CHAPTER VII

THE REVISION OF THE TREATY AND THE SETTLEMENT OF EUROPE

The deeper and the fouler the bogs into which Mr. Lloyd George leads us, the more credit is his for getting us out. He leads us in to satisfy our desires; he leads us out to save our souls. He hands us down the primrose path and puts out the bonfire just in time. Who, ever before, enjoyed the best of heaven and hell as we do?

In England, opinion has nearly completed its swing, and the Prime Minister is making ready to win a General Election on Forbidding Germany to Pay, Employment for Every one, and a Happier Europe for All. Why not, indeed? But this Faustus of ours shakes too quickly his kaleidoscope of halos and hell–fire, for me to depict the hues as they melt into one another. I shall do better to construct an independent solution, which is _possible_ in the sense that nothing but a change in the popular will is necessary to achieve it, hoping to influence this will a little, but leaving it to those, whose business it is, to gage the moment at which it will be safe to embroider such patterns on a political banner.

If I look back two years and read again what I wrote then, I see that perils which were ahead are now passed safely. The patience of the common people of Europe and the stability of its institutions have survived the worst shocks they will receive. Two years ago the Treaty, which outraged Justice, Mercy, and Wisdom, represented the momentary will of the victorious countries. Would the victims be patient? Or would they be driven by despair and privation to shake Society’s foundations? We have the answer now. They have been patient. Nothing very much has happened, except pain and injury to individuals. The communities of Europe are settling down to a new equilibrium. We are almost ready to turn our minds from the avoidance of calamity to the renewal of health.

There have been other influences besides that patience of the common people which often before has helped Europe through worse evils. The actions of those in power have been wiser than their words. It is only a slight exaggeration to say that no parts of the Peace Treaties have been carried out, except those relating to frontiers and to disarmament. Many of the misfortunes which I predicted as attendant on the execution of the Reparation Chapter have not occurred, because no serious attempt has been made to execute it. And, whilst no one can predict with what particular sauce the makers of the Treaty will eat their words, there can no longer be any question of the actual enforcement of this Chapter. And there has been a third factor, not quite in accordance with expectations, paradoxical at first sight, but natural, nevertheless, and concordant with past experience,—the fact that it is in times of growing profits and not in times of growing distress that the working classes stir themselves and threaten their masters. When times are bad and poverty presses on them they sink back again into a weary acquiescence. Great Britain and all Europe have learned this in 1921. Was not the French Revolution rather due perhaps to the growing wealth of eighteenth–century France—for at that time France was the richest country in the world—than to the pressure of taxation or the exactions of the old régime? It is the profiteer, not privation, that makes man shake his chains.

In spite, therefore, of trade depression and disordered exchanges, Europe, under the surface, is much stabler and much healthier than two years ago. The disturbance of minds is less. The organization, destroyed by war, has been partly restored; transport, except in Eastern Europe, is largely repaired; there has been a good harvest, everywhere but in Russia, and raw materials are abundant. Great Britain and the United States and their markets overseas have suffered a cyclical fluctuation of trade prosperity of a greater amplitude than ever before; but there are indications that the worst point is passed.

Two obstacles remain. The Treaty, though unexecuted, is not revised. And that part of organization, which consists in currency regulation, public finance, and the foreign exchanges, remains nearly as bad as it ever was. In most European countries there is still no proper balance between the expenditure of the State and its income, so that inflation continues and the international values of their currencies are fluctuating and uncertain. The suggestions which follow are mainly directed towards these problems.

* * * * *

Some contemporary plans for the reconstruction of Europe err in being too paternal or too complicated; also, sometimes, in being too pessimistic. The patients need neither drugs nor surgery, but healthy and natural surroundings in which they can exert their own recuperative powers. Therefore a good plan must be in the main _negative_; it must consist in getting rid of shackles, in simplifying the situation, in canceling futile but injurious entanglements. At present every one is faced by obligations which they cannot meet. Until the problem set to the Finance Ministers of Europe is a _possible_ one, there can be little incentive to energy or to the exercise of skill. But if the situation was made such that an insolvent country could have only itself to blame, then the highest integrity and the most accomplished financial technique would, in each separate country, have its chance. I seek by the proposals of this chapter, not to prescribe a solution, but to create a situation in which a solution is possible.

In their main substance, therefore, my suggestions are not novel. The now familiar project of the cancelation, in part or in their entirety, of the Reparation and Inter–allied Debts, is a large and unavoidable feature of them. But those who are not prepared for these measures must not pretend to a serious interest in the Reconstruction of Europe.

In so far as such cancelation or abatement involves concessions by Great Britain, an Englishman can write without embarrassment and with some knowledge of the tendency of popular opinion in his own country. But where concessions by the United States are concerned he is in more difficulty. The attitude of a section of the American press furnishes an almost irresistible temptation to deal out the sort of humbug (or discrete half–truths) which are believed to promote cordiality between nations; it is easy and terribly respectable; and what is much worse, it may even do good where frankness would do harm. I pursue the opposite course, with a doubting and uneasy conscience, yet supported (not only in this chapter but throughout my book) by the hope, possibly superstitious, that openness does good in the long run, even when it makes trouble at first.

