462.00R296/4260: Telegram
The Ambassador in Germany (Sackett) to the Acting Secretary of State
108. For the President and the Acting Secretary of State. I have seen Chancellor Bruening since my telephone conversation of this afternoon. My discussion with the Chancellor followed my conversation this morning with Foreign Minister Curtius, during which I urged, according to my instructions, the need for some statement by the Government on the matter of warships which would also constitute an assurance to all that none of the sums made available to the German Government for purely economic rehabilitation would be allowed to result in any increase in German naval or military establishments. My conference with Curtius was most serious and I fully stated the urgent need for the German Government to issue some statement evidencing cooperation in securing acceptance of the plan for the debt moratorium.
This afternoon I discovered that long and serious discussions had been held by the German Cabinet on the subject of my visit, and this afternoon Chancellor Bruening gave to me with complete frankness and with grave concern this picture of conditions here: The actual bank returns do not sufficiently indicate how acute the financial situation has become in the last few days. He told me in strictest confidence that the largest concern in Bremen is on the verge of disaster unless some method of rediscounting through the Reichsbank can be worked out for relieving such banks. At the present moment it seems doubtful that this can be done. The concern in Bremen referred to above is deeply involved with two of the Darmstädter Banks in Berlin. If this failure takes place, 50 million beneficiaries will be involved. This is merely an added development that may break at any moment on the serious internal situation of Germany.
If this failure and other expected smaller failures materialize, the tide of radicalism which has been steadily accumulating will be precipitated. I was told by the Chancellor tonight that his only hope of saving Germany from a radical debacle, which he believes to be imminent, lay in the army. If the events set forth above occur, the army, in which Bruening has full confidence at present, may have to be called in by the early part of next week. He said that he could not impress upon me in too strong terms the necessity of setting this situation before you.
[Page 131]Bruening was convinced that any public statement made by the Government which implied any renunciation of the meager rights granted by the Treaty of Versailles to Germany, especially with regard to the right of Germany to build cruisers as replacements for the over-age ships which are now a part of the German Navy, would have so great a “symbolic” meaning for the German nation that it would revive all the antagonisms and passions which had been allayed with some difficulty last spring at the time of the Reichstag debates on this subject. Even though this is principally a naval question, the younger army officers in particular would view this as so great a renunciation of the interests of the armed forces of Germany that the loyalty of the army would be heavily jeopardized. Bruening feels that notwithstanding the desperate financial condition of the country it is his obligation to safeguard the one arm of defense that is available for his use in controlling imminent disturbances, and that he has neither the strength nor the ability to risk sacrificing that protection—an eventuality which he knows, from his acquaintance with the serious internal political situation, would result if he issued a statement such as you feel should be made.
In spite of what the Chancellor said I again laid before him the fact that the peoples of the world thought that Germany was receiving everything and giving nothing, and I went over with him the sort of statement that I felt he could make. He warned me that this request that it be publicly stated that the German Government had abandoned any part of its treaty rights with regard to the construction of cruisers would bring on a situation which could not be controlled, but admonished me to tell you that he was genuinely willing to do everything that the safety of the country permitted him to do.
Bruening tells me that it is not at all his intention to use any of the money which accrues to Germany as a result of the moratorium year for increasing the annual military and naval appropriations over and above the appropriations which have been made for this year.
At the end of our conversation Chancellor Bruening told me that he would call his Cabinet together this evening and try to draft the most favorable statement that the situation will permit. I will telegraph that statement later tonight.
From the intimate association I have with the Chancellor I feel that the picture I have given above is his own honest view of the present situation in Germany. My personal feeling had been that the situation was not so serious as he portrays it; but the present moderate Government is so essentially a Government by a very small minority, as Embassy reports have emphasized, that it is not able to take a firm stand against the extremists in the Nationalist camp, no matter how blind their opposition may basically be. Copy sent to Paris.
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