Third Standstill

Germans say they are trying hard to pay their short-term private debts. But how much have they paid? In Berlin last week U. S., British, French. Italian, Swiss and Dutch bankers representing the Reich's chief short-term creditors announced themselves satisfied that Germany has done her utmost and done well. During 1932 she has repaid, they estimated, nearly 14% of the short-term credits frozen in Germany under the "standstill agreement" (TIME, Aug. 31. 1931) which followed the Hoover Moratorium.

The standstill, originally a six-month affair, was extended to 18 months last February. Last week the creditor Bankers' Committee, chairmanned by Manhattan's genial', astute Albert Henry Wiggin, signed an agreement prolonging the standstill to 30 months, until Feb. 28, 1934. In return for their signatures the Wiggin

Committee exacted transfer concessions as important as they are ingenious.

Subject to restriction by the Reichsbank, foreign creditor banks having mark deposits frozen in German "blocked accounts" were authorized last week to invest or transfer such marks in (but not out of) Germany. As an immediate result, British banks possessing 35,000,000 blocked marks offered to transfer this sum to the Berlin bank account of the Soviet State last week, in return for delivery in Britain of 35,000,000 marks worth of Russian lumber. Other results will be the purchase of German bonds & real estate with previously blocked marks and the payment of such marks to tourists in Germany against letters of credit and travelers' checks.

In a broad report on German conditions last week the Wiggin Committee found that "markedly greater ease in the financial situation has arisen, largely from the return [to circulation] of hoarded banknotes representing nearly 1,000,000 reichsmarks [$238,000,000]." This greater ease was reflected, the Committee noted, in the Reichsbank's ability to close 1932 with a discount rate of only 4% as against 8% the year before.

"In measures undertaken to cope with her internal difficulties, as well as in her adjustments to external developments," concluded Chairman Wiggin & Committee, "Germany has shown impressive results. These have come not only from the effectiveness of the plans themselves, but also from the steady co-operation of the Government, the Reichsbank and the business community. Underlying all has been the continued support by the masses of the people, who, schooled in bitter experience, willingly support a program which negatives any cheapening of the currency or any impairment of the gold basis of that currency."

Lest the world grow too optimistic about German prospects, blunt Dr. Hans Luther, President of the Reichsbank, cautioned citizens of Frankfurt-am-Main last week.

"We must exercise the utmost restraint regarding German acquisition of new foreign credit," said he. "Such borrowing must not take place, except as a service of finance or for genuine trade."

Standstill credits in Germany totaled $880,600,000 last week as against $1,025,304,000 a year ago. Of the credits still frozen about 40% were extended by U. S. citizens.

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