Standstill Agreement

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Ordinance of the Reich President to ensure the implementation of the standstill agreement. 9 September 1931

Standstill agreement (standstill agreement) is an agreement between creditors and debtors, after which creditors agree to waive temporarily explain to repay debt.

When the standstill agreement is spoken of, the German standstill agreement, made in Basel in August 1931, is usually meant.

Basel Standstill Agreement

The German banking crisis occurred as part of the global economic crisis . As a result, there were massive foreign exchange outflows and the impossibility of German banks to obtain credit abroad. In a system of freely tradable currencies , this would have led to a devaluation of the Reichsmark . However , this path was blocked by the gold backing of all major currencies . The Reichsbank therefore resorted to the instrument of foreign exchange restrictions in order to prevent the outflow of foreign funds.

From the point of view of the creditors, there was a dilemma: Their claims were de facto frozen. And a release was impossible as long as the flight of capital continued, so the creditors tried to withdraw their money. The only possibility of receiving at least part of the claims in foreign currency was to help restore the liquidity of the Reichsbank in foreign currency.

A conference of foreign creditors met in London from July 20 to 23, 1931 , at which the possibility of a new loan to Germany, which would enable the Reich to meet its foreign exchange obligations, was discussed. One could not bring oneself to such a loan. However, a standstill agreement was agreed. As a first step, a short-term loan of $ 100 million granted on June 25, 1931, was rolled over. The central banks and private creditor banks abroad received letters of recommendation calling on them to stand still.

The British and American creditor banks now formed a commission that sent the Englishman Frank C. Tiarks and the American John D. Gannon to Berlin for negotiations . On the German side, Carl Fürstenberg and Otto Jeidels ( Berliner Handels-Gesellschaft ), Rudolf Loeb ( Bankhaus Mendelssohn ), Gustav Schlieper ( Deutsche Bank and Disconto-Gesellschaft ) and Ernst Spiegelberg ( Bankhaus Warburg ) and Reichsbank President Hans Luther had their own draft Standstill agreement prepared.

On August 14, 1931, the representatives of the debtor and creditor banks were invited to the standstill conference in Basel. The Wiggins Commission , a special committee at the Bank for International Settlements , which was supposed to determine Germany's immediate credit needs on behalf of the participants of the London conference , had already met there since August 8th . This consisted of the American Albert H. Wiggins, the British Walter Layten and the German Carl Melchior . The general secretary was Karl Blessing . The Commission produced a 10-point paper (Wiggin-Layton Report), the seventh of which was the standstill agreement. The paper described that the German bank and industrial debtors were unable to service the foreign debt in full at the given time.

The subject of the standstill agreement was that payment obligations (from loan agreements) in the amount of around 6 billion Reichsmarks were suspended for six months from September 1, 1931, towards foreign banks. The contracting parties for Germany were the Reichsbank, the Golddiskontbank , the German Committee for Banking Representatives and representatives of the Reich Association of German Industry . The German debtors were obliged to join by an emergency decree of the Reich Chancellor. On the foreign side were the representatives of the banking associations of the United States, Belgium, Denmark, England, France, Italy, the Netherlands, Norway, Sweden, Switzerland and Czechoslovakia. However, the creditors there were not directly bound. The banking associations only made recommendations; the individual banks had to join the agreement individually.

A number of foreign currency debts were exempt from the standstill agreement. These included short-term public debt (these amounted to 260 million Reichsmarks and were covered by separate standstill agreements from 1932 onwards), long-term debts, commercial loans, seasonal and harvest loans, daily stock exchange money and advances on stock exchange papers and mortgages. Loans to foreign branches or subsidiaries of German companies were also not affected.

Follow-up agreement

In March 1932, the standstill agreement, known as the German loan agreement, was extended by twelve months.

This German loan agreement from 1932 closed some loopholes (foreign subsidiaries were now also included) and repayments were agreed that reduced the loan amount year after year from now on. In the spring of 1939 they had fallen to the equivalent of 700 million Reichsmarks. However, the devaluation of the British pound on September 21, 1931 and the US dollar on January 31, 1934 also contributed to this.

The German debtors did not pay the amounts due directly to the creditors, but rather to a trustee account at the Reichsbank. The foreign creditors could use these amounts for purchases in Germany, but could not have them paid abroad. This so-called register mark was mainly used for payments by foreign travelers in Germany. It could also be transferred to third parties. Here the owners of the register mark had to accept a discount that grew over time. But it was always lower than the discounts for the other blocked balances of this time, which resulted from foreign exchange management, such as B. the Askimark or the Libkamark .

