Inter-locking Debts.

This 1931 credit-extension (“standstill”) agreement (“commercial” debts) was due to expire in February, 1932. The Hoover moratorium expires in July, 1932. During December, France emphasised the priority of reparation annuities (beginning to be due in July after the expiry of the Hoover moratorium) over the “commercial debts.” In Britain, the reply was made that the “commercial debts” are part of the working foundation on page 10 which the reparation payments themselves are based. The “commercial debts” represent the financing of German trade; no financing, no trade; and no trade, no reparation payments. France was represented as kicking at her own ladder if she drove out the “commercial” finance. It would be not unlike a combined attack by the first mortgagees of New Zealand farms upon the essential short term finance of those farms.