At the risk of boring readers, further reference must be made to the developments which are occurring in Europe, and particularly the conversations between Herr Hitler and Signor Mussolini Which are due to commence to-day with the visit of the former to Rome. It is likely that what results from those negotiations may mot only have a deep effect upon the future of Europe, but may have repercussions in this part of the world, for the formation of the tripartite pact against the Komintern, with all that it implies, must of necessity have some bearing upon conditions in the Far East, where one of the parties is at ihe present time playing a prominent if not an uncomfortable part. It may not prov to be true, but the activities o? Germany, Italy, and for that matter Japan seem to have about them a quality of ce-ordination which /has created an atmosphere of anxiety, if not of actual suspicion, The question naturally arises what will the German-Italian parleys do to remove that? Prior to the commencement of the Anglo-Italian negotiations which nave achieved such pleasing results, it was announced that Hitler would pay this visit to Rome dos clear, therefore, that it is not dictated byJ"anything which has happened between Great Britain and Italy, though it may have the effect of either modifying or enlarging the programme of subjects which are to be discussed between Herr Hitler and Signor Mussolini. Probably the best method of considering the possible outcome of these negotiations is tg review the. relationships existing between the two countries involved, and the manner in which they have been modified by recent events and those which seem to be in the offing. The basic foundation of the understanding between Berlin and Rome is opposition to Communism. That is not the only one; but that which brings th two governments ti a unity of purpose. The Other chief basis is the desire ior mutual support in dealing with member nations of the League.
While the former basis still ex: original integrity, the latter has been considerably modified by the recent events in Austria and those.which threaten in Czechosslovakia. The ai 1 doctrine of the Germa ansch aching one, and completely opposed to the Italian traditional policy, for it was designed eventually to bring Germany down to the Adriatic with consequent loss of Italian possessions. Herr Hitler goes to Rome, with the German borders now brought to the Brenner Pass, with the inclusion of Austr in the Reich as an accomplished fact, with a threat to Czechosslovakia and the practically complete breaking down of the Italian Danubian policy. There is no buffer state between Italy and Germany, and Herr Hitler goes to Rome as the victor 9f the political and semi-military develcpments of recent weeks, developments, for which, in the main Italy has paid the price.
He has promised he will never forget Italian compliance in the matter of Austria and the question naturally arises is as to what he has at the present time to offer his partner in the Berlin-Rome axis. It does not appear that Italy, herself, has much to offer, except a continuance of that support which up to the present time has proved so valuable to Der Fuehrer, but she is already in a stronger position than she was by the effecting of more cordial relations with Great Britain and the possibility of bringing about the same happy relationship with France. Signor Mussolini may have been faced with un fait accompli on the northern borders of his nation, but his position has been considerably strengthened vis-à-vis of Germany by the develop-of the last few weeks, Before Ger-y stood without friends: now she has been shown that she may not be entirely support, though that, of course, is no stronger than she cares to make it. From this i appears that if Italy chooses to assume the role of mediator between Germany on the one hand and Great Britian and France on the other, her position may now be sufficiently strong to enable her to undertake that important task with some hope of suc ce From another point of view this may not happen. It may be possible for Herr Hitler to persuade Signor Mussolini that it is his paramount duty to renew the crusade against the democracies. That would require no new alliance or treaty, but would only involve the reiteration of statements already made, and the adoption of something along the line; of the mutuality which has been re-established between Greaj Britain and France as the result of, the conversations "of last week That German-Italian mutuality underwent a evere blow when Austria was absorbed into the Reich, It would undergo another if Czechoslovakia were torn t3 pieces as the various minorities appear now to demand: it would be completely disrupted by the further advancement towards the complete German anschluss which Herr Hitler has so repeatedly emphasized to be his great ambition, and from which it is now impossible for him to recede. The results, therefore, of the conversations between Herr Hitler and Signor Mussolini depend very much on what the former has to ofer. If he can recompense his dictator-colleague for his abiding by his commitments during the March anschluss—and it is not at the: moment apparent how he can—then Signor Mussolini might still be in a position to urge upon Der Fuehrer the maintenance of the present status in Central Europe and the necessity for further moderation in the future, At the moment, therefore, Rome is the very necessary bridge between Great Britain and France on the one side and Germany on the other. Failure on the part of Signor Mu: solini to bridge the existing-gap need not any way reflect upon his bona fides: it should not ever be accepted as a test, for the dominant partner in the Berlin-Rome axis is Der Fuehrer, as events have proved. He ay still be able to keep Italy on a leading but, if he succeeds, it need not be surprising if Italian eyes tura to other but undoubtedly less exciting compan, Banks and Exchange The general answer to the considerations raised by A Hetptrss Ciirwr in the correspondence columns can only be a brief one, for sks a large. number of questions the answer io which would take up too much space. He and others of the general public do not appear to realize that the exchange value of China note issue is solely the responsibility of the Chinese Government. The Foreign Exchange Banks are not obligated to redeem the currency by sales of exchange although they have been endering great assistance to the Central Bank as intermediaries in meeting public demands for their legitimate requirements. The result s that the foreign banks have a choice of two alternatives:—
(a) They can accept applications from clients ior sterling at a rate of exchange approximate to the Central Bank's official rate and pass on such applications weekly to the Central Bank, dealing out proportionately whatever allotment they receive. This must be a very small prop tion of the general public's needs. This means Foreign Banks would keep out of the open exchange market and only operate local currency transactions in Shanghai, thus refraining from taking any risks of selling foreign currencies for which they have no exchange cover to protect themselves.
(b) They endeavour to meet their clients requirements at an open market rate established on the supply of foreign exchange each bank Can make available from share of trade resources of the Port, Export business being practically at a standstill, owing to the blockade established by the Japanese Military and Naval Authorities, Foreign (Banks must inevitably sell to the General Public far more Foreign Exchange than they can cover and so take the risk of a fall in exchange on the fanding commi ments beyond what they recover from allotments received weekly from the Central Bank Which would the general public prefer: everyone who has cash in hand for their r quirements may obtain exchange at an open market rate or that a few individuals can obtain a proportion of their needs at 1/2 In times like these it is ingenious to li gine foreig exchange can be bought on a credit basi is obvious that the fairest method is some such scheme as banks like the Hongkong & Shanghai Banking Corporation put out in their Circular Letter referred to by A HziPLEss Criewr and it is a great mistake for the General Public, whose living depends on the movement of trade, to criticise foreign bank operations without the necessary vision of the risks involved or what would happen if procedure (a) were whole-heartedly followed.
Text read from the printed page and cleaned; old type leaves the occasional error.