Coolidge escaped in time. He was out of office before the final mad orgy of the 1929 stock market in the United States, and before the heaviest pressure began upon the debtor countries of Europe. But he lived, none the less, long enough to see the collapse of a mad world.
Financial pressure began for Germany, and for most of the debtor countries of Europe, with the tightening of the money market in the United States and the great reduction of foreign loans by the United States in 1929. Germany turned from borrowing to repaying in the middle of 1929. and in the last half of that year developed an export surplus in so doing. The Young plan was substituted for the Dawes plan in 1925, over Schacht's protest against the abandonment of the protective clauses of the Dawes plan. All debtor countries of Europe felt the tightening of the money markets.
The British stock market crashed at the time of the Hatry scandal, preceding our own stock market crash. Following our stock market crash, an ominous price collapse came in almost all of the great international staples, including especially farm products. But international confidence remained, and in '30 another great German loan was placed under the provisions of the Young plan. The depression of 1930 was relatively mild. It was more severe in England than in the United States, because British costs and prices were very inflexible and would not yield fast enough to prevent diversion of trade from England to other countries. Debtor countries were paying with goods. It seemed possible that the great mushroom of international credit might be sufficiently liquidated in this way. Then we raised our tariffs in 1930, and the whole world began to raise tariffs and other trade barriers to heights never dreamed of before, and the best intentioned debtor struggled with difficulties.
In the spring of '31, a new factor entered. Austria and Germany, for what seemed to them sound economic reasons, entered into a customs union which involved a large measure of free trade between them. France interpreted this as the annexation of Austria by Germany, and took violent exception to it. Then and there international financial policies came to be dominated by political considerations. France had become powerful finan