GERMANY’S DEBTS

Nelson Evening Mail, Volume LXVI, 20 December 1933, Page 5

GERMANY’S DEBTS

REICHSBANK COMMITTEE’S DECISION

SOME STRONG CRITICISM

Press Association—By Electric Telegraph—Copyright)

LONDON, 19lli Dcecmlxsr

It is reported from .Berlin that the Reichsbank Committee in connection with amounts maturing prior to 30th June lias arranged to fully transtcr the interest on the amortisation 7 per cent. Dawes loan of 1924, and the interest on the Young loan of 1930. Thirty per cent, will be transferred of all maturing interest dividends and the amounts paid into the Reichsbank conversion fund for foreign debts amortisation payments, except in connection with the Dawes loan, which will not be made. The regulations apply to German and foreign owners of securities. DIPLOMATIC ACTION URGED LONDON, 19th December. 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 Ist January will receive only 30 per cent. There will be strong protests and the British Government will be asked to take diplomatic action; but debit collections by diplomacy is a hard job. 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 the legitimate claims of bondholders, including those who sold goods to Germany. Either Germany is reducing payments because she intends to deliberately cheat her creditors, or because her economic position is far worse than when Hitler came to power.” The “Daily Herald’s” Berlin correspondent states that unless Germany’s exports increase, payments of foreign loans are likely to be completely suspended. The “Chronicle” declares that' the Reichsbank decision is a heavy blow to German credit, since Dr. Schacht must know that the only inference can be that he does not care but is deliberately playing up to Nazi ideal, making Germany self-sufficient. DECLINING EXPORTS BERLIN, 19th December. According to Dr. Schacht, Germany’s declining exports and currency dumping prevent her maintaining her transfer of quota. He admitted that the Reichsbank currency reserve increased £6,350,000 since Ist July, but £5,000,000 thereof was accountable by payments under the new economic law, allowing Germans to escape prosecution for evasion of the currency laws by bringing back 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 and transfer must cease, if additional imports are impossible. Germany’s gain of £10,000,000 to £15,000,000 in her foreign debt service' was quadruply offset by international trade losses due to Anglo-Swedish, American and Japanese currency dumping. Germany’s export surplus declined £90,000,000 compared with 1931. “UNWARRANTABLE DEFAULT” POSITION OF BRITISH BOND= HOLDERS LONDON. 19th December. The “Daily Telegraph’s” city editor says that Dr. Schacht's decision amounts to unwarrantable default. The "Daily Mail” says that Dr. Schacht's declaration means that British holders of German State and nniniciptal bonds will receive less than onethird of the interest clue, which completely rebuffs British long-term creditors' representations that a reduction in interest from 50 to 30 per cent, is unjustifiable. It remains to be seen whether British official action will ‘follow. STOCK EXCHANGE PROTEST (Received 20th December,- 10.10 a.m.) LONDON. 19th December. Foreign bond dealers strongly protested at the committee meeting of tho 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. FURTHER COMMENT DISREGARD OF FOREIGN CREDITORS British Official Wireless) RUGBY, 19th December. The central committee of the Reichsbank announced yesterday the curtailment during the first six months of next year of cash transfers in respect of interest payments on Germany’s medium and long-term debt from 50 to 30 per cent. Interest on the Dawes and Young loans will continue to be transferred in full, but no amortisation payments will be transferred except on the Dawes loan. “The Times,” commenting on this further default, says: “Altogether the impression left by Dr. Schacht's handling 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 indicting any hardship upon the German people. Throughout the negotiations Dr. Schacht has displayed a high handed disregard of the legitimate claims of foreign creditors which it is difficult to reconcile with perfect good faith, and bis preferential treatment of the Swiss and Dutch claims in particular introduced arbitrary discrimination which no amount of sophistry can justify.” The “Morning Post” says: “The view is strongly held in this country that no debtor lias the right to discriminate 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.”