Nine standstill agreements had been reached by the start of World War II . With the beginning of the war, the willingness of the German opponents to continue the agreement ended. On September 3, 1939, the American and British Banking Committees denounced the agreements. The German side tried to reach individual agreements with the neutral states. A standstill agreement was reached with Switzerland on September 18, 1939, and one with Holland and Belgium on October 3, 1939. The German-American Standstill Agreement of 1939 followed on December 9, 1939 and was extended in 1940. When the United States entered the war on December 11, 1941, Switzerland remained the only state with a standstill agreement. The last extension agreements were made in Zurich in May 1944.

Final regulation

In the London Debt Agreement in 1953 the standstill loans were finally settled. As part of this agreement, a regulation was made that was based on those of the 1939 Standstill Agreement. Due to the economic boom of the economic miracle , the problem of the lack of foreign currency in the Federal Republic of Germany was soon resolved and there was no longer any need for further standstill agreements. From September 1954, blocked balances could be transferred abroad via payment agreements. When the German Credit Agreement of 1954 expired on December 1, 1954 , most of the standstill debts, which in 1953 had amounted to DM 507 million, had been repaid for the most part. There were still 55 million DM so-called East-related loans open, which were unclear due to the division of Germany. A protocol from 1954 was drawn up to regulate the outstanding debts , which was listed as Appendix III of the London Debt Agreement. This was last extended in 1960 and expired on June 1, 1961. At the end of 1962, the foreign banking committees and the German committee for standby debts dissolved.

Demarcation

The Basel standstill agreement should not be confused with the Hoover moratorium (during the German banking crisis) of July 6, 1931 (Paris), where inter-allied war debts including reparation payments were already suspended for one year. A year later on July 9, 1932 at the conference of Lausanne the reparations payments from the First World War were finally canceled.

literature

Individual evidence

  1. ^ Eckhard Wandel: Banks and Insurance in the 19th and 20th Century. Munich 1998, p. 100:
    “At the London conference […] the Germans' hopes for new, short-term loans were finally dashed. Instead, an expert committee was convened in Basel on August 8th, which proposed an international standstill agreement in its final report, the Layton report. " (Online)
  2. ^ Tilman Koops: The Cabinets Brüning I u. II: March 30, 1930 to October 10, 1931. Volume 3, Boppard 1982. Introduction, LXVVI:
    “The report denied that Germany was at fault and stated to the reparations problem [...] that Germany had only one alternative, either reparations with foreign ones To pay credits and sooner or later collapse due to over-indebtedness, or to finance war compensation from export surpluses, which would mark it as the eternal troublemaker of the world economy. " (Online) ( Memento of the original from May 12, 2014 in the Internet Archive )     Info: The archive link was used automatically and not yet checked. Please check the original and archive link according to the instructions and then remove this notice. @1@ 2Template: Webachiv / IABot / books.google.at
  3. ↑ Ursula Büttner : Weimar. The overwhelmed republic 1918–1933. Stuttgart 2008, p. 434:
    "[...] therefore the banks of the most important creditor countries were forced to keep silent on German commercial debts for half a year with repayment of around a quarter and high interest on the rest ..." (online)
  4. ↑ Ursula Rombeck-Jaschinski: The London debt agreement. The settlement of German foreign debts after the Second World War. Munich 2005, p. 34 f. (on-line)
  5. ^ Karl Erich Born: The German banking crisis 1931. Munich 1967, p. 149. (online)
  6. ^ Heinrich August Winkler: Weimar 1918–1933. The history of the first German democracy. 4th edition. Munich 2005, p. 416:
    “[…] while negotiations were still taking place in Paris, reports of impending company and bank failures were increasing in Germany. Then on July 13th the event occurred that ushered in a new phase of the German Depression ... " (online)
  7. ^ Gerhard Schulz: Between Democracy and Dictatorship: From Brüning to Hitler. Volume 3, Berlin 1992, p. 421:
    "[...] the President declared on the part of the United States to grant a deferral of payments for a period of one year for all government debt instruments from July 1 on, provided that such a deferral of intergovernmental debts, including the reparations granted by all important creditor powers. Private debt, including government bonds in private hands, were excluded. " (Online)
  8. ↑ Ursula Büttner: Weimar. The overwhelmed republic 1918–1933. Stuttgart 2008, p. 797. (online)