Evening star., 1933-08-06
AMERICANS HOLD
STAKE Of BILLION
|NRE|CH DEFAULT
Germans Reported Buying
Bonds Back at RuinousIy
Low Prices.
PREVIOUS HEAVY LOSSES
TO U. S. HOLDERS CITED
Belief That Nazi Business Ad-
vances Are Due to Withhold Funds,
Quoted by Observer.
BY DIR. MAX WINKLER.

NEW YORK, August (NAN.A).-
BY virtue of governmental decree, in
terest is being withheld on more than
81 900 ,000, 900 placed by American in
vestors, institutions as well as individ-
uals. in various German term in
vestmentS.
Shortly after Adolf Hitler became
chancellor of Germany and Hjalmar
Schacht guide Of the reich's financial
destinies, representatives Of the coun-
try's foreign creditors were invited to a
conference, at which DR.. Schacht pro-
posed to prove that Germany was in
such straits that she could no longer
meet interest on most Of her foreign
engagements. He, therefore, asked
them, on behalf Of Germany, to indulge
cessation of transfer Of debt service,
not only on State and municipal obli-
cations, but on corporate commitments
as well.
The representatives were neither con-
vinced nor Modified, and SO informed
Germany In no uncertain terms.
Nevertheless, a somewhat modified
reputation has gone into effect, and
American investors are being rendered
reichsmarks blocked in Germany, in
which they are entitled.
Trade Gains Reported.
simultaneously with DR.. Schacht's
pronouncements, there came official
statistical reports from Germany. pur-
porting to show the extent Of business
improvement registered since the advent
of Hitlerism. Some of the facts to
which particular attention was directed
by Nazi organizations are as follows:
l. Business improvement in Germany
is reflected not only in reduced unem-
ployment figures( the number OF people
gainfully employed has increased by
about 1000 000). but also in the major
production indices.
2. Production of raw steel shows an
advance of 13 per cent compared with
1892.
3. The coal business Is showing en-
couraging gains.
4. Potash sales are IL per cent higher
than for the corresponding period a
year ago.
S. The volume Of building has risen
Is per cent above 1882 and the number
of buildings completed has advanced IS
per cent
6. Cement sales show an increase of
1874 900 tons over the same period in
1882
7. The production index for semi
finished copper and aluminium goods
stands at about 831a, compared with
slightly more than SO last year.
g. Sales figures at the Ruhr Gas
Works, which have lately become a
more and more useful index of indus
trial activity in this important area.
are approximately one-third higher
than in 1882.
9. Output of automobiles has shown
noteworthy increase.
TO- Increased, employment is mani
Testing itself in higher imports Of new
materials.
IL. Leading industries are reporting
| new capital investments in plant and
machinery.
H. Exports to Germany's leading
foreign customers are again increasing
49, The June value of German pur-
chases abroad represents the third con-
secutive monthly gain.
Gold Inflow Stressed.
a. The inflow Of gold into the Reich
bank which has been conspicuous since
July. continues In a gratifying man
ner, as does also the return flow OF
currency.
Is. The German mark commands q
substantial premium over the American
dollar, enabling German debtors to
purchase $100 for only 800 marks, COM
pared with 420 marks which are re-
quired with the dollar at gold parity.
While sales in June have declined,
the month wound up with an excess OF
exports over imports of well over S10,-
| 00O. 900 at prevailing rates of exchange,
equivalent to more than 2i2 times in
terest requirement for July on German
long-term dollar bonds, and bringing
the favorable trade balance for the first
six months up to appreclably more
than $100,000,000.
While DR.. Schacht bemoaned a de-
| creasing export surplus and charged it
with the reputation, the government
| was declaring that practically all baro-
metric indices were registering ad-
vanceS.
The suspension of payments recalls
German financial history since the war,
a history with which DR.. Schacht has
been intimately connected. Only too
| 000, 900 worth of marks on American
investors, which were soon literally
worth only the paper on which they
| were printed. Only too recently did
Germany sell to American investors her
| mark bonds. only to repurchase them
| for practically nothing, and after she
| had them back she revalued her mark
bonds That Germany has again, at
prices ruinously low to American own
ers, been rebuying her bonds In large
amounts is common knowledge.
Is the picture painted by DR.. Schacht
true, SO that American investors are
wiser to accept this slash in interest
| and to sell their bonds to Germans at
J third or less of their face value? Or
are the government statistics true, so
! that American bondholders in law and
morals should get their interest and, as
good investors. should hold their bonds
| until they bring reasonable price?
Is it true. as has been maintained by
one of Amsterdam's most distinguished
| financiers. that German industry is
"artificiallv thriving principally through
funds withheld from foreign (notably
| American) investors?"
/ American holders Of 81 900, ,000, 900 OF
German bonds are entitled to know
the truth.
(Copyright 1888, BY North American News
paper Alliance, Inc)
FRANK J. KNELL GIVEN