THE GERMAN DEFAULT.

Auckland Star, Volume LXV, Issue 148, 25 June 1934, Page 6

THE GERMAN DEFAULT.

The British Note to Germany on the German transfer moratorium is a plain accusation that Germany is not acting in good faith. The Note contends that Germany claims that no foreign exchange resources are available to meet the service on her loans, and then, when these loans have fallen in price as the result of such contemplated default, Germany uses resources, which should have gone to meet the loans, to purchase her loans at the new low prices resulting. This sharp

practice has caused Britain to threaten retaliatory measures. Britain is satisfied Germany cart pay, and hints that she has hidden reserves equal to many times the amount of the interest on the Dawes and

Young loans due during the next six months. The threat of "exchange-clearings," which would wipe out Germany's favourable trading balances, and thus force her to restrict still further her imports from raw material producing countries, including those of the British Empire, seems to have had the effect of making Germany reconsider her attitude, and she has now consented to a conference with English representatives to discuss the transfer question. As usual, German diplomacy seems to have been clumsy.

It is an interesting speculation as to how far Germany has been influenced in her moratorium proposals by the attitude of debtor nations towards their own war debts to America. There has been no suggestion of bad faith on Britain's part, but Britain suggests bad faith on Germany's part. It must have occurred to the British Government when they sent the Note to the United States that it might have serious reactions on Britain's own debtors. The conference suggested by Britain, and approved .by Germany, is the most sensible way of settling this and other debt problems. ,