ANGLO-GERMAN PAYMENTS AGREEMENT. (Hansard, 1 July 1938)

§ The Chancellor of the Exchequer (Sir John Simon)
I ask leave, on the Motion for the Adjournment of the House, to make a short statement as to the negotiations which have been proceeding with the German Government on the subject of the Anglo-German Payments Agreement. A number of questions have been put to me on this important subject in the last week or two by various hon. Members, and only yesterday I had to tell the hon. Member for the Forest of Dean (Mr. Price) that I was not then in a position to make a statement, but I added that I hoped to be able to do so at a very early date. That opportunity has now arrived.
I am very glad to say that the British and German Delegations which have been negotiating a revision of the Anglo-German Payments Agreement to take account of the incorporation of Austria in the German Reich have arrived at a settlement to-day. The basis of this settlement is that, without prejudice to the question of legal liability, the German Government will reimburse the United Kingdom Government any sums paid in respect of their guarantees of the Austrian Guaranteed Loans and assure the full service of bonds of these loans owned by British holders on the 1st July, 1938.
The settlement also confirms the principles of an 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 Austrian 7 per cent. Loan of 1930-5 per cent. interest and 2 per cent. cumulative sinking fund.
For the Young Loan and the Saarbrucken Loan—4½ per cent. interest; and 1 per cent. cumulative sinking fund, beginning after two years.
The service of the German Government 4 per cent. Funding Bonds, and also of Austrian Government Creditanstalt Bonds 2363 owned by British holders will continue in full.
In respect of the other medium and long-term debts of Germany and Austria, there will be a temporary settlement under which, during the next two years, coupons, dividends, etc., will be paid in cash at 50 per cent. of their nominal amount, with a maximum of 4 per cent.
The Standstill Agreement relating to Banking Debts is not affected.
As regards trade, agreement has been reached for a revision of the allocation for United Kingdom exports out of the sterling proceeds of German exports to the United Kingdom on a sliding scale which should enable the level of United Kingdom exports to the Greater Reich to be maintained as heretofore. The German Government have agreed that a larger proportion of this allocation will be used for the purchase of finished goods; but if the sterling proceeds of German exports left at the disposal of the German Government are inadequate to meet their financial obligations to the United Kingdom, it will be open to the German Government to approach His Majesty's Government with a view to a reduction of the allocation for United Kingdom exports. Finally, the two Governments have undertaken to enter into further negotiations with a view to increasing the mutual trade and to improving the trade relations between the two countries.
The formal agreements giving effect to these arrangements are being signed and will take effect from to-day.
I do not think I need apologise to the House for asking that there should be time for me to make this statement in the House, because manifestly the arrangements had to be immediately known to the City and to business quarters, and it seemed to me that, although it was Friday afternoon, I ought to take the opportunity of informing the House directly. I could not do so at the beginning of the Sitting of the House, because 2364 the agreements had not yet been signed, but I have taken this opportunity, and I think the House will be glad to know of the satisfactory termination of those very difficult negotiations.

§ Mr. Dalton
I am sure the House is grateful to the right hon. Gentleman the Chancellor of the Exchequer for making this statement. It was a complicated statement, and I am sure that we all endeavoured to follow it to the best of our ability. It referred to a large number of different loans, transactions and other arrangements, and I think it will not be unreasonable if I say that my hon. and right hon. Friends would like to reserve the right to have a further discussion upon it at a suitable time.

§ Sir Percy Harris
I wish to congratulate the right hon. Gentleman the Chancellor of the Exchequer for making this statement in the House. The House is always jealous to have important communications of this character made to it directly, and I am sure I shall express the general feeling of hon. Members when I say that we appreciate it that the right hon. Gentleman used the procedure of moving the adjournment, of the House in order that the statement should be made to the House rather than directly to the Press. Like the hon. Member for Bishop Auckland (Mr. Dalton), naturally we must have an opportunity to examine this Agreement in detail, but, at first glance, it is satisfactory to have come to a settlement.