GERMANY AND LOANS

New Zealand Herald, Volume LXXV, Issue 23055, 4 June 1938, Page 12

GERMANY AND LOANS

Germany's growing contempt of her obligations is creating concern in London's financial circles, as a result of the unpromising trend of negotiations between Britain and Germany on the question of Austria's debts. This anxiety can be readily understood. If the German Government should maintain its attitude of irresponsibility in relation to these debts, there is reason to fear that it may go the whole length of the repudiation road, refusing to recognise any and every obligation to repay national loans. In that event, many nations will be involved in loss, irrespective of their political relations with the Nazi Government. There cannot be differential treatment, on economic, logical or moral grounds, but because of their differing circumstances some will be more embarrassed than others. It should be remembered that to • injure the financial fabric of the world at any point is to injure the whole, so complex and interrelated is its structure. It should be remembered also that the loans over which now hangs the threat of wholesale repudiation were made with a view to helping Austria and Germany out of pressing difficulties. Sympathy with their plight at the time certainly played a part in the promotion of the loans, and to say that the lenders had in mind the safeguarding of the general economic structure which meant so much to themselves, as well as to Austria and Germany, is not to tell all the story. This applies no less to the loans under the Dawes and Young Plans in connection with reparation indebtedness than to other loans. However, emphasis on the inducement of self-interest strengthens the case for general economic risk should the feared repudiation be given effect. The widespread concern occasioned by the threat must, in self-defence, provoke a reaction prejudicial to Germany's need for credits in the purchase of raw materials. In her own interests she should withdraw the threat, and collaborate amicably in international discussion .as jn other dayß.j