GERMANY'S DEFAULT

Evening Star, Issue 21748, 16 June 1934, Page 15

GERMANY'S DEFAULT

MORATORIUM ON FOREIGN LOANS RETALIATORY MEASURES THREATENED Press Association—By Telegraph—Copyright. LONDON, June 15. ‘ The newspapers emphasise the importance of Germany’s default and the total inadequacy of Dr Schacht’s defence. This is silent regarding the enormous purchases of raw material which Germany has made recently. ' “ Doubtless in view of. the present contingency,” the ‘Daily Express’ says, “ the 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 the 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 the moneys which normally would accrue to German importers are intercepted in London Germany will cut down its purchases, say, from Australia. Moreover, the balance of trade between. Britain herself and Germany shows a greatly diminished margin out of which the British creditors could he recouped. ‘The Times’ says: “Df Schacht’s apologia recalls the murderer, who, after slaying his parents, pleaded for mercy on the ground that he was an orphan. Germany is wilfully neglectful of her good name, and has shattered the slender .remains of her credit. The British Government has already emphasised its serious view of the situation. No one will welcome retaliatory measures, but there is no alternative.”

INDIGNATION IN LONDON LONDON, June 15. City financial circles say that there is small doubt that the Reichsbank re-; serves are to be, used to buy German bonds when , they are 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, contributed to the default. BREACH OF TREATIES ALLEGED BERNE, June 15. The directors of the Bank for International Settlements, as ' fiduciary agents for the Young Loan, have sent a protest to the German Government, pointing out that, the German action constitutes a breach of the treaties of The Hague' and Lausanne! f . ' ’ i ACTION BY FRANCE PARIS, June 15. | The Government is preparing measures to protect the bondholders. Official circles declare that if Germany paid the interest in marks the problem would be easily soluble by creating a FrancoGerman clearing, house. AMERICAN INVESTORS HIT 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'are said to hold the largest proportion of these obligations, totalling, three billion marks, and the losses of interest on German Governmental and corporate bonas as a result of the suspension of money transfers, it is .believed, will total 35,000,000 dollars. SWEDEN’S ATTITUDE ’ STOCKHOLM. June 15. (Received June 16, at 10.30 a.m.) M. Sandler (Foreign Minister) declares that the German moratorium violates Sweden’s rights and interests. Tho Government reserves the right to take any measures necessary to safeguard them. PROPOSED LEGISLATION BY BRITAIN LONDON, June 15. (Received June 16, at. 1 a.m.) In the House of Commons Mr Neville Chamberlain 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 this if a satisfactory agreement ensuring fair treatment to British' bond holders 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.