There are also attached five copies each of the English translations,
made in the B. I. S., of the note under which the Memorandum was
transmitted, and of the Memorandum itself, the official text whereof
was in German.
[Subenclosure—Translation]
Memorandum
The German Government hereby applies for the convocation by the
Bank for International Settlements in Basle of the Special
Advisory Committee for which provision is made in the New Plan
of the Hague Agreement of January 20, 1930. In regard to the
cause and purpose of this application the German Government has
the honour to make the following statement:—
As early as the beginning of June of this year the German
Government became convinced that, in spite of the most severe
retrenchment in Government expenditure and repeated increases in
the burden of taxation, it would be incapable of continuing the
payment of the annuities under the New Plan. The economic and
financial situation of Germany was at the time already most
gravely threatened. The German Government had accordingly
decided to draw the necessary conclusions from the
situation.
This decision was followed on June 21st by the declaration of the
President of the United States of America, proposing the
postponement during one year of all payments on
intergovernmental debts, reparations and relief debts. The
purpose of the far-sighted initiative thus taken was, in the
words of the declaration, to assist in the re-establishment of
confidence, thus forwarding political peace and economic
stability in the world; the debtor countries were to be given
time to recover their national prosperity. The hope that this
proposal would bring about a decisive turn in the world crisis
was not realized. In consequence of subsequent events, the
Hoover holiday year was not in itself sufficient to overcome the
danger of collapse. Accordingly, the British Government in July
took the initiative of summoning the London Conference.48 The
recommendations of the Conference led to the prolongation of the
rediscount credit accorded to the Reichsbank, the Basle
Standstill Agreement and the Report of the Basle Committee of
Experts set up by the Bank for International Settlements.
Important as all these measures were for immediate relief, they
were essentially merely preparatory in character. The London
Conference itself in its closing declaration stated that the
measures recommended were only intended as a first step which
would form a basis for more permanent action to follow.
Accordingly, the experts who collaborated in the execution of
the London recommendations constantly had in mind the
provisional character of all these measures. The Standstill
Agreement states, for example, that the contracting parties have
approved the settlement therein provided “pending a
[Page 351]
more permanent
solution of the German short term indebtedness problem”.
Similarly the Report of the Basle Committee of Experts closes
with an urgent appeal to the Governments concerned to “lose no
time in taking the necessary measures for bringing about such
conditions as will allow financial operations to bring to
Germany—and thereby to the world—sorely needed assistance”.
In the intervening months the economic and financial situation of
Germany has become exceedingly critical. The characteristic
facts of this situation are universally known. In other
countries also the pressure of the crisis has had a most serious
effect. The world has come to realize in an increasing measure,
the inter-relationship of the various financial problems to
which the situation has given rise, and the necessity for
immediate action for their solution as a whole. In considering
the most suitable method of handling this problem the view has
gained ground that the Special Advisory Committee should now be
convened. As under the terms of the New Plan the convocation of
the Special Advisory Committee is dependent upon an application
by the German Government, the German Government has determined
to make this application, in order to do all in its power to
pave the way for comprehensive and joint measures on the part of
the Governments.
In accordance with the New Plan the application requires a
declaration by the German Government to the effect that “they
have come to the conclusion in good faith that Germany’s
exchange and economic life may be seriously endangered by the
transfer in part or in full of the postponable portion of the
annuities”. In making this declaration, the German Government
must expressly state that such a declaration does not do justice
to the present situation. Since the New Plan was framed, the
economic and financial situation in the world, and particularly
in Germany, has been fundamentally altered by a crisis without
parallel. As the New Plan requires the Committee to examine the
situation from all points of view, the Special Advisory
Committee must investigate the problem in its entirety by taking
into consideration all its factors, with special reference to
the circumstance that the question of Germany’s private
indebtedness must duly form the subject of a new settlement
before the end of the month of February next, by means of an
agreement to be reached between foreign creditors and German
debtors.
Present conditions being such that the necessary measures require
to be taken with the utmost dispatch, the German Government
proposes that the Special Advisory Committee should meet
immediately and that it should complete its work as quickly as
possible, in order that a Conference of those Governments which
are competent to take the decisions then to be reached may
thereupon at once be held.
Berlin, November 19,
1931.
