It is obvious that the making of the budget must have presented considerable difficulties .sx Great use has been made of reserves and as far as possible expenditure has been postponed to future budgets .sx Marriage Loans .sx There are also certain substantial items of expenditure connected with the Unemployment Work Programmes .sx One of these is the provision for Marriage Loans ( costing RM .sx 120 million in 1933 and RM .sx 150 million in 1934 ) , which , however , are to be covered by the available revenue from the marriage contribution .sx The grant of marriage loans was suspended during February and March , 1934 , in order to ensure this .sx Fund for house repairs .sx A second item is the RM .sx 500 million provided by the Government scheme of last September for the repair , conversion , etc. , of houses in the winter months ; part of this will have fallen into 1933 and part will fall into 1934 .sx Construction of Motor Roads .sx Finally , there is the provision for the construction of the new motor roads , which will be carried out by a Company subsidiary to the German Railway Company ; the Government has just taken power by a new law to guarantee the Company's borrowings .sx Various figures ranging from RM .sx 500 to RM .sx 1,000 million have been cited publicly as the anticipated expenditure on the roads in 1934 .sx Total Indebtedness of the Reich .sx On the 31st December , 1933 , the total indebtedness of the Reich amounted to RM .sx 11,688 million , as against RM .sx 11,602 million at the end of January , 1933 .sx The latter figure leaves out of account RM .sx 703 million of debt for revalorised paper Mark debt not carrying drawing rights and the former RM .sx 616 million for the same purpose , as well as RM .sx 1,215 million of tax certificates in circulation and RM .sx 600 million tax certificates with the Reichsbank .sx The depreciation of foreign currencies was for the first time allowed for in the December return ; that portion of the total indebtedness which was represented by foreign debts in such currencies was converted at the average rate of December 30th , instead of at the former parities .sx The floating debt in December ( included in the above figure ) was RM .sx 2,033 million , composed as follows :sx Total Indebtedness of the States .sx The debts of the States amounted on the 30th September , 1933 ( latest date available ) to RM .sx 2,579.1 million and those of the Hanse towns ( Hamburg , Bremen , Lubeck ) to RM .sx 754.3 million .sx Total Indebtedness of the Municipalities .sx The total indebtedness of the municipalities and districts on the 31st March , 1933 , amounted to RM .sx 11,330 million , approximately the figure at which it stood at the outbreak of the 1931 crisis .sx This department of public indebtedness has caused most difficulties and anxieties .sx Not only were the towns and districts , like other debtors , subjected to severe pressure for repayment of their short term commitments in the first phase of the crisis , but they were also hard put to it subsequently to find the means to meet the service of their other debts , because the crisis on the one hand diminished the revenue and on the other increased the unemployment burden of the municipalities and districts .sx The result was widespread default of towns and districts and it became imperative to find a remedy .sx In September , 1933 , the decision was taken to abolish the municipal share of one-fifth of " crisis " unemployment relief , and to limit the expenditure by the towns and districts for poor law relief to RM .sx 26.6 million monthly .sx The extra funds for this purpose were to be supplied by the Reich and the Reich Labour Exchange and Unemployment Office ; the cost has in fact been eased by the general revival , with the consequent fall in unemployment .sx A further important measure was the Municipal Debt Conversion Law of the 21st September , 1933 .sx It provides that German municipalities or districts which are in financial difficulties may , with the approval of the competent State authorities , become members of a Debt Conversion Association .sx Long term and foreign indebtedness are excluded from the new arrangement ; foreign short term debts of the municipalities are dealt with under a special stand-still agreement .sx Towns or districts which are admitted to the Association may offer their creditors the conversion of short or medium term debts into bonds to be issued by the Association , bearing 4 per cent .sx interest and , after the 1st October , 1935 , amortisation at 3 per cent .sx plus saving in interest .sx Short term and medium term for the purposes of this law means capital claims already due , or which will fall due by the 31st March , 1935 .sx In order to ensure the punctual service of the bonds , the Reich Minister of Finance remits to the Association any arrears which might occur and will recoup himself from the tax revenue due to be transferred by the Reich to the States concerned .sx If the creditor does not accept the conversion proposal , he may during the next five years recover neither capital nor interest , the latter being added to the capital at the existing rate .sx Except as provided in legislation dealing with the creation of work , towns and districts may not take up new loans before 31st March , 1935 .sx The States are also offered the possibility of joining the Association .sx " Wirtschaft und Statistik " puts the total municipal short and medium term indebtedness on the 31st March , 1933 , at RM .sx 2,868 million .sx From this sum RM .sx 50 million of foreign debt and RM .sx 340 million of ways and means credits to be repaid out of current income , must be deducted ; this leaves about RM .sx 2,500 million as the maximum eligible for conversion .sx This maximum will not , however , be reached , since some towns or districts will be able to meet the service of their loans without help , others will only seek conversion for a part of their debt ; and it is reported that the creditors have refused to agree to the conversion of about 25 per cent .sx of the total , though in some cases a compromise is under discussion .sx It is stated in the press that the municipalities and districts began the financial year 1933 with a deficit of some RM .sx 1,100 million , and it is estimated that at the beginning of the present financial year this