GERMANY WON’T PAY

Greymouth Evening Star, 20 December 1933, Page 7

GERMANY WON’T PAY

FOREIGN DEBTS DEFAULT CHEATING HER CREDITORS [by CABLE—PRESS ASSN. —COPYRIGHT.] LONDON, December 19. It is reported from Berlin that the Committee of the Reichbank set up in connection with the Davies and Young Plan loans to Germany, have in connection with the amounts maturing prior to June 30 next, arranged fully for the transfer of interest and' amoritisation of seven per cent, on the Dawes Plan loan of 1924, and also interest on the Young Plan loan of 1930. Thirty per cent, will be transferred of all of the maturing interest, dividends, and of the amounts paid into the Reichbank Conversion Fund for foreign debts. Amortisation payments, except those in connection witji the Dawes Plan, will not be made. The regulations will apply to the German foreign owners of the securities.

Under the heading, “Cheating—or Hiding the Truth,” the “Daily Herald’s” city editor says: Since the first moratorium was announced, Germany’s foreign creditors have been receiving 50 per cent, of the sums due, but after January 1 they will receive only 30 per cent. There will be strongprotests. The British Government will be asked to. take diplomatic action, but debt collection by diplomacy is a hard job. The head of the Reichbank, Dr. Schacht, without producing a word of argument, virtually tells the world that Germany will pay just what she likes, regardless of her capacity to pay or of the legitimate claims of her bondholders, including those who have sold goods to Germany. Either Germany is reducing the payments because she intends deliberately to cheat the creditors or because her economic position is far worse than when Herr Hitler came to power.

The “Daily Herald’s” Berlin correspondent states: Unless Germany’s exports increase, the payments on foreign loans are likely to be completely suspended. The “News-Chronicle” declares: — The Reichbank decision is a heavy blow to German credit, since Dr. Schacht must know that the only inference can be that he docs not care, but is deliberately playing up to the Nazi ideal of making Germany selfsufficient. The “Daily Telegraph’s” city editor .says: Dr. Schacht’s- decision amounts to an unwarrantable default. 'The “Daily Mail” says: Dr Schacht’s declaration means that the British holders of German State and municipal bonds are to receive less than one-third of the interest due to them,, which completely upholds the. British long-term creditors’ representations that a reduction in interest from 50 to 30 per cent, was unjustifiable. It remains to be seen whether British official action will follow. 1 “HIGH-HANDED DISREGARD.” RUGBY, December 19. The “Times,” commenting on this further default, says that altogether the impression left by Dr. Schacht’s handling of the debt question is anything but favourable. It is idle to pretend that the Reichsbank and the Government are powerless to effect any increase in the available supply of foreign exchange, for these could, without question, be stimulated by appropriate measures. Indeed, it seems quite clear that if they really desired to do so, Dr. Schacht and the Government could very well continue the payments, at least, on the present scale, without inflicting any hardship upon the German people. Throughout the negotiations, Dr. Schacht displayed a high-handed disregard of the legitimate claims of foreign creditors, which it is difficult to reconcile with perfect good faith, and his preferential treatment of the Swiss and Dutch claims in particular introduced an arbitrary discrimination which no amount of sophistry can justify. The “Morning Post” says: The view is strongly held in this country that no debtor has the right to disci'iminate in this arbitrary fashion between his creditors. The British Government has already addressed a remonstrance to Berlin, without apparent result, but they ought not to let the. matter drop. BOND-DEALERS’ PROTEST. LONDON, December 19. Foreign bond-dealers have strongly protested to the Committee of the Stock Exchange against Germany’s default, severely criticising the German policy of using ' funds which should go to pay interest, to buy German bonds at knockout prices in London. with a view to cancellation TRADE LOSSES ALLEGED. BERLIN, December 19. According to Dr. Schacht, Germany’s declining exports and the-cur-rency dumping prevent her from maintaining the transfer quota. He admitted that the Reichbank currency reserve had increased by £6,350,000 since July 1, but five millions thereof is accountable by the payments made under a new economic law allowing Germans to escape prosecution for evasion of the currency laws by bringing back their capital into Germany. This increase could not recur. Dr. Schacht added that the actual receipts from foreign currency were only £12.500,000, which probably would be further reduced. Transferlie said, must cease if additional imports became impossible. Germany’s., gain of from 10 to 15 million sterling in her foreign debt service was offset four times by her international trade losses, which were due to the English, Swedish, American and' Japanese currency dumping. Germany’s export surplus had declined ninety millions sterling compared to 1931.