So far, Reparation on a large scale has not been collected from Germany. So far, the Allies have not paid interest to the United States on what they owe. Our present troubles, when they are not attributable to the after–effects of war and the cyclical depression of trade, are due, therefore, not to the enforcement of these claims, but to the uncertainties of their possible enforcement. It follows, therefore, that merely to put off the problem will do us no good. That is what we have been doing for two years already. Even to reduce our Reparation demands to Germany’s maximum actual capacity and really force her to pay them, might make matters worse than they are. To write down inter–ally debts by half and then try to collect them, would be an aggravation, not a cure, of the existing difficulties. The solution, therefore, must not be one which tries to extract the last theoretical penny from everybody; its main object must be to set the Finance Ministers of _every_ country a problem not incapable of wise solution over the next five years.

I. _The Revision of the Treaty_

The Reparation Commission have assessed the Treaty claims at 138 milliard gold marks, of which 132 milliards are for pensions and damage and 6 milliards for Belgian debt. They have not stated in what proportions the 132 milliards are divided between pensions and damages. My own assessment of the Treaty claims (p. 131 above) is 110 milliards, of which 74 milliards are for pensions and allowances, 30 milliards for damage and 6 milliards for Belgian debt.

The arguments of Chapter VI make it incumbent on those who are convinced by them to abandon as dishonorable the claims to pensions and allowances. This reduces the claims to 36 milliards, a sum which it may not be in our interest to exact in full, but which is probably within Germany’s theoretical capacity to pay.

Apart from clearing out of the way various clauses which are no longer operative or useful, and from terminating the occupation on conditions set forth below, I should limit my Revision of the Treaty to this simple stroke of the pen. Let the present assessment of 138 milliard gold marks be replaced by 36 milliard gold marks.

We are strictly entitled under the Armistice Terms to these 36 milliards; and if prudence recommends an abatement below that figure, such abatement can properly be made, on terms, by those and those only who are entitled to the claims. I estimate with some confidence that this sum of 36 milliards is divisible between the Allies about in the proportions shown in the table below.

The payment by Germany of 5 per cent interest and 1 per cent sinking fund on this total sum is not, in my judgment, theoretically impossible. But it could only be done by stimulating her export industries in a manner injurious and irritating to Great Britain, and by imposing on her Treasury a financial problem of such difficulty that it would tend to unsound finance and to weak, unstable Governments. Even though this payment is theoretically possible, I do not think that it is practically obtainable over a period of thirty years.

────────────────┬───────┬─────────────┬────── │Damage.│Belgian Debt.│Total. ────────────────┼───────┼─────────────┼────── British Empire │ 9 │ 2 │ 11 France │ 16 │ 2 │ 18 Belgium │ 3 │ .. │ 3 Italy │ 1 │ .. │ 1 United States │ .. │ 2 │ 2 Others │ 1 │ .. │ 1 ├───────┼─────────────┼────── │ 30 │ 6 │ 36 ────────────────┴───────┴─────────────┴──────

I recommend, therefore, that, as a separate arrangement from the Revision of the Treaty as above, the British Empire should waive the whole of their claims, with the exception of 1 milliard gold marks reserved for a special purpose explained below, and should undertake to square the claims of Italy and the minor claimants by cancelation of debt owing from them; thus leaving Germany to pay 18 milliards to France and 3 milliards to Belgium (on the assumption that the United States also would forego the trifle due to her). This sum should be discharged by an annual payment of 6 per cent of the sum due (being 5 per cent interest and 1 per cent sinking fund) over a period of thirty years. With the assistance of minor measures to ease the opening period, it is reasonable to suppose that this amount could be paid without serious injury to any one.

In so far as it proves convenient to discharge this liability in goods, and not in cash, so much the better. But I see no advantage in laying stress on this. It would be wiser to leave Germany to find the money as best she can, any payment in goods being by mutual agreement, as in the Wiesbaden plan.

It may lead, however, to great anomalies to fix the annual payments in terms of _gold_ over so long a period as thirty years. If gold prices fall, the burden may become intolerable. If gold prices rise, the claimants may be cheated of their expectations. The annual payment should be adjusted, therefore, by some impartial authority, with reference to an index number of the commodity–value of gold.

The other Treaty change relates to the Occupation. It would promote peaceable relations in Europe if, as a part of the new settlement, the Allied troops were withdrawn altogether from German territory, and all rights of invasion for whatever purpose waived, except by leave of a majority vote of the League of Nations. But in return, the British Empire and the United States should guarantee to France and Belgium all reasonable assistance, short of warfare, in securing satisfaction for their reduced claims; whilst Germany should guarantee the complete de–militarization of her territory west of the Rhine.

II. _The Satisfaction of the Allies_

_France._—Is it in the interest of France to accept this settlement? If it is combined with further concessions from Great Britain and the United States by the cancelation of her debts to them, it is overwhelmingly in her interest.

