Evening star., 1932-01-24
CREDIT AGREEMENT REACHED.
Committee of Bankers Accepts ohe
Year Extension Arrangement.

BERLIN, January 20 VI J. - -
for one year Of billion ooliaIS III
short term foreign credits now tleo up
in Germany is provided for in an agree
ment signed by the International Com
mittee OF Bankers, which has been con-
silering German credits for seVeraI
weeks. ,
Credits are renewed to January s..
1888. without exacting any immediate
Devment. An additional guarantee Is
srpplied by the Gold Discount BANK,
fortified In turn, by the round ropln
pledge signed last June by 1000 Ger
man industrialists. -,,..
This agreement, while it relleVeS
German debtors of the necessity lot
meeting payment in lump sum- leaves
several knotty problems unsolVea,
among them the rate OF interest 10 oe
charged. ~ e.,..,
Representatives Of the United states
England, France, Holland, itaiy,
Sweden and Switzerland issued q JONI
statement generally devoid OF hgures'
b,,t the German gave more details.
Refers to Reparations.
One sentence in the joint statement
which some commentators interpreted
as a direct reference to reparatlonS
said, STRENGTHENING Of the German
situation makes 1t necessary that Ger
man resources should not be disslpateo
te meet other claims OUTSIDE tiiS
standstill agreement" ,,..
{ In addition to prolonging the creolts,
the agreement provides for autonlaClc
termination in the event that Germany
should declare a moratorium on lor-
efpn debts. The agreement also may
be terminated if the Bank Tor inter
national Settlements declines 10 renew
credits placed with the RelchSoank, OF
if a ma ajority OF the creators oeclue
that termination is advisable.
The statement by the creditors en-
nhasized the need for immediate action
bv the governments involved, asserting
that neither creditors nor debtors can
control the main current of events, and
both await decisions by the govern
mentS."
It was pointed out that the short
term credits in Germany now amount
to roughly $1,l05, 900, 900, but with their
expiration at the end Of this agreement
to total will have risen to S1,4OO, ,0O0,-
600 because the present long-term
credits will mature during the year.
Remove Money Menace.
An important part of the repayment
plan is the suspension Of the necessity
for paying loans in the money OF the
creditor company.
To relieve the Reichsbank of going
into the money market in search OF
foreign currencies at the risk of depre-
ciating German money, the plan pro-
yides that bank creditors have the op-
ton of withdrawing semi-annuaily 70
per cent of their credits in Re1chsbanks
which must be used for the purchase OF
German securities, the securities 10 De
held for at least five years.
Creditors whose loans are made 10
German industries have similar OPP
ton of withdrawing Is per cent semi
annually under the same conditions.
Also a plan for consolidating $50
900 900 of the bank credit into l0-year
loans would be launched, and each
bank would place Is per cent OF Its Dor
rowings annually in a Reichsoank
trust fund against which per cent
trust certificates would be issued, re-
deemable at 10 per cent annually.
Divergence in Payments.
Recalling that Germany has paid
roughly $3.50, 900, 900 since the Autumn
of 1880, the new contract seeks to plug
up some of the holes in the old agree
ment.
Assuming that Germany has reduced
her credits by 10 per cent since the
original standstill agreement became
effective, the committee said there had
been some divergence in the payments
received by some creditors as compared
with other payments.
In future" said the report, cash
payments, when determined, will be
made first to those creditors who
hitherto have received the least, thus
rectifying the inequalities
BY this arrangement, financial oo.
servers here thought America and
France would be among the first to re-
ceive cash, when. as and II 1t Is PAID
because several other countries ALREADY
have been paid, Germany taking ad-
vantage of their deprecated currency
to make payments while the creditors
money was below par.
The major portion OF the Work IN
connection with the new agreement
falls on the gold discount bank. Whlch
will be the Intermediary between Ger
man debtors and foreign creditors.
Rich or Poor Together.
The creditors entimaLsd that about
billion marks In hoardrd ln Germany
and predicted thls money would come
back into circulation whsn eonhdrncs
is restored
The COMMITTEES deprecated Increasing
world tariff walls and said
The creditors hays dune all that
can be done 10 give Germany period
of recuperati6n dutiae The next year.
This COMMITTEES is Impressed by The ef-
forts OF the German peapla 10 main
tain their position Ia Time Of un-
precedented difflRHltlss II Is i'm
perative that hiHdfaHees 10 the de-
velopment ot German seonomy be re-
moved. This cannot b1 done without
positive action by The governments, for
the committee which recently met at
Basel urged that no time be lost. AL