 gulden and was refused.

  1. i. e., of the Directors of the Bank for International Settlements.