USA Financial Markets Collapse: Impact on Europe Uncertain

Following a short lived rally after the disastrous 11% market decline of October 24th, the American financial markets collapsed on the 29th. Lead downward by the stock exchange in New York, which lost another 13% of its market value on the 28th followed by a further 11% decline the next day, American investors went on a panicked selling spree that evaporated over $30B(US) of market value in less than two days. American financiers, among them the Rockefellers and the Durants, were said to be purchasing vast amounts of equities in an effort to stabilize the markets, but stock prices continued to decline at a record pace on record volumes.

The scene on New York's Wall Street as the US stock
markets collapsed on October 29th.
(AP Photo)

Internationally the price of gold soared to $120 (US) per ounce from its pre-crash price of $80 (US) and European bourses fell slightly as investors, banks and governments began to assess the damage. In London, noted economist John Maynard Keynes issued a statement saying that, "The extraordinary speculation on Wall Street in past months has driven up the rate of interest to an unprecedented level." He went on to suggest that the crash was only a severe correction to these speculative excesses and that once the speculators had been "driven out" prices would quickly stabilize at a sustainable level.

In Germany, reaction was muted but concern over the value of investments in American stocks and the effect on American imports of German products was beginning to take hold. Economics Minister Robert Schmidt released a statement yesterday urging calm and echoing Keynes earlier statement that the precipitous decline was merely a correction and that princes would soon stabilize.

Economics Minster Robert Schmidt
arrives for a Cabinet meeting on
October 29
(AP Photo)

Meanwhile in Washington, US President Herbert Hoover reiterated his strong support for the pending Hawley-Smoot Tariff Bill, which is expected to raise US import duties on over 20,000 agricultural and industrial products, including many from Germany, to near record levels. Canada, Britain, France and Germany have been strongly urging the measure not be adopted, but it is poised for final passage by the US Senate in the next few weeks. Hoover's statement that the market downturn would not change his support for the bill is said to have depressed prices further on the 29th, with investors concerned about Canadian and European retaliation. German President Paul von Hindenberg had made a personal appeal to Hoover to reconsider his support for the legislation but to no apparent effect.

With one more trading day before the markets close for the weekend, the eyes of the world are on Wall Street and the American President. As calls for calm seemingly fall on deaf ears, investors have moved from nervousness to a full scale panic, suggesting that the "hands off" approach favored by most governments and economists is not having a salutary effect.

German markets have declined an average of 6% over the past 2 days.

World Reaction to Stresemann Death

Condolences poured in from around the Nation and the World in reaction to the death on Monday of German Foreign Minister and Statesman Gustav Stresemann. In Geneva, the Polish Delegate to the League of Nations arose to deliver a reflective eulogy at the session opening, and Dr. von Schubert, the Delegate from Germany, received official expressions of sorrow throughout the day. Helen Dukas, secretary to the noted Berlin University physicist Albert Einstein, wrote an obituary in the Berliner Zeitung expressing the hope that Stresemann's tireless work would be carried on and not forgotten. NSDAP Chairman Adolph Hitler said that "given the dire circumstances with which he was faced, no man could have done more than Gustav Stresemann."

Dignitaries from across Europe attend the funeral service for German
Foreign Minister Gustav Stresemann.
(BAZ Photo)

Chancellor Hermann Meuller presided at the official State Funeral, delivering a lengthy speech describing Stresemann's many successes and contributions, and announcing that the former Chancellor and Foreign Minister would be interred in the Luisenstadt Cemetery at Südstern in Berlin Kreuzberg, and that a suitable monument, including work by the German sculptor Hugo Lederer, would be erected in his memory by the Republic.

Meanwhile, Dr. Julius Curtius (DVP) was named to succeed Stresemann as Foreign Minister. Curtius was the former Economics Minister.

Gustav Stresemann Dead at 51

German Foreign Minister, former Chancellor and Nobel Laureate Gustav Stresemann died suddenly this morning from an apparent stroke, leaving the country in shock and the world uncertain of the political repercussions. Widely recognized as the premier statesmen of Germany throughout the 1920s, Stresemann's signature achievement was the eventual reconciliation of Germany with its former enemy France, an achievement for which he shared the Nobel Peace Prize with his French counterpart, Aristide Briand. He served as Chancellor of the German Republic from August to November, 1923, and subsequently as Foreign Minister, where he arguably made his most significant and lasting contributions.

Foreign Minister Gustav Stresemann
Dead of a stroke at age 51.
(BAZ Photo Archives)

Born in Berlin in 1878, Stresemann's parents owned a brewery and small beerhall. He entered the University of Berlin in 1897 and studied Political Economy, which was to serve him well throughout his career. During his University career he was active in the Burschenschaften movement and was Editor of the Allgemeine Deutsche Universitäts-Zeitung. He received his Doctorate from the University of Leipzig. 
Upon graduation he founded the Saxon Manufacturer's Association and was married in 1903 to Kate Kleefeld, the daughter of a prominent Berlin businessman.

His first political success was his election to the town council of Dresden in 1906, and he entered the Reichstag in 1907 for the Liberal Party from Saxony. He was not re-elected in 1912 and returned to private life to found the German-American Economic Association. Excused from military service for health reasons, Stresemann returned to the Reichstag in 1914 and became leader of the Liberal Party in 1917. He generally supported socialist welfare programs at home and an aggressive, economically based policy abroad. In 1918, he helped to form the German People's Party (DVP) and served as "loyal opposition" to the formation of the Wiemar Republic. He made little secret of being a monarchist by inclination.

Stresemann in September with his wife
Käthe and son Wolfgang
(BAZ Phot Archives)

Stresemann was appointed Chancellor during the Ruhr Crisis of 1923, and served in that role for only 3 months. After the collapse of his government, he was asked to remain as Foreign Minister, a post that he held until his death. His accomplishments as Foreign Minister were legion and included the reduction of German reparations payments thought the Dawes Plan, the reorganization of the Reichsbank, favorable negotiation of the Lucarno Treaty and the Rapello Treaty with the Soviet Union. He pursued an aggressive economic campaign to redefine Germany's borders with Poland, making often unpopular concessions to France in order to obtain a freer hand in the east.

The Mueller government has not yet announced a successor at the Foreign Ministry, nor have plans been announced for memorial services.