What is her present balance–sheet of claims and liabilities? She is entitled to 52 per cent of what Germany pays. On p. 75 I have calculated what this will be under the London Settlement, (_a_) on the basis of German exports at the rate of 6 milliards, namely 3.56 milliard gold marks; and (_b_) on the basis of exports at the rate of 10 milliards, namely 4.60 milliard gold marks. France’s share, therefore, is 1.85 milliards per annum on assumption (_a_), and 2.39 milliards on assumption (_b_). On the other hand, she owes the United States $3634 million and the United Kingdom £557 million. If these sums be converted into gold marks at par, and the annual charge on them is calculated at 5 per cent for interest and 1 per cent for sinking fund, her liability is 1.48 milliards per annum. That is to say, if Germany pays in full and if the more favorable assumption (_b_) is adopted as to the growth of her exports, the most for which France can hope under existing arrangements is a net sum of .91 milliard gold marks (£45,500,000 gold) per annum. Whereas under the revised scheme she will not only be entitled to a greater sum, namely 1.08 milliard gold marks (£54,000,000 gold) per annum; but, inasmuch as she will be accorded a priority on Germany’s available resources, and as the total charge is within Germany’s capacity, she may reasonably expect to be paid.

My proposal provides for the complete restoration of the devastated provinces at a fair valuation of the actual damage done, and it abandons other rival claims which stand in the way of the priority of this paramount claim. But apart from this, about which opinions will differ, and apart from the increased likelihood which it affords of really getting payment, France will actually receive a larger sum than if the letter of the existing agreements is adhered to all round.

_Belgium_ is entitled at present to 8 per cent of the receipts, which under the London Settlement would amount to 280 million gold marks per annum on assumption (_a_) and 368 million on assumption (_b_). Under the new proposal she will receive 180 million gold marks per annum and will gain in certainty what she loses in possible receipts. The satisfaction of her existing priority should be adjusted by mutual agreement between herself and France.

_Italy_ would gain immensely. She is entitled to 10 per cent of the receipts under the London Settlement (together with some claims on problematical receipts from Austria and Bulgaria); that is to say, 326 million gold marks per annum on assumption (_a_) and 460 million on assumption (_b_). But these sums are far below the annual charge of her obligations towards the United Kingdom and the United States, which, converted into gold marks on the same basis as that employed above in the case of France, amounts to 1000 million gold marks per annum.

III. _The Assistance of New States_

I have reserved above, out of the claims of Great Britain, a sum of one milliard gold marks, with the object, not that she should retain this sum for herself, but that she should use it to ease the financial problems of two states for which she has a certain responsibility, namely Austria and Poland.

_Austria’s_ problems are well known and attract a general sympathy. The Viennese were not made for tragedy; the world feels that, and there is none so bitter as to wish ill to the city of Mozart. Vienna has been the capital of degenerate greatness, but, released from imperial temptations, she is now free to fulfil her true rôle of providing for a quarter–part of Europe the capital of commerce and the arts. Somehow she has laughed and cried her way through the last two years; and now, I think, though on the surface her plight is more desperate than before, a very little help will be enough. She has no army, and by virtue of the depreciation of her money a trifling internal debt. Too much help may make of her a lifelong beggar; but a little will raise her from despondency and render her financial problem no longer beyond solution.

My proposal, then, is to cancel the debts she owes to foreign governments, including empty claims to Reparation, and to give her a comparatively small sum out of the milliard gold marks reserved from British claims on Germany. Credits placed at her disposal in Berlin, equivalent in value to 300 million gold marks, to be available, as required, over a period of five years, might be enough.

For the other new States, the cancelation of debt owing, and, in the case of Hungary, of Reparation claims, should be enough, except for Poland.

_Poland_, too, must be given a possible problem, but it is not easy to be practical with so impracticable a subject. Her main problem can be solved only by time, and the recovery of her neighbors. I deal here only with the urgent question of making just possible for her a reorganization of currency, and of facilitating a peaceable intercourse between herself and Germany. For this purpose I would assign to her the balance of the reserved milliard, namely, 700 million gold marks, of which the annual interest should be available to her unconditionally, but of which the capital should be employed only for a currency reorganization, under conditions to be approved by the United States and Great Britain.

In its essentials this scheme is very simple. I think that it satisfies my criterion of leaving every Finance Minister in Europe with a possible problem. The rest must come gradually, and I will not burden the argument of this book by considering along what lines the detailed solutions should be sought.

Who are the losers? Even on paper—far more in reality—every continental country gains an advantage. But on paper the United States and the United Kingdom are losers. What is each of them giving up?

Under the London Settlement Great Britain is entitled to 22 per cent of the receipts, which is from 780 to 1010 million gold marks per annum (£39,000,000 to £50,500,000 gold) according to which assumption is adopted as to the volume of German exports. She is owed by various European governments (including Russia, see Appendix No. IX.) £1,800,000,000, which at 6 per cent for interest and sinking fund is £108,000,000 per annum. On paper she would forego these sums, say £150,000,000 per annum, altogether. In actual fact, her prospects of securing more than a fraction of this amount are remote. Great Britain lives by commerce, and most Englishmen now need but little persuading that she will gain more in honor, prestige, and wealth by employing a prudent generosity to preserve the equilibrium of commerce and the well–being of Europe, than by attempting to exact a hateful and crushing tribute, whether from her victorious Allies or her defeated enemy.

The United States would forego on paper a capital sum of about 6500 million dollars, which, at 6 per cent, represents an annual charge of $390,000,000 (£78,000,000 gold). But in my opinion the chance of her being actually paid any considerable amount of this, if she tries to exact it, is decidedly remote.[111] Is there any likelihood of the United States joining in such a scheme _soon enough_ (for I feel confident she will cancel these debts in the end) to be useful?

