Evening star., 1933-03-25
.GERMANSMA|NTA|N.
INTEREST ON BONDS.
Service on Dollar Loans
Next Month Expected
to Be Met.
Special Dispatch to The Star.

Special Dispatch to The Star.
NEW YORK, March 25.-Interest
payments are due April / and April Is
on about Is per cent of the total Ger
man dollar loans floated In the United
States. There is no present prospect
OF default on any one of the % sepa-
rate Issues which carry April coupons
and represent par amount Of $780,
100000.
In this list is the German external
issue Of 1924, commonly known as the
Dawes loan," which has been reduced
from the original amount Of $4,000, 900
to about $76,000,000. Its semi-annual
interest Of 31a per cent is due on April
is. Other substantial loans Of which
the service charge is to be met next
month are those q the State Of Prussia,
City Of Berlin, She Central Bank for
Co. and the Berlin Electric Elevated &
Underground Railways Co., the Electric
Power Corporation of Germany, the
Rhine -Westphalia Electric Power Cor
poration, the Ruhr Gas Corporation
and Hugo SHINES Industries, Inc.
Already funds have been received In
New York by the paying agents for
most of the issues with coupons due
April l or April is. 1t is interesting
to note that this list includes two Ger
man municipalities that have been
unable to meet the service of the debt
contracted internally. 1t is proof of
the strength Of the German situation
that for nearly two years after 1t be-
came necessary to declare moratorium
on German reparation payments there
has been an uninterrupted flow Of funds
from Germany to the United States to
meet the periodic services on all the
government, municipal and corporation
external loans held in this country.
The present dominance Of the Ma
tionnl Socialist party in Germany, the
removal Of DR.. Hans Luther as the
head of the Reichsbank and the ap-
pointment of DR.. Hjalmar Schacht as
his successor may bring a change in
the policy Of the government toward
its external debt before the October
coupons Of the bonds cited above fall
due. Judging from the contradictory
reports that have come from Germany
there is a division of opinion in the
ranks of the Hitler party regarding the
policy to be pursued toward what ARE
classified as commercial loans in con-
trast with political debts. Powerful
members Of the Hitler group have been
advocating a reduction in interest
charges on dollar loans for more than
a year. So long as the influence OF
DR.. Luther was felt in the Reichsbank
no attempt was made to change the
status quo.
Since his appointment to head the
government bank, DR.. Schacht has
stated that he considered it necessary
to maintain the integrity Of the exter-
nal debts. He has not, however, made
clear pronouncement concerning his
policy toward the interest on these
debts. The general belief is that he
tnclines to a reduction in it as one
Of the means Of rebuilding German
credit, which. 1t Is claimed, has been
greatly affected not only by these an
nual payments, but by exhaustion of
gold resources In a cutting down of
the principal Of the short-term debt
held in the United States and in Eng
land
Many Of the German loans have
sinking fund features. These compel
large annual amortization payments.
In the aggregate they present a sub
stantial total for which exchange must
be created each IL months. 1t is
possible, therefore, that before inter-
est rates are reduced 1t will be the
abandon payments on sinking fund ac-
counts. This would impose no hard
ship on American holders Of German
dollar loans, although 1t might have
some price effect by removing q sta
bilizing market factor. It is a relief
measure that other foreign borrowers
in dollars. as for instance some of the
South American republics, have been
considering for q long tnoo ha,t bovo
not yet put into effect.
Large amounts of German dollar
bonds have been repurchased for Ger
man account as well as by investors in
the Scandinavian countries, in Swift
zerland and in Holland. In spite of
the radical political tendencies that
have developed in Germany in recent
months. the average price of German
dollar loans is substantially higher than
. year ago.
Copyright. 1933.)