Evening star., 1932-01-23
REICH CUTS DEBTS
BILLION IN YEAR
Builds Up Exports Surplus of
S714,OOO,OW With Aid
of u. S. Credits.
BY Gable to The Star.

By Gable to The Star
BERLIN, Germany, January 23-
Germany carried on its business as
usual during the past year, thanks to
old and new American credits, and
built up surplus of exports over i'm
ports of 5000, 100000 marks (s714, ,00o,-
000J and reduced its Indebtedness more
than 81 100000 900, besides paying repa-
rations and increasing its balances
abroad. The balances are hard to esti-
mate or touch because they represent
the flight of capital.
The surprising fact is that American
credits to Germany continued after back
credits were declared frozen. A stand
that credits granted to Germany during
a certain period were lifted out bodily
and set aside as -collectable and
non-payable. This amount Is some
thing over 81 l,000, ,000, 900, received from
investors and from many institutions in
many lands. Credit to Germany con-
tinued after the previous back credits
were frozen, and American bankers and
concerns today are still loaning goods
to Germany on short-term credit. These
credits are being discounted still in the
form of acceptances, and German firms
are meeting their obligations.
Not only are the Germans settling
their new obligations, but old debts
and even those under the frozen credit
agreement are being paid where pos
sible under the conditions governing the
agreements.
Credit Agreement Renewal Advanced.
Renewal of the frozen credit agree
ment Is about completed, and American
bankers In Berlin are impatient to COM
plete the negotiations and return home.
Their passage already has been en-
gagged but had to be postponed. Now
It is thought they will sign the agree
ment any day and leave lawyers to
phrase the altered document. The
agreement Is supposed to be along al
ready known lines of q years renewal
and on the basis Of a 20-year compile
ton, but elastic so as to provide for
better conditions which the future
might bring.
In principle the agreement provides
for the leaving of from $500, ,000,0 900 to
S900,000,000 in Germany. AS 1ndivid-
ual German debtors cannot find as
many profitable uses for funds as for
merly. they often prefer to settle a
debt and naturally the Americans and
others prefer to dispose of their funds
as they see fit rather than transfer
the credit to other German firms,
hence the total amount Is bound to
fluctuate considerably
The crux of Germany's debt situa-
ton Is the condition Of the German
currency cover. The Reichsbank gold
and foreign exchange holdings have
been slipping gradually despite efforts
to fall back on foreign exchange from
exports.
Imitation Is Opposed.
Importers are allowed rs per cent
Of their requests for foreign exchange
and also duties are being raised to dis
courage imports Neither organized
German industry nor people want in
flation and the Reichsbank would OPP
pose imitation. Germany has no inter-
est in trying another imitation, as the
internal debt Is low. However. all
depends on the frozen credits agree
ment renewal and the reparations ad-
justment.
Should bankers insist on immediate
payment or even on large installments
or high interest and if reparations
should be removed, then the Relchs-
bank could not supply foreign ex-
change A complete moratorium would
be the result.
The German export business Is good
indeed, 1t is the best in the world-but
the internal business in on the rocks
and is being barely kept alive by the
Reich's paternal aid Def1atioii Is in
full swing. The withdrawal of sup
port from foreign business would prob
ably cause collapse in Germany. In
other words, American credit permit
ting Germany to purchase raw ma
terials is keeping Germany going.
(Conyrioht 1920