Saga - 1990, Page 87

í LÁNSFJÁRLEIT 1937-39
85
Summary
The article describes the attempts by the Mayor of Reykjavík, Pétur
Halldórsson, to secure a loan abroad for building the geothermal distance
heating system between 1936-39, He began in the English-speaking coun-
tries. Due to the Great Depression it proved impossible to obtain a loan in the
United States, and whilst at first his chances in England seemed good,
higher authorities then intervened. Already in 1936 they had decided that
war with Germany was imminent and therefore they allowed loans only to
prospective allies and for military purposes. However, false excuses were
used as an explanation. Then the Mayor turned to Denmark where he ran
into two obstacles. Unofficially, banks in Scandinavia decreed that if a bank
extended a loan to a customer then the bank had priority in doing further
buiness with him. AIso, the Icelandic government was looking for loans to
pay various costs and to build hydropower stations. The government's fi-
nancial situation was weak during this time, in particular after the salt fish
market closed down because of the Spanish Civil War and fish processing
methods had to be completely altered in a very short time. The financial posi-
fion of Reykjavík was sound, however. A few years earlier, Reykjavík had
obtained a loan from Enskilda banken in Stockholm, and the Danes therefore
suggested that the Mayor should approach the Swedes. He went there and
tried at first to secure loans in various banks other than Enskilda banken. He
was unsuccessful for the same reasons as above. Finally the Enskilda banken
was approached but they chose to take their time, eventually declaring that
they were not interested in the deal. Only then did the Danish banks decide
that they were able to put up loans for the distance heating system, in spite
of the fact that from the start the project was believed to be both profitable
and interesting. Like other officials in Iceland, the Mayor was suspicious of
German authorities in those years, and he did not want to ask them for a
loan until all other possibilities had been tried.
The article is mostly based on the Mayor's private letters to his wife and
mother. He used to write to them in his hotel room in the evening and tell
ihem about the events of the day. This is intermingled with his and their pri-
vate matters which are not touched upon here.