GERMAN DEBT

New Zealand Herald, Volume LXXI, Issue 21845, 6 July 1934, Page 11

GERMAN DEBT

AGREEMENT REACHED PAYMENTS TO BRITAIN DAWES AND YOUNG LOANS REPRISALS AVERTED By Telegraph—Prejp Association—Copyright (Received July 5. G. 5 p.m.) British Wireless RUCIBY, July -1 The Chancellor of the Exchequer, Mr. Neville Chamberlain, announced in the House of Commons to-day that an agreement regarding the German debt question was signed this afternoon. Tho agreement covers a period of six

months as from July 1, 1934, and provides that during this period the German Government will provide sterling funds at the Bank of England for the purchase, at the nominal value, of all coupons under the Dawes and Young loans. This applies to coupons in the beneficial ownership of British owners on June 15. 1934. In regard to other medium and longterm debts, the agreement provides that the terms of the offer of the Reichsbank, embodied in a communique issued on May 29, shall apply to all interest, etc., due in respect of investments which on June 15 were in beneficial ownership of British holders. Germany undertakes not to give preferential treatment to any other country. Finally the agreement provides that the British Government will not, during the period of the agreement, exercise in respect of Germany the powers given to it by the Debts Clearing Offices and Imports Restrictions Act of 1934. The agreement is without prejudice to the standstill terms in regard to short-term debts. How the Arrangement Works The Chancellor said that in the preamble to the agreement both Governments affirm their earnest desire that the trade and financial relations between the two countries shall continue on a non-discriminatory and most friendly basis, and that the volume of mutual trade shall be maintained and as far as possible increased. The German Government had informed the British Government that it was prepared to negotiate an exchange agreement for commercial payments similar to those which are, or may be, in force between Germany and other countries.

Mr. Chamberlain explained that for the purpose of the agreement British holders in the case of sterling issues meant British subjects belonging to any part of the Empire in which they were resident. In the case of non-sterling issues, it meant residents in the United Kingdom. Loan Issues Rise on Market The Chancellor said it would have been more satisfactory if the German Government could"have made arrangements with all its creditors on the lines of this agreement, but as it was engaged in separate negotiations with the different creditors Britain had been forced to take the same lines.

"I hope the House," he said in conclusion, "will agree that so far as

this country is concerned this agreement is a satisfactory solution." The Dawes and Young loan issues rose two to three points after the news of the agreement, which was fayourably received in the City. Permission to pay the Young loan in sterling is a concession, since the bonds provide for the interest to be paid on a gold basis. Moreover, hitherto the German Government has transferred interest payments on the loans to the Bank for International Settlements in monthly instalments.

Transfer now will be effected not earlier than tho interest is due, namely, half-yearly, thus providing a welcome breathing-space. AMERICAN DECISION EQUAL TREATMENT SOUGHT INTERESTS OF NATIONALS (Received July 5. 5.5 p.m.) NEW YORK. July 4 The Washington correspondent of the New York Times savs that officials today stated that tho arrangements concluded in London to permit of the payment of interest to British holders of the Dawes and Young bonds by Germany would encourage tho State Department to press for equal treatment for American holders. The United States Government will seek for its nationals the same treatment as is extended to tho most favoured country with which Germany may reach an agreement.

AUSTRALIA'S POSITION GERMANY AND WOOL (Received July 5. 9.35 p.m.) CANBERRA, July 5 The Assistant Treasurer, Mr. R. G. Casey, stated in the House of Representatives to-day that the threats of German discrimination against Australian wool had been removed by the agreement reached between the British and German Governments.