Most Americans, with whom I have discussed this question, express themselves as personally favorable to the cancelation of the European debts, but add that so great a majority of their countrymen think otherwise that such a proposal is at present outside practical politics. They think, therefore, that it is premature to discuss it; for the present, America must pretend she is going to demand the money and Europe must pretend she is going to pay it. Indeed, the position is much the same as that of German Reparation in England in the middle of 1921. Doubtless my informants are right about this public opinion, the mysterious entity which is the same thing perhaps as Rousseau’s General Will. Yet, all the same, I do not attach, to what they tell me, too much importance. Public opinion held that Hans Andersen’s Emperor wore a fine suit; and in the United States especially, public opinion changes sometimes, as it were, _en bloc_.

If, indeed, public opinion were an unalterable thing, it would be a waste of time to discuss public affairs. And though it may be the chief business of newsmen and politicians to ascertain its momentary features, a writer ought to be concerned, rather, with what public opinion should be. I record these platitudes because many Americans give their advice, as though it were actually immoral to make suggestions which public opinion does not now approve. In America, I gather, an act of this kind is considered so reckless, that some improper motive is at once suspected, and criticism takes the form of an inquiry into the culprit’s personal character and antecedents.

Let us inquire, however, a little more deeply into the sentiments and emotions which underlie the American attitude to the European debts. They want to be generous to Europe, both out of good feeling and because many of them now suspect that any other course would upset their own economic equilibrium. But they don’t want to be “done.” They do not want it to be said that once again the old cynics in Europe have been one too many for them. Times, too, have been bad and taxation oppressive; and many parts of America do not feel rich enough at the moment to favor a light abandonment of a possible asset. Moreover, these arrangements, between nations warring together, they liken much more closely than we do to ordinary business transactions between individuals. It is, they say, as though a bank having made an unsecured advance to a client, in whom they believe, at a difficult time when he would have gone under without it, this client were then to cry off paying. To permit such a thing would be to do an injury to the elementary principles of business honor.

The average American, I fancy, would like to see the European nations approaching him with a pathetic light in their eyes and the cash in their hands, saying, “America, we owe to you our liberty and our life; here we bring what we can in grateful thanks, money not wrung by grievous taxation from the widow and orphan, but saved, the best fruits of victory, out of the abolition of armaments, militarism, Empire, and internal strife, made possible by the help you freely gave us.” And then the average American would reply: “I honor you for your integrity. It is what I expected. But I did not enter the war for profit or to invest my money well. I have had my reward in the words you have just uttered. The loans are forgiven. Return to your homes and use the resources I release to uplift the poor and the unfortunate.” And it would be an essential part of the little scene that his reply should come as a complete and overwhelming surprise.

Alas for the wickedness of the world! It is not in international affairs that we can secure the sentimental satisfactions which we all love. For only individuals are good, and all nations are dishonorable, cruel, and designing. In deciding whether Italy (for example) must pay what she owes, America must consider the consequences of trying to make her pay,—so far as self–interest is concerned, in terms of economic equilibrium between America and Italy, and, so far as generosity is concerned, in terms of Italian peasants and their lives. And whilst the various Prime Ministers will telegraph something suitable, drafted by their private secretaries, to the effect that America’s action makes the moment of writing the most important in the history of the world and proves that Americans are the noblest creatures living, America must not expect adequate or appropriate thanks.

Nevertheless, since time presses, we cannot rely on American assistance, and we must do without it if necessary. If America does not feel ready to participate in a Conference of Revision and Reconstruction, Great Britain should be prepared to do her part in the cancelation of paper claims, irrespective of similar action by the United States.

The simplicity of my plan may be emphasized by summarizing it. (1) Great Britain, and if possible America too, to cancel all the debts owing them from the Governments of Europe and to waive their claims to any share of German Reparation; (2) Germany to pay 1260 million gold marks (£63,000,000 gold) per annum for 30 years, and to hold available a lump sum of 1000 million gold marks for assistance to Poland and Austria; (3) this annual payment to be assigned in the shares 1080 million gold marks to France and 180 million to Belgium.

This would be a just, sensible, and permanent settlement. If France were to refuse it, she would indeed be sacrificing the substance to the shadow. In spite of superficial appearances to the contrary, it is also in the self–interest of Great Britain. Perhaps British public opinion, profoundly altered though it now is, may not yet be reconciled to obtaining nothing. But this is a case where a wise nation will do best by acting in a large way. I have not neglected to consider with care the various possible devices by which Great Britain might get, or appear to get, something for herself from the settlement. She might take, for instance, in satisfaction of her claims some of the C Bonds under the London Settlement, which, having a third priority after provision for the A and B Bonds, can be given a nominal value but are really worth nothing. She might, in lieu of receiving a share of the proceeds of the German customs, stipulate that her goods should be admitted into Germany free of duty. She might seek a partial control over German industries, or obtain the services of German organization for the future exploitation of Russia. Plans of this sort attract an ingenious mind and are not to be discarded too hastily. Yet I prefer the simple plan, and I believe that all these devices are contrary to true wisdom.

