Vienna (May. 12)
The Vienna House of Rothschild has again saved Austria from a gigantic financial disaster, by joining the Government in effective action which has prevented the collapse of the Austrian Credit Anstalt, the great Austrian banking concern which controls practically the whole financial and industrial life of the country, and has in addition big interests in Poland, Czecho-Slovakia, Hungary, Jugo-Slavia, and other countries. The House of Rothschild, which has thus repeated the action which it took in October 1929, by stepping in at the urgent request of the then Premier, Dr. Johann Schober, the Vice-Premier and Foreign Minister in the present Government, and taking over the Boden Credit Anstalt, when it was on the verge of collapse and restoring it to financial stability, has provided 30 million schillings (Â£870,000), the Austrian National Bank providing the same amount, and the Austrian Government 100 million schillings (Â£2,900,000), in that way wiping out the deficit of the Bank, and enabling it to continue to function normally.
The last balance sheet of the Credit Anstalt – that for 1930 – showed losses amounting to 140 million schillings, of which 60 million schillings are attributed to the taking over of the Boden Credit Anstalt in 1929, and the other 80 million schillings to depreciation of securities and the writing off of debts owing to the economic depression. This loss was offset by 125 million schillings of paid-up capital and reserves for 40 million schillings, so that the funds now provided should supply more capital than the Bank had at the end of 1930, so that the deposits and current accounts are safeguarded.
When the state of affairs first became known this morning, a run on the Bank started and continued till about noon, but the depositors were all paid out in full, and by the afternoon the run had subsided. Some of the withdrawals were afterwards redeposited. The Management of the Bank states that it is in a position to pay out now the entire amount of its deposits.
ABILITY TO SUPPLY 30 MILLION AT MOMENT’S NOTICE AFFORDS STRIKING PROOF THAT ROTHSCHILDS STILL RETAIN OLD POTENCY SAYS VIENNA PRESS
An official communique issued by the Government confirms that the further existence of the Credit Anstalt is now assured, and that sufficient funds are available as a result of the combined action of the State and the House of Rothschild: The Prime Minister, Dr. Ender, and the Minister of Finance, Dr. Juch, have also made a declaration to this effect at a press reception given to-day, adding that no blame whatever attached to the administration of the Credit Anstalt, of which Baron Louis de Rothschild is President, everything being in proper order, and the difficulty being due solely to the responsibilities assumed in taking over the Boden Credit-Anstalt, and the depreciation of securities caused by the economic depression.
The intervention of the State to save the Bank is described in financial circles as only one good turn deserving another, since the Bank assumed the liability of the Boden Credit Anstalt on the urgent demand of the Government, which, together with the National Bank had assured the Rothschild House that they would help to cover any losses resulting on the absorption. The Government and the House of Rothschild, it is added, have by their prompt action prevented a financial catastrophe which would have overwhelmed half Europe.
Twenty-five per cent. of the capital of the Bank has been written off as an additional measure to assure the stability of the Bank, and as the shareholders of the Credit Anstalt are largely Jewish, many Jews in Austria, France, England and America who hold big blocks of shares will lose about 25 per cent. of their share capital. There will be no other losses, however, since the depreciation of share capital is covered by the Bank reserves.
The Austrian Press, including even the antisemitic papers, are full of praise for the Government and the House of Rothschild in saving the bank.
Baron Louis de Rothschild continues as President of the Credit Anstalt, which gives general satisfaction, the papers terming it a good sign for the future, the ability to put 30 million into the Bank at a moment’s notice, the Press says, affording striking proof that the House of Rothschild still retains all its old potency.
M. Quesnay, the General Director of the Bank for International Payments at Basle, which would have had to grapple with the problem of stabilisation had the Bank collapsed, is expected to arrive in Vienna to-morrow, and Sir Otto Niemeyer is also expected on behalf of the Bank of England.