ANGLO-GERMAN DEBTS AGREEMENT

Dominion, Volume 28, Issue 34, 3 November 1934, Page 7

ANGLO-GERMAN DEBTS AGREEMENT

Result of Berlin Talks MR. RUNCIMAN OUTLINES RESULTS (British Official Wireless.) Rugby, November 1. The Anglo-German debts clearing agreement, the terms of which were given by the President of the Board of Trade, Mr. Walter Runciman, in the House of Commons, was initialled at Berlin to-day. In his statement Mr. Runciman said that for some time during the negotiations it appeared that there was no solution for the difficulties that could be found, except along the lines of the clearing agreement. In spite of the drawbacks of such a system, and the hindrances which it inevitably places upon the flow of trade, the draft of the clearing agreement, which it was hoped would avoid the major difficulties in such an arrangement and the pitfalls which bad prevented the successful working of similar agreements between Germany and other countries. had, however, been agreed upon. Germany’s Proposal. Toward the end of the negotiations the German Government put forward an alternative proposal with the object of safeguarding the payment for current exports of the United Kingdom goods to Germany and enabling outstanding debts to be liquidated without setting up a clearing system. The basis of this proposal was that the German Government will guarantee that 55 per cent, of value of German exports to the United Kingdom shall be definitely earmarked for the payment of United Kingdom exports to Germany. This allocation should, according to the normal trend of Anglo-German trade, be sufficient to ensure full payment. The Reicbsbank will provide immediately not less than £400,000 for the liquidation of outstanding commercial debts, and will also expedite their liquidation by the realisation of out'standing German commercial claims on the United Kingdom, whether by credit operation or otherwise. Insofar as these measures are not sufficient the Reicbsbank will set aside an additional percentage, provisionally fixed at 10 per cent, of the value of German exports to the United Kingdom, sufficient to ensure liquidation of all the outstanding debts within 12 months. Sondermarks standing in a special account under the exchange agreement of August last, as well as those waiting to go into that account, will continue to be sold by the Bank of England, and further arrangements will be made whereby, with the help of credit operation, and, if necessary, of the charge upon 55 per cent, earmarked for current trade purposes, Sondermarks will be liquidated within three months. At the outset foreign exchange certificates for imports of United Kingdom goods into Germany will be issued without restriction. but the German Government, after consultation with the British Government, may temporarily restrict the issue of such certificates. But in exercising this control they will give special consideration to exports to Germany which are particularly important to Britain, namely coal and coke, herrings, yarns, tissues, and textile manufactures. Interest on Loans. The German Government further agree that they will continue, as from January 1 next, to pay full interest on the bonds of the Dawes and Young Loans in the beneficial ownership of British holders on June 15 last, and will offer to British holders of non-Relch loans 4 per cent, funding bonds guaranteed by the German Government and exempt from transfer restrictions on the understanding that British holders who accept this offer will take the funding bonds in full settlement of any coupons funded. Mr. Runciman said the agreement reached embodied these arrangements. In case it should not prove successful provision had been made for its replacement by a clearing arrangement. The agreement was the best possible in the circumstances, but he did not suggest it would remove all difficulties in the way of Anglo-German trade, and he advised exporters to continue to proceed with caution.