There is a disposition in some quarters to insist that any concessions to France by Great Britain and the United States, affecting Reparation and Inter–Ally Debt, should be conditional on France’s acceptance of a more pacific policy towards the rest of the world than that to which she herself appears to be inclined. I hope that France will abandon her opposition to proposals for reduced military and naval establishments. What a handicap her youth will suffer if she maintains conscription whilst her neighbors, voluntarily or involuntarily, have abandoned it! Does she realize the impossibility of friendship between Great Britain and _any_ neighboring Power which embarks on a large program of submarines? I hope, too, that France will forget her dangerous ambitions in Central Europe and will limit strictly those in the Near East; for both are based on rubbishy foundations and will bring her no good. That she has anything to fear from Germany in the future which we can foresee, except what she may herself provoke, is a delusion. When Germany has recovered her strength and pride, as in due time she will, many years must pass before she again casts her eyes Westward. Germany’s future now lies to the East, and in that direction her hopes and ambitions, when they revive, will certainly turn.

France has an opportunity now of consolidating her national position into one of the stablest, safest, richest on the face of the earth; self–contained; well– but not over–populated; the heir of a peculiar and splendid civilization. Neither whining about devastated districts, which are easily repaired, nor boasting of military hegemonies, which can quickly ruin her, let her lift up her head as the leader and mistress of Europe in the peaceful practices of the mind.

Nevertheless, these objects are not to be gained by bargaining and cannot be imposed from without. Therefore they must not be dragged into the Reparation Settlement. This Settlement must be offered France on one condition only,—that she accepts it. But if, like Shylock, she claims her pound of flesh, then let the Law prevail. Let her have her bond, and let us have our bonds too. Let her get what she can from Germany and pay what she owes to the United States and England.

The chief question for dispute is, perhaps, whether an annual payment by Germany of £63,000,000 (gold) is enough. I admit that the payment of a somewhat larger sum may prove to be within her capacity. But I recommend this figure because on the one hand it is sufficient to restore the destruction done in France, yet on the other is not so crushing that, to make Germany pay it, we need be in a position to invade her every spring and autumn. We must fix the payment at an amount which Germany herself will recognize as not unjust, and which is sufficiently within her maximum capacity to leave her some incentive to work and pay it off.

Suppose that we knew the theoretical maximum of Germany’s capacity to produce and sell abroad a surplus of goods, or could hit on some sliding scale which would automatically absorb year by year whatever surplus there was; should we be wise to demand it? The project of extracting at the point of the bayonet—for that is what it would mean—a payment so heavy that it would never be paid voluntarily, and to go on doing this until all the makers of the Peace Treaty of Versailles have been long dead and buried in their local Valhallas, is neither good nor sensible.

My own proposals, moderate though they may seem in comparison with others, throw on Germany a very great burden. They procure for France an enormous benefit. Frenchmen, having fed to satiety on imaginary figures, are nearly ready, I think, to find a surprising flavor and piquancy in real ones. Let them consider what a tremendous financial strength my scheme would give them. Freed from external debt, they would receive in real values each year for thirty years a payment equivalent in gold to nearly half the gold reserve now held by the Bank of France; and at the end of the set period Germany would have paid back ten times what she took after 1870.

Is it for Englishmen to complain? Are they really losers? One cannot cast up a balance–sheet between incommensurables. But peace and amity might be won for Europe. And England is only asked (as I fancy she knows pretty well, by now, in her bones) to give up something which she will never get anyhow. The alternative is that we and the United States will be jockeyed out of our claims amidst a general international disgust.

FOOTNOTE:

[111] This scheme is in no way concerned with the debt of Great Britain to the United States, which is excluded from the above figures. The question of the right treatment of this debt (which differs from the others chiefly because the interest on it is capable of being actually collected in cash) raises other issues with which I am not dealing here. The above proposals for cancelation relate solely to the debts owing by the Governments of Continental Europe to the Governments of Great Britain and the United States.

APPENDIX OF DOCUMENTS

I. THE SPA AGREEMENT, JULY 1920

(_A_) _Summary[112] of the Agreement upon Reparations between the Allies, signed by the British Empire, France, Italy, Japan, Belgium, and Portugal._

ARTICLE 1 provides that in pursuance of the Treaty of Versailles the sums received from Germany for reparations shall be divided in the following proportions:

France 52 per cent. British Empire 22 ” Italy 10 ” Belgium 8 ” Japan and Portugal ¾ of 1 per cent each.

The remaining 6½ per cent is reserved for the Serbo–Croat–Slovene State and for Greece, Rumania, and other Powers not signatories of the Agreement.

ARTICLE 2 provides that the aggregate amount received for reparation from Austria–Hungary and Bulgaria, together with amounts that may be received in respect of the liberation of territories belonging to the former Austro–Hungarian Monarchy, shall be divided:

(_a_) As to half in the proportions mentioned in Article 1.

(_b_) As to the other half, Italy shall receive 40 per cent, while 60 per cent is reserved for Greece, Rumania, and the Serbo–Croat–Slovene State and other Powers entitled to reparations but not signatories of the Agreement.

ARTICLE 3 provides that the Allied Governments shall adopt measures to facilitate if necessary the issue by Germany of loans destined for the internal requirements of that country and to the prompt discharge of the German debt to the Allies.

ARTICLE 4 deals in detail with the keeping of accounts by the Reparation Commission.

