The Washington times., 1934-06-16
GERMAN CRISIS
WILL HIT j. s.
CREDITORS
BondhoIders Must Wait for
Trade Gains in Order to
Get Payment
By KINGSBURY SMITH
BY International News Service

BY International News Service
American holders of more than
1000 million dollars worth Of
German bonds today faced
prolonged and indefinite suspen-
sion Of all payments.
The German government, 1t
was learned, has notified the
State Department that future
payments on these bonds and
all foreign debts depends entire
ly upon the extent to which the
rest Of the world agrees to in
crease its purchases Of German
goods.
Moratorium Indefinite
Thus, the six months mora
torium proclaimed by the Reichs-
bank on all foreign debts will be
prolonged indefinitely and re-
sumption of payments to creditors
will be dependent upon and in
proportion to the extent each
country contributes to an in
crease in -Germany'S export trade.
This position Of the German
government has been made clear
to Secretary Of State Hull by
German Ambassador Hans
Luther.
However, Ambassador Luther
notified Secretary Hull that Ger
many's action did not mean she
was seeking any reduction in the
debts owed American creditors,
nor had she any intention Of re-
pudiating them, but the lack of
gold and the negligible state Of
the German export trade made it
physically impossible for the
Reichsbank to continue making
payments.
Discussion Invited
In this connection, the German
note said the equivalent in marks
Of the amount due the creditors
would be held in their account in
the ReichSbank pending efforts to
obtain foreign exchange with
which to resume payments.
Ambassador Luther was in
formed that this Government
had no authority to grant import
concessions to foreign nations ex-
cept in reciprocal trade agree
ments which assured similar treat
ment for American goods.
PARIS, June 16 QN.SO.-The
French council of ministers this
afternoon postponed until next
week making a decision regard
ing Germany's moratorium. The
postponement will enable the gov
ernment to await action by Great
Britain so that France may take
similar measures.
It was announced that two
methods are foreSeen either of
which would furnish protection to
the French holders of Dawes and
Young plan bonds The first is
the revival Of the recovery act,
a super-import tax, which France
used before when Germany de-
faulted on reparationS payments;
the second is the extension to
the Franco German trade office
of power to prevent payments
to Germany until French export
erS and bondholderS are satisfied.
LONDON, June 16 IN.SO-
Diplomatic and financial circles in
three European capitals today
were studying the situation created
by Germany's moratorium on in
terest payments on the Dawes and
Young plan loans.
Great Britain already has an
nounced it will impound German
trade balances in London for the
protection of British holders of
Dawes and Young plan bonds.
Germany was given until July l,
the date when the moratorium
becomes effective, to negotiate a
satisfactory settlement. Other
wise Great Britain, herself a de-
faulter on her debts to the United
States, will establish a clearing
house here and pay British credit
ors Of Germany out Of the reich'S
trade balances.