On 1 November 1934, in Berlin, representatives of the British Government, led by Frederick Leith-Ross, and of the German Reich signed the Anglo-German Payments Agreement, together with an exchange of letters (completed on 12 November). The text appeared as Cmd. 4726 and later as Treaty Series 026/1936 (Cmd. 4963). It entered into force the same day. It is not a clearing agreement: that is the device they avoided, after a draft clearing had been initialled.

Article 1: the German Government issues, without restriction, foreign-exchange certificates for imports of United Kingdom goods. Fifty-five per cent of the value of German exports to the United Kingdom, calculated monthly from the average of the statistics of the penultimate month, is earmarked to pay for those imports. Goods must carry a certificate of British origin from the chambers of commerce. After consultation, Germany may temporarily restrict the certificates; coal, coke, herrings, yarns and textile manufactures receive special consideration.

Article 4: the Reichsbank immediately provides not less than £400,000 to liquidate outstanding commercial debts to United Kingdom persons from the sale of goods. Article 6: if that sum does not suffice, the Reichsbank sets aside a further 10 per cent of exports to the United Kingdom, until 1 November 1935. Article 5 ends, for payments falling due after 1 November 1934, the Exchange Agreement of 10 August 1934 (the special sondermark account).

Article 7: Germany continues to provide sterling at the Bank of England for Dawes and Young loan coupons beneficially owned by British holders, at full value, along the lines of the Transfer Agreement of 4 July 1934, and offers British holders of non-Reich loans 4 per cent funding bonds. Article 10 provides a committee of government representatives to watch over the working of the Agreement.

Runciman told the House of Commons the same day: the 55 per cent allocation should, on the normal trend of trade, cover United Kingdom exports to Germany in full; remaining sondermarks were to be liquidated within three months. The Agreement is not the 1935 Naval Agreement and does not settle frontiers.

The revision of 1 July 1938, with a sliding scale and reduced interest on Dawes, Young and Austrian loans, is a later instrument. Interest payments to British holders continued until September 1939; the outbreak of war closed the framework, not a 1934 denunciation clause.

Image: Brandenburg Gate, Berlin, city of signature; Thomas Wolf, 3 May 2008; CC BY-SA 3.0, Wikimedia Commons. Cropped to 16:9.

Source consulted: Anglo-German Payments Agreement. Treaty text: Anglo-German Payments Agreement, Berlin, 1 November 1934 (Runciman statement; Cmd. 4726).