ARTICLE 5 secures to Belgium her priority of £100,000,000 gold and enumerates the securities affected by such priority.[113]

ARTICLE 6 deals with the valuation of ships surrendered under the various Peace Treaties, and provides for the allocation of sums received for the hire of such ships. It deals also with questions outstanding as to the decisions taken by the Belgian Prize Courts. Belgium receives compensation out of the shares of other Allied Powers.

ARTICLE 7 refers to the Allied cruisers, floating docks, and material handed over under the Protocol of January 10, 1920, as compensation for the German warships which were sunk.

ARTICLE 8 declares that the same Protocol shall apply to the proceeds of the sale of ships and war material surrendered under the naval clauses of the Treaty, virtually including the proceeds of naval war material sold by the Reparation Commission.

ARTICLE 9 gives Italy an absolutely prior claim to certain specified sums as a set–off to amounts due to her by Austria–Hungary and Bulgaria.

ARTICLE 10 reserves the rights of Poland and declares that this Agreement shall not apply to her.

ARTICLE 11 maintains the rights of countries who lent money to Belgium before November 11, 1918, and makes provision for repayment immediately after satisfaction of the Belgian claim to priority in respect of £100,000,000.

ARTICLE 12 maintains the rights of the Allied Powers to the repayment of credits granted to ex–enemy Powers for the purposes of relief.

ARTICLE 13 reserves the question of fixing the cost of the armies of occupation in Germany on a uniform basis for discussion with the United States of America.

(_B_) _The Allied Note to Germany on the Subject of Coal Deliveries_

1. The German Government undertakes to place at the disposal of the Allies, from August 1, 1920, for the ensuing six months, 2,000,000 tons of coal per month, this figure having been approved by the Reparation Commission.

2. The Allied Governments will credit the Reparation accounts with the value of this coal, as far as it is delivered by rail or inland navigation, and it will be valued at the German internal price in accordance with Paragraph 6 (A), Annex V., Part VIII., of the Treaty of Versailles. In addition, in consideration of the admission of the right of the Allies to have coal of specified kind and quality delivered to them, a premium of five gold marks, payable in cash by the party taking delivery, shall be applied to the acquisition of foodstuffs for the German miners.

3. During the period of the coal deliveries provided for above, the stipulations of Paragraphs 2, 3, and 4 of the draft Control Protocol of July 11, 1920, shall be put in force at once in the modified form of the Annex hereto. (See below.)

4. An agreement shall be made forthwith between the Allies for distribution of the Upper Silesian coal output by a Commission on which Germany will be represented. This agreement shall be submitted for the approval of the Reparation Commission.

5. The Commission, on which the Germans shall be represented, shall meet forthwith at Essen. Its purpose shall be to seek means by which the conditions of life among the miners with regard to food and clothing can be improved, with a view to the better working of the mines.

6. The Allied Governments declare their readiness to make advances to Germany equal in amount to the difference between the price paid under Paragraph 2 above, and the export price of German coal, f.o.b. in German ports, or the English export price, f.o.b. in English ports, whichever may be the lowest, as laid down in Paragraph VI. (B) of Annex V., Part VIII., of the Treaty of Versailles. These advances shall be made in accordance with Articles 235 and 251 of the Treaty of Versailles. They shall enjoy an absolute priority over all other Allied claims on Germany. The advances shall be made at the end of each month, in accordance with the number of tons delivered and the average f.o.b. price of coal during the period. Advances on account shall be made by the Allies at the end of the first month, without waiting for exact figures.

7. If by November 15, 1920, it is ascertained that the total deliveries for August, September, and October 1920 have not reached 6,000,000 tons, the Allies will proceed to the occupation of a further portion of German territory, either the region of the Ruhr or some other.

_Annex_

1. A permanent delegation of the Reparation Commission will be set up at Berlin, whose mission will be to satisfy itself by the following means that the deliveries of coal to the Allies provided for under the Agreement of July 15, 1920, shall be carried out: The programmes for the general distribution of output, with details of origin and kind, on the one hand, and the orders given to ensure deliveries to the Allied Powers on the other hand, shall be drawn up by the responsible German authorities and submitted by them for the approval of the said delegation a reasonable time before their despatch to the executive bodies responsible for their execution.

2. No modification in the said programme which may involve a reduction in the amount of the deliveries to the Allies shall be put into effect without prior approval of the Delegation of the Reparation Commission in Berlin.

3. The Reparation Commission, to which the German Government must periodically report the execution by the competent bodies of the orders for deliveries to the Allies, will notify to the interested Powers any infraction of the principles adopted herein.

II. THE PARIS DECISIONS,[114] JANUARY 29, 1921

1. In satisfaction of the obligations laid on her by Articles 231 and 232 of the Treaty of Versailles, Germany shall pay, apart from the restitutions which she must effect in conformity with Article 238 and all obligations under the Treaty:

(1) Fixed annuities, payable in equal instalments at the end of each six months, as follows:

milliard gold marks (_a_) Two annuities of 2 (May 1, 1921–May 1, 1923) (_b_) Three ” 3 (May 1, 1923–May 1, 1926) (_c_) Three ” 4 (May 1, 1926–May 1, 1929) (_d_) Three ” 5 (May 1, 1929–May 1, 1932) (_e_) Thirty–one ” 6 (May 1, 1932–May 1, 1963)

(2) Forty–two annuities, reckoning from May 1, 1921, equivalent to 12 per cent of the value of Germany’s exports, levied on the receipts from them and payable in gold two months after the conclusion of each six–monthly period.

