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Royall Tyler to Mildred Barnes Bliss, July 18, 1931


The emotions of the last ten days leave one gasping, dearest Mildred. I got your wireSee telegram of July 13, 1931. asking for news on the morn. of the 14th. Soon after lunch that day I heard that the Germ. Govt. had decided to entrust SchachtHjalmar Horace Greeley Schacht (1877–1970), a German economist, banker, politician, and cofounder of the German Democratic Party. He was a strong critic of his country’s post-First World War reparation obligations. He served in Hitler’s government as president of the Reichsbank and as minister of economics, and he helped implement Hitler’s policies of redevelopment. with the management of its monetary policy, and had done so in knowledge of Schacht’s intention to create an internal non-convertible currency. On that, I wired you.See telegram of July 14, 1931. The same night the Germ. Govt. decided not to place its affairs in Schacht’s hands—but it is true that from noon that day till about 11 p.m. a cabinet decision to that effect stood recorded. Then, next day, a renewed invitation to BrüningHeinrich Brüning (1885–1970), a German politician who served as chancellor of Germany from 1930 to 1932. and CurtiusJulius Curtius (1877–1948), German foreign minister in 1929–1931. to come to Paris made a rift in the clouds. They should be here by now; but the outcome of their visit will be known to you long before this letter reaches you, so I must confine myself to eternal verities, or to stuff that can bear reading a fortnight after the writing, which is much more difficult still.

You ask me what is the real position in Germany. My belief is that the economic events of the last 18 months have radically altered a state of affairs that existed up to and including the conclusion of the Young negociationsThe Young Plan, a program for settlement of German reparations debts after the First World War that was written in 1929 and formally adopted in 1930. It was presented by a committee of the Allied Reparations Committee and was headed by the American Owen D. Young (1874–1962). The Young Plan reduced further German payments from 269 billion to 112 billion gold marks. and subsequent loan,In October 1930, Heinrich Brüning (1885–1970), German chancellor in 1930–1932, obtained a bridging credit line of 125 million dollars that was brokered by Lee, Higginson and Co., New York. and that a readjustment of that settlement will now have to be made—now or sometime soon. That is in some respects a great calamity, but there is a great gain to be set off against that calamity, namely that the U.S. are now officially participating in the attempt to reach a settlement, for without the U.S.’ participation nothing more than a stop gap can be hoped for.

Of course it is quite on the cards that there will be a break down here tonight or tomorrow, followed by crashes in various parts of the economic structure of Europe, but it’s no good speculating about that, so I’ll just give you my own view of the position at present.

One has to go back to the German inflation period 1919–1923. During those years, great part of Germany’s liquid wealth was destroyed, and most of the rest took refuge outside.

Then came the ‘Dawes’ agreement;In accordance with the Treaty of Versailles, the Allied Reparation Commission was directed to estimate damage done by Germany to Allied civilians and their property during the First World War and to formulate methods of collecting assessments. The Reparation Commission fixed German liability at 132 billion gold marks (equivalent to $10.3 trillion in 2002) to be paid in annual installments. Inflation and growing unemployment forced the German government to default on its reparations by the early 1920s. In 1923, the Reparation Commission created “Expert Committees,” and Charles G. Dawes (1865–1951), an American banker, was asked to investigate the problems of payments. His report, published in April 1924, proposed that annual payments of reparations be paid on a fixed scale. The Dawes Plan was initially a great success because it stabilized the currency, brought inflation under control, and lowered unemployment in Germany. Rufus Cutler Dawes, The Dawes Plan in the Making (Indianapolis: The Bobbs-Merrill Company, 1925). a currency secured on gold again, foreign credit markets opened, an internal political and moral situation that was far from steady. Germany in any case had to borrow the annual $500,000,000 she had to pay in reparations. Further, seeing how easily she got the money, and in presence of the offers of credit, long and short term, which American bankers, attracted by high interest rates, fell over each other to offer her, Germany proceeded to borrow for all and every other purpose: for new plant, new dwellings, increases in civil service salaries, social services, amenities, art, culture, etc. etc. It went all right for a time, though towards 1928 the stock exchange boom in the U.S.A. provided a counter-attraction for capital that made it much more difficult for Germany to borrow.

And then the 1929 crash. Not only was there a failure to produce the new loans which would have been necessary to keep Germany able to pay Reparations and to run a concern that had been allowed to become exceedingly costly, but of the short loans which had formerly been so easily granted, many were now withdrawn. And since then the American sources of credit have tended more and more to dry up, with the result that Germany has got into grave budgetary and banking difficulties, accentuated of course by the fall in commodity prices.

Since Brüning took power last autumn, great efforts have been made inside Germany to retrench, but without wanting to diminish the present Govt’s merits in that connexion, one can only observe that the trouble had gone far too deep to be cured in so short a time.

I do not believe in any concerted, deliberate attempt on Germany’s part to frustrate the whole debt settlement by courting another bankruptcy. All she has done has been to follow the line of least resistance—and she was, for several years, lured down the primrose path by the dulcet strains of American flutes—played by bankers longing to lend her money (at attractive rates).

Now, that’s all over, and if, like most people, one doesn’t believe that the boom days of 28–29 are going to recur, one must tell oneself that Germany is not again going to be in a position to pay anything like the Young Annuities. If that is the case, what happens to the annuities which Gt. Britain, France etc have agreed to pay to the U.S., and which, in the minds of the public in those countries, are only tolerable on the supposition that the sums to be paid to the U.S. are received from Germany?

Is opinion in the U.S. realising that, if it wants the war debts to go on being paid, it must lend Germany—not only the money to make those payments, but perhaps more as well? There are signs that it is realising this truth.

As for the other countries of Central Europe—Austria, Hungary etc., what happens there will be largely conditioned by the settlement or non-settlement of German problems.

These days have been pretty nerve-wracking. There has been talk of mobilisation, and I’m afraid not only on the café terrasses. But I don’t believe Europe is going to destroy itself like that.

Tomorrow I’m going with Geoffrey Dodge and an un-prepossessing Hun called von FreyAlexander von Frey (1882–1951), a German art dealer of Hungarian birth. to see two tapestriesProbably two of the three “mille fleur” tapestries made in the southern Netherlands or northern France ca. 1500 that were acquired by the Musée du Louvre, Paris, in 1945. They were in the collection of the Duc de La Trémoille, Château de Serrant (Maine-et-Loire), and then in the collection of Édouard Larcade, who gave them to the Louvre in 1945. One tapestry (OA 9408), known as the Noble Pastorale has figures processing wool from sheep against a background carpeted with sprays of flowers. The tapestries also have the coats of arms of Thomas Bohier (died 1524), administrator of the royal finances under Charles VIII, Louis XI, and François I, and his wife Catherine Briçonnet (died 1526), which were added to the tapestries. about which Dodge has written to you, and which, judging from insufficient photos., look as if they might be just what you want.Geoffrey Dodge wrote Mildred Barnes Bliss on July 16, 1931: “But I am enclosing photographs of a pair of tapestries which seem in the scheme of the big room. They were brought to my attention by Doctor Alexander Frey and belong to the Duke de La Trémoille and have been for centuries in their château near Angers. Through a complicated story of some lady friend wanting to make an affair, the young Duke has been persuaded to sell them, although he does not need money. Doctor Frey has not seen them yet and, as he says, they look almost too good to be true, but I am leaving with him and Royall, who is much interested, on Sunday and will write you further details.” Blissiana files, Geoffrey Dodge correspondence.

I’m rushing to catch the air post.

Love and blessings

R. T.

Associated People: Geoffrey Dodge