Evening star., 1938-07-01
GERMANY TO PAY
BR|TA|NONB BONDS
BUT IGNORES i. S.
Compensation to Be Made
to Austrian Loans
Guarantor.
AGREEMENT ANNOUNCED
TO COMMONS BY SIMON
American Hopes Languish as
Three Communications Fail
to Receive Reply.
ny the Associated Press.

LONDON. July IAN announce
ment that British and German nego-
tiators had reached an agreement on
Austrian external loans was made to-
day by Sir John Simon, chancellor Of
the exchequer.
Sir John told the House of Com
mons that without prejudice to the
question of legal liability, the German
government will reimburse the United
Kingdom government for any sums
paid in respect to their (Britain's)
guarantees of the Austrian guaranteed
loans and will insure full service of
the bonds of these loans owned by
British holders on July l. 1888"
U. S. Makes Protests.
Defaults on payments on Austrian
bond issues since Germany's annexa-
ton of Austria have brought protests
from the United States, Britain,
France and other countries.
The chancellor continued:
THE settlement also confirms the
principles of the arrangement reached
between the German representatives
and the German Long-term Creditors
Committee regarding the future service
of other German and Austrian long
term debts.
Under this arrangement the service
Of the following German and Austrian
loans will be:
For the Dawes loan and the Aus
trian per cent loan of 1880, per
cent interest and per cent cumula-
tive sinking fund.
For the Young loan and the Saar-
bruecken loan, AZ per cent interest
and per cent cumulative sinking
fund, beginning after two years."
$S0,000,000 Dawes Loan Out.
The Dawes loan, made in 1924, was
at per cent and about $50, 1000, 900
Is still outstanding. The Young loan.
OF 1880, was at 51a per cent and about
500. .00o, 900 is outstanding. Both were
foated to help Germany's reparations
settlement.
Walther Funk, German economics
lrinister, In speech at Bremen June
IL, declared interest on the two loans
must be reduced to q normal level"
At the same time he asserted Germany
was not legally or morally responsible
for some $3.50, ,000, 900 which Austria
borrowed abroad before her annexation
March IS.
Negotiations for settlement of the
troublesome debts question have been
IN progress in London between Sir
Frederick Leith-Ross, chief economic
adviser to the British government, and
German representatives.
U. S. Awaits Debt Reply.
State Department ofhcials looked in
vain today for a reply from Germany
on settlement Of Austria's debts to the
United States. They did not feel any
better about it when they heard the
British chancellor of the exchequer
had announced that an accord had
been reached with Germany for the
payment of Austria's debts to Great
Britain.
The United States has. addressed
three diplomatic communications to
Germany on this subject, the first
dated April 6.
No reply has been received. Never
theless, State Department ofncials said
the United States would continue to
insist that Germany assume Austria s
obligations to this country, both pub
lie and private bonds, and undertake
regular servicing of them.
It is believed here Great Britain was
able to bring about settlement by
threatening Germany with application
Of clearing arrangement for the pay
ment Of the debts. BY this method
Great Britain, which buys more from
Germany than she sells to her. would
hold back sufficient money owed on
purchased goods to pay of her own
holders of Austrian bonds.
The United States, which sells more
to Germany than she buys from her, is
not in the same position, to bring
pressure to bear.