To ensure that (2) above shall be completely carried out, Germany will accord to the Reparation Commission every facility for verifying the amount of the exports and for establishing the necessary supervision.

2. The German Government shall deliver forthwith to the Reparation Commission Bearer Bonds payable at the due dates laid down in Article 1 (1) of the present scheme, and of an amount equal to each of the six–monthly instalments payable thereunder. Instructions will be given with the object of facilitating, on the part of such Powers as may require it, the mobilisation of the portion accruing to them under the Agreements which they have established amongst themselves.

3. Germany shall be entitled at any time to anticipate the fixed portion of her obligation.

Payments made by her in anticipation shall be applied in reduction of the fixed annuities prescribed in Article 1 (1), discounted at a rate of 8 per cent up to May 1, 1923, 6 per cent from May 1, 1923, to May 1, 1925, and 5 per cent after May 1, 1925.

4. Germany shall not embark on any credit operation abroad, directly or indirectly, without the approval of the Reparation Commission. This restriction applies to the Government of the German Empire, the Government of the German States, German provincial and municipal authorities, and also to companies and enterprises controlled by these Governments and authorities.

5. In pursuance of Article 248 of the Treaty of Versailles all the assets and revenues of the German Empire and its constituent States are held in guarantee of the complete execution by Germany of the provisions of this scheme.

The receipts of the German Customs, by land and sea, in particular the receipts of all import and export duties and all supplementary taxes, constitute a special pledge for the execution of the present Agreement.

No modification shall be introduced, liable to diminish the yield of the Customs, without the Reparation Commission approving the Customs Legislation and Regulations of Germany.

The whole of the receipts of the German Customs shall be credited to the account of the German Government, by a Receiver–General of the German Customs, nominated by the German Government with the assent of the Reparation Commission.

In the event of Germany failing to meet one of the payments laid down in the present scheme:

(1) The whole or part of the receipts of the German Customs shall be taken over from the Receiver–General of the German Customs by the Reparation Commission and applied by it to the obligations in which Germany has defaulted. In this event the Reparation Commissions shall, if it deems necessary, itself assume the administration and collection of the Customs receipts.

(2) The Reparation Commission shall be entitled, in addition, to require the German Government to impose such higher tariffs or to take such other measures to increase its resources as it may deem indispensable.

(3) If this injunction is without effect, the Commission shall be entitled to declare the German Government in default and to notify this state of affairs to the Governments of the Allied and Associated Powers who shall take such measures as they think justified.

(Signed) HENRI JASPAR. D. LLOYD GEORGE. ARISTIDE BRIAND. C. SFORZA. K. ISHII.

PARIS, _January 29, 1921_.

III. CLAIMS SUBMITTED TO THE REPARATION COMMISSION BY THE VARIOUS ALLIED NATIONS, AS PUBLISHED BY THE COMMISSION,[115] FEBRUARY 23, 1921

FRANCE

I.—_Damage to Property (Reconstitution Values)_

Frs. (Paper) Industrial damages 38,882,521,479 Damage to buildings (_propriété bâtie_) 36,892,500,000 Damage to furniture and fittings (_dommages mobiliers_) 25,119,500,000 Damage to land (_propriété non bâtie_) 21,671,546,225 Damage to State property 1,958,217,193 Damage to public works 2,583,299,425 Other damages 2,359,865,000 Shipping losses 5,009,618,722 Damages suffered in Algeria and colonies 10,710,000 Do. abroad 2,094,825,000 Interest at 5 per cent on the principal (33,000,000,000 francs, in round figures, between November 11, 1918, and May 1, 1921, or 30 months), say, in round figures 4,125,000,000

II.—_Injuries to Persons_

Frs. (Paper) Military pensions 60,045,696,000 Allowances to families of mobilised men 12,936,956,824 Pensions accorded to civilian victims of the war and their dependants 514,465,000 Ill–treatment inflicted on civilians and prisoners of war 1,869,230,000 Assistance given to prisoners of war 976,906,000 Insufficiency of salaries and wages 223,123,313 Exactions by Germany to the detriment of the civilian population 1,267,615,939 ─────────────── Total of the French claims 218,541,596,120 ═══════════════

GREAT BRITAIN

£ Frs. Damage to property 7,936,456 Shipping losses 763,000,000 Losses abroad 24,940,559 Damage to river and canal shipping 4,000,000 Military pensions 1,706,800,000 Allowances to families of mobilised men 7,597,832,086 Pensions for civilian victims 35,915,579 Ill–treatment inflicted on civilians and prisoners 95,746 Assistance to prisoners of war 12,663 Insufficiency of salaries and wages 6,372 ────────────── ────────────────── £2,542,070,375 Frs. 7,597,832,086 ══════════════ ══════════════════

ITALY

Damage to property Lire 20,933,547,500 Shipping losses £128,000,000 Military pensions Francs 31,041,000,000 Allowances to families of mobilised men Francs 6,885,130,395 Civilian victims of the war and prisoners Lire 12,153,289,000 ───────────────────── Total Lire 33,086,836,000 ” Francs 37,926,130,395 ” £128,000,000 ═════════════════════

BELGIUM

Damage to property (present value) Belgian Frcs. 29,773,939,099 Shipping losses (present value) Belgian Frcs. 180,708,250 Military pensions French Frcs. 1,637,285,512 Allowances to families of mobilised men French Frcs. 737,930,484 Civilian victims and prisoners of war Belgian Frcs. 4,295,998,454 ────────────── Total Belgian Frcs. 34,254,645,893 ” French Frcs. 2,375,215,996 ══════════════

The other claims may be summarised as follows:

Japan 297,593,000 yen (shipping losses). ” 454,063,000 yen (allowances to families of mobilised ─────────── men). 832,774,000 yen.

Jugo–Slavia 8,496,091,000 dinars (damage to property). ” 19,219,700,112 francs (injuries to persons). Rumania 9,734,015,287 gold francs (property losses). ” 9,296,663,076 gold francs (military pensions). ” 11,652,009,978 gold francs (civilians and prisoners of war). ────────────── 31,099,400,188 gold francs.

Portugal 1,944,261 contos (1,574,907 contos for property loss). Greece 4,992,788,739 gold francs (1,883,181,542 francs for property loss). Brazil £1,216,714 (shipping £1,189,144), plus 598,405 francs. Czecho–Slovakia 6,944,228,296 francs and 5,614,947,990 kroner (war–losses). 618,204,007 francs and 1,448,169,845 kroner (Bolshevist invasion). ───────────── ───────────── 7,612,432,103 francs and 7,063,117,135 kroner. Siam 9,179,298 marks, gold, plus 1,169,821 francs. Bolivia £16,000. Peru £56,236, plus 107,389 francs. Haiti $80,000, plus 532,593 francs. Cuba $801,135. Liberia $3,977,135. Poland 21,913,269,740 francs gold, plus 500,000,000 marks gold. European } Danube } 1,834,800 francs gold, 15,048 francs French, and Commission } 488,051 lei.

IV. THE FIRST ULTIMATUM OF LONDON, MARCH 3, 1921

The following declaration was delivered to Dr. Simons by Mr. Lloyd George, speaking on behalf of the British and Allied Governments, by word of mouth:

“The Allies have been conferring upon the whole position and I am now authorised to make this declaration on their behalf:

“The Treaty of Versailles was signed less than two years ago. The German Government have already defaulted in respect of some of its most important provisions: the delivery for trial of the criminals, who have offended against the laws of war, disarmament, the payment in cash or in kind of 20,000,000,000 of gold marks (£1,000,000,000). These are some of the provisions. The Allies have displayed no harsh insistence upon the letter of their bond. They have extended time, they have even modified the character of their demands; but each time the German Government failed them.

“In spite of the Treaty and of the honourable undertaking given at Spa, the criminals have not yet been tried, let alone punished, although the evidence has been in the hands of the German Government for months. Military organisations, some of them open, some clandestine, have been allowed to spring up all over the country, equipped with arms that ought to have been surrendered. If the German Government had shown in respect of reparations a sincere desire to help the Allies to repair the terrible losses inflicted upon them by the act of aggression of which the German Imperialist Government was guilty, we should still have been ready as before to make all allowances for the legitimate difficulties of Germany. But the proposals put forward have reluctantly convinced the Allies either that the German Government does not intend to carry out its Treaty obligations, or that it has not the strength to insist, in the face of selfish and short–sighted opposition, upon the necessary sacrifices being made.

“If that is due to the fact that German opinion will not permit it, that makes the situation still more serious, and renders it all the more necessary that the Allies should bring the leaders of public opinion once more face to face with facts. The first essential fact for them to realise is this—that the Allies, whilst prepared to listen to every reasonable plea arising out of Germany’s difficulties, cannot allow any further paltering with the Treaty.

_The Ultimatum_

“We have therefore decided—having regard to the infractions already committed, to the determination indicated in these proposals that Germany means still further to defy and explain away the Treaty, and to the challenge issued not merely in these proposals but in official statements made in Germany by the German Government—that we must act upon the assumption that the German Government are not merely in default, but deliberately in default; and unless we hear by Monday that Germany is either prepared to accept the Paris decisions or to submit proposals which will in other ways be an equally satisfactory discharge of her obligations under the Treaty of Versailles (subject to the concessions made in the Paris proposals), we shall, as from that date, take the following course under the Treaty of Versailles.

“The Allies are agreed:

(1) To occupy the towns of Duisburg, Ruhrort, and Düsseldorf, on the right bank of the Rhine.

(2) To obtain powers from their respective Parliaments requiring their nationals to pay a certain proportion of all payments due to Germany on German goods to their several Governments, such proportion to be retained on account of reparations. (This is in respect of goods purchased either in this country or in any other Allied country from Germany.)

(3) (_a_) The amount of the duties collected by the German Customs houses on the external frontiers of the occupied territories to be paid to the Reparation Commission.

(_b_) These duties to continue to be levied in accordance with the German tariff.

(_c_) A line of Customs houses to be temporarily established on the Rhine and at the boundary of the _têtes des ponts_ occupied by the Allied troops; the tariff to be levied on this line, both on the entry and export of goods, to be determined by the Allied High Commission of the Rhine territory in conformity with the instructions of the Allied Governments”.

V. THE GERMAN COUNTER–PROPOSAