Trade Treaty with Germany

Hawke's Bay Herald-Tribune, Volume 81, Issue 69, 14 December 1937, Page 9

Trade Treaty with Germany

Own Correspondent.)

PROBLEMS AHEAD Why Nazis Prefer Barter to Free Exchange BUILDING-UP CREDITS

(From Our

WELLINGTON, This Bay. There are some disturbing elements for the Government in the recently-con-cluded German trade agreement. It is almost incredible how little information has been given to the eountry concerning this pact. But in the last few weeks curious things have been leaking out from those in a position to know. The first thing to be revealed was that the conclusion of the German trade pact means that the concessions given to Germany must automatically be extended to the dozen or so countries with which the Bominion has most-favoured nation agreements. The list of these is interesting. It is a surprise, for instance to find that we have a trade treaty with Liberia extending back to 1848, the year in which the Bepubiie was founded, and that our agreement with Costa Eiea is dated only a year later. The treaty which gives Colombia those concessions goes back to 1866. The list is heavily studded with the names of American States — Argentine, Colombia, Gosta Rica, Nicaragua and Venezuela all appear on it, so do Norway and Sweden, Greece, Italy (because of the treaty of 1883), and Japan. But along with this other things have have been emerging. At the time of the announcement of the conclusion of the treaty Mr Nash let it be understood that he was unable to give information about the financing of the trade operations under the agreement because of objections of the Germans themselves. It is now freely being reported that another reason for his reticence is the fact that the doal is being finance through London (as indeed it must be, if there is to be any financing at all) and that the New Zealand Government is meeting Germany by hiaking available a temporary credit in a London bank — in other words a short-dated loan — in order to allo\y the plan to begin smoothly. That, of course, is feasible cnough, it is only what the Australian Government did after its conclusion of an eighteen-months' trade agreement with Japan at the end of last year, when the Japanese had exhausted their Australian credits and would have been unable to purchase wool had accommodation not been granted to them. But a certain amount of doubt exists as to whether the Germans really need this financial accommodation and what will he done with the .credits that are established in London. Problem of Old Debts. The view taken here is that the agreement with New Zealand is merely one more step in the trade plan of Germany, as devised by the late Minister of Economics, Br. H. G. Schacht, to established the much-needed supplms of devisen (foreign exchange) to finance the operations of her Eour Year Pian. The innovation of the bulk exchange plan is not new. It is the produet of the general repudation of foreign debts by the Nazis. This repudiation has resulted in the creation of "clearing " systems in the various countries to which she owes money. In Erance, for instance, tne proceeds from all German exports are paid into a common pool from which 16 per cent. goes to the holders of German honds in Erance, 59 per cent. to firms which are owed commercial debts by Germany, and only 25 per cent. is available for the financing of new purchases. It is because of the fact that under this system any increase in German exports merely goes towards paying off old debts which it is not thc intention of the Nazis to meet (and which at prcseni are being rapidly written off) that the Germans began the system of virtual barter into which the New Zealand trade agreement fits. The past operations of this system are another cause for anxiety about the effect on New Zealand trade. Germany has bought food before; she has purchased the Greek raisin crop and the Turkish fig crop and has dumped them in the Netherlands market for what they would fetch. The Balkans countries have had to take payment in munitions, which Germany has been able to export, and additLnal foreign exchange has been created in this way. What, it is being asked here, will be the effect on New Zealand's return from butter in the London market if Germany adopts the same tactics towards the produce of this Bominion? Mr Nash Trusts Germans. It is pointed out that it is not necessary for the German-bought New Zealand butter to come in t() the British market to influence the trend of prices, but that by dumping the produce iu ot'her countries the Germans may create a situation which will scnd more dairy produce from the Continent to Britain. Mr Nash, of course, does not believe that the Germans would do this thing. He rnet leading Nazis when in Germany and has decl'ared since his return that he fouiid them to be simple, human men, not resembling the picture3 of them painted abroad, and trying to do their best for the improvemont of the lot of the people of their eountry. He does not believe that they. are planning war. There is a final aspect of the situation which up to now has been surrounded with cl ■~o secrecy, but which is also being discussed in welj-informed cireles. That is the shipping problem. There is more than a liint that the Germans are anxious to add to the work of their merchant marine, in crease their foreign earnings and save the doductions involved through employmont of Britisli ships and transiiipment fr'«m London. In shc-rt, it is believed tliat the German Government is anxious to establish a direct service to New Zealand for the purpose of carrying goods to be exclianged between the two countries under the provisions of the new pact. It is reported that this prineiple is causing the Government some embarrassment. but that the Germans claim tliat, as the result of the j establishment of a direct link between