FOREIGN LOANS

Southland Times, Issue 22351, 16 June 1934, Page 5

FOREIGN LOANS

GERMANY’S DEFAULT SERIOUS VIEW TAKEN BY BRITAIN RETALIATION EXPECTED (United Press Assn.—Telegraph Copyright.) (Rec. 9.25 p.m.) London, June 15. The newspapers emphasize the importance of Germany’s default on all foreign loans and the. total inadequacy of Dr Schacht’s defence and his silence regarding the enormous purchases of raw material Germany has made recently. Doubtless in view of the present contingency the Daily Express says that money owing to German commercial firms by British traders will be appropriated for the benefit of British holders of German bonds. Retaliation by Germany is impossible, as commercial debts due to Germany far exceed those owing to British traders. The News-Chronicle, however, points out that the practical difficulty of applying a clearing system to Germany is that the British Empire as a whole sells more to Germany than it buys. If moneys which normally would accrue to German exporters are intercepted in London, Germany will cut down her purchases, say, from Australia. Moreover, the balance of trade between Britain herself and Germany shows a greatly diminished margin out of which British creditors could be recouped. The Times says that Germany is wilfully neglectful of her good name and has shattered the slender remains of her credit. The British Government has already emphasized its serious view of the situation. No one will welcome retaliatory measures, but there is no alternative. German bonds fluctuated freely on the London Stock Exchange and showed a sharp fall at the close. In the House of Commons Mr Neville Chamberlain, Chancellor of the Exchequer, announced that the British ambassador had informed the German Government that Britain intended shortly to legislate to create an Anglo-. German clearing office, but was prepared to refrain from doing so if a satisfactory agreement ensuring fair treatment for British bondholders was negotiated before July 1. Anyone purchasing German bonds from foreigners would do so at his own risk. Mr Chamberlain said that imports and exports between Germany and the dominions would not be involved in the proposed legislation. USE OF RESERVES GERMAN TACTICS CRITICIZED. (United Press Assn.—Telegraph Copyright.) (Rec. 7 p.m.) London, June 15. City and financial circles say there is small do’ibt that the Reichsbank reserves were used to buy German bonds when they were depreciated. As a result of the German policy at least 600,000,000 marks worth were thus purchased in the past year. There is considerable indignation at such tactics, which, it is agreed, have contributed to default. DECISION TO DEFAULT GOVERNMENT BEHIND REICHSBANK. (United Press Assn.—Telegraph Copyright.) Berlin, June 14. The Minister of Finance in a statement said the interest and amortization sen-ices on all State loans were at present suspended. The Government approves of the Reichsbank’s action as far as its decision entails Government obligations, thereby showing that it has no intention of changing the interest agreements one-sidedly. The Reichsbank offers coupon holders preferring cash to funding bonds to purchase the coupons at 40 per cent, of their face value at any time during six months, after which the respective coupons are due. FRENCH OPINION PROTECTION FOR BONDHOLDERS. (United Press Assn.—Telegraph Copyright.) (Rec. 7 p.m.) Paris, June 15. The Government is preparing measures to protect holders of German bonds. Official circles declare that if Germany paid interest in marks the problem would be easily soluble by creating a Franco-German clearing house. “BREACH OF TREATIES.” (United Press Assn.—Telegraph Copyright.) (Rec. 7 p.m.) Berne, June 15. The directors of the Bank of International Settlements as fiduciary agents for the Young loan have sent a protest to the German Government. They state that Germany’s action constitutes a breach of the treaties of the League and Lausanne. INVESTORS’ LOSSES AMERICA JOINS PROTEST. (United Press Assn.—Telegraph Copyright.) (Rec. 7.0 p.m.) New York, June 14. It was indicated here to-night that the American Government was prepared to join other nations in any formal protest against Germany’s suspension of payments. It was also announced that American investors were said to hold the largest proportion of these'obligations, totalling three billion marks. The losses of interest on German Government and corporate bonds as a result of the suspension of money transfers will, it is believed, total 35,000,000 dollars.