Evening star., 1922-06-11
STATEMENT OF BANKERS
ON GERMAN LOAzV DELAY Y

|
that even II q loan could be raised
on the basis of assigned securities.
rather than on the basis OF Ger.
| many's general credit. 1t could at
best do no more than assure snors
would be faced with her un,iim-
inished reparation obligations. with
the further handicap that her best
securities would have been already
mortgaged for the service Of a loan.
| and the rest of the world would have
been SUFFERING from continued un-
certainty, which In every country Is
| serious obstacle TO economic re-
covery. Thus. even II such loan
| were possible II would represent at
bert the payment Of heavy price
merely in order to await for condi-
tions which might be more ravor-
| able for a general settlement.
Allied Investors Injured.
"(c) 1t was also stated that in
vestors in countries which took no
part In the war were sufrefinE Sc
verely from the depreciation OF the
mark. partly because they had in
vested heavily In marks and partly
| because the commercial competition
of German industry derived artifcial
advantage from this continued depre-
citation, and 1t was stated that IN
| these circumstances they also would
feel no interest in loan when Of
| fered no prospect of establishing
Germany's finances on a stable foun-
| dation.
"(d) Again as regards France. II
| was stated that limited loan would
| encounter great difficulties, since
at best return directly to France as
reparation. Realizing these and oth-
er difficulties and feeling that they
ought not to recommend loan OF
which they could not confidently an
| ticipate successful return in their
respective markets. the members OF
| the committee have with great re-
gret arrived at the conclusion that
under the present conditions they
cannot advise that an external loan
| is feasible.
GeneraI observations Added.
Having regard, however. to this
negative conclusion. the committee,
| while feeling unable to accept the
majority invitation of the commits
problem. consider that they may use
fully add the following general OBJ
servationS upon 1t:
"(a) An essential condition Of an
external loan at any time is that the
public should feel that Germany is
herself making a real and substantial
effort to place her public finances upon
| a stable basis 1t Is Of the greatest
Importance that. through the. tech
nical security to be given by Germany
| in the rehabilitation of her financial
, situation, she should clearly show
desire to meet her obligations. in the
hope that by the fulfillment of these
obligations she will re-establish her
credit.
"(b) A second essential condition is
that dealt with in detail above, viz
removal Of the present uncertainty
regarding reparation obligations.
"(c) The committee had before
them the statement that American
bankers and investors could in these
circumstances be interested in sub
stantial degree in the purchase of
German obligations. but only If one
further fundamental condition was
satisfied. namely, that such a loan
should be at the unanimous request
and for the benefit of the allied ma
tions. This unanimity could be in no
active cooperation Of the bankers OF
the allied and neutral countries in
the distribution of securities to their
own nationals.
American Participation.
Among the fundamental conditions
of American participation, therefore,
was unanimity among the lenders as
well as the establishment OF the
credit of the borrower.
"(d) Most Of the members OF the
committee are well aware that any
advice of theirs, while it might have
assisted: could not in itself have Sc
realize. for example. that If they rec.
ommend as an essential condition of
a loan limitation of Germany's an
cerned in considering the effect on
their financial situation would neces-
sarily have in mind their own exter-
| nal indebtedness. They realize that a
10 otN h Ia
might in fact prove to be imprac-
ticable unless it were preliminary to
other financial adjustments.
mt Of hpdsn of
obligations. is also a serious factor
in the case of the external public
debts Of the allied countries. In this
call that in considering the conditions
| Of the re-establishment of Germanys s
general credit they regard certainty
as essential: mere leniency in enforce
ment, such as the commission may
show. without modifying the total OBJ
legation is not sufficient
"Such questions, however, as in
| terallied Indebtedness are outside
their competence and cannot there
fore be discussed here. But the COM
mittee can not ignore the fact that
in the minds of those who consider
any adjustments Of reparation obli-
cations they are bound to be discuss
ed and that they are among the fac
tors in the problem of securing that
desirable allied agreement which they
consider one of the essential condi-
tions of a loan to Germany.
Advice of Economists.
I'm this connection they have in
mind the consistent principle con-
tanned in the advice Of economists
and financial experts since the men,
orandum submitted on the fifteenth
of January. 1920, to the governments
Of the several European countries
which were accepted by the Brussels
financial conference from September
| to October 1920, and have recently
been indorsed by the Genoa confer
ence Of 1922.
I'm conclusion, II the committee
felt obliged to be discouraging as to
the prospects Of loan in the present
position of Germany's credit. they de-
sire to be no less emphatic in stat
ing their conviction that. provided
| Of her credit can be realized. sub
stantial loans could be successfully
foated in all the main markets of the
world
now definitely favorable to the issue
of such loans. more favorable than
at any time since the war. The COM
mittee wish to assure the commission
that it Is their earnest desire to do
everything in their power to assist
in raising such loans II the condi-
tions to which they have referred can
be secured. They are deeply con-
siious Of the immense assistance to
| the economic recovery of the whole
| world, which would be afforded by
q gradual conversion OF Germany's
| obligation from a debt to govern
| ments into a debt to private inves-
l ~ In doh 70