deficit had risen to RM .sx 1,400 million .sx Foreign Indebtedness .sx Germany's foreign indebtedness is of special interest , partly because it is the most serious problem with which Germany is faced in the financial field and partly because it directly affects a number of other countries .sx Total foreign indebtedness in Marks .sx " Wirtschaft und Statistik " in its No .sx 5 of the 15th March , 1934 , gives the following data on this subject :sx - .sx This total includes all obligations of debtors owing at least RM .sx 5,000. All debts ( also those contracted on a gold basis ) have been converted at the Berlin official average rate of the 30th September , 1933 .sx If other foreign investments in Germany ( stocks and shares , participations and real estate ) and the loans below RM .sx 5,000 are added ( these items are put at RM .sx 4,300 million ) , and the German holding of foreign loans ( about RM .sx 500 million ) is subtracted , the total net foreign investment in Germany was about RM .sx 18,600 million on the 30th September , 1933 .sx The figure of RM .sx 14,841 million which represents the foreign obligations of RM .sx 5,000 and over which have to be reported to the Foreign Debt Control Office , shows a considerable fall since the end of February , 1933 , when it stood at R.M.19,000 million ; this is largely explained by the fact that the rate of the dollar and pound declined during this period , the dollar in particular dropping from RM .sx 4.21 to RM .sx 2.74. In endeavouring to distinguish between the decrease in indebtedness due to the depreciation of currencies and the changes which have taken place outside the exchange fluctuations , the following sets of figures may be compared :sx the indebtedness on the 28th February and the 30th September , 1933 , converted in each case at the rate of the day ; .sx the indebtedness on the 28th February and the 30th September , both converted at the rate of the 28th February , 1933 .sx If the first method be applied the foreign debts reported to the Control Office were reduced from RM .sx 18,967 million on the 28th February to RM .sx 14,841 million on the 30th September , by over 20 per cent .sx ; but if the second calculation be adopted , the decline in the debts is only from RM .sx 18,967 million to RM .sx 18,014 million , by RM .sx 953 million .sx This last sum does not , however , correspond to the Marks used by the debtors for the purchase of foreign exchange , partly because some of the indebtedness was paid back at lower rates ) and partly because some of the difference is due to statistical alterations .sx The most important of the latter is a more complete and improved return of the risks carried by insurance companies ; this resulted in the figure on the 30th September being raised by about RM .sx 250 million , so that on this basis the reduction of foreign indebtedness between the end of February and the 30th September , 1933 , was RM .sx 1,200 million , but , owing to currency depreciation , the actual decline was not less than RM .sx 4,400 million .sx Changes in foreign indebtedness of the various debtors .sx The foreign indebtedness of the various groups changed as follows between the 28th February and 30th September , 1933 :sx The increase under " Other debtors " is due to the statistical improvement in the insurance company returns referred to above .sx Service of Germany's foreign debt .sx The service of Germany's foreign debt for the twelve months September 30th , 1933 , to September 30th , 1934 , is stated to be RM .sx 933 million of which RM .sx 724 million is for interest .sx For the calendar year 1934 the interest works out as follows , at the exchange rates of the middle of March , 1934 :sx The amortisation on foreign loans during 1934 amounts to RM .sx 349 million from which must be deducted about RM .sx 40 million representing bonds already in German possession which can be handed in for cancellation .sx The estimate of the total service for 1934 is , therefore , RM .sx 1,113 million .sx " Wirtschaft und Statistik " points out that in 1933 Germany's favourable balance from foreign trade and services was about RM .sx 1,000 million and her revenue from foreign investments about RM .sx 150 million , but that the foreign exchange which she received from the former was only about half the total owing to the " additional " export procedure and the use of Register Marks by travellers , etc. .sx German foreign exchange position .sx As will be noticed from various portions of this report , the German foreign exchange position is one of considerable difficulty .sx When the Moratorium was put into force for the long term foreign debt at the beginning of July , the Reichsbank reserve had fallen from RM .sx 920 million on the 31st December , 1932 , to a low point of RM .sx 273 million on the 30th June , 1933 .sx This reduction was mainly due to the repayment of the outstanding Central Bank Credit of 86 million dollars and Gold Discount Bank Credit of 45 million dollars .sx The equivalent of these dollar amounts at par is RM .sx 550 million , but owing to the fact that the depreciation of the dollar occurred in the middle of the repayments , the actual Reichsmark equivalent was less .sx To some extent dollar assets were used for the repayment of these dollar obligations , and the exact cost in Reichsmarks of the repayment is not precisely known , although it has been reported in the press to be approximately RM .sx 516 million .sx The total loss in the six months exceeded this last figure by upwards of RM .sx 100 million and it was plain that the export surplus , which had averaged RM .sx 48 million a month in the same period had fallen below the level necessary to permit the continued payment of the full service of the foreign debt .sx The forcing of exports by the deflationary policy of the Bruning Government had , in fact , ceased , and a new stage in the exchange position had been reached .sx Reichsbank Reserve .sx It was estimated by Dr. Schacht that the combined effect of the reduction as from 1st July of cash transfers on the long-term debt to 50 per cent .sx , the interest savings secured by agreement on the Standstill Debt , and the imposition of the Economic Treason Law , would be to secure an increase in the Reichsbank reserve of some RM .sx 120 million in the six months to 31st December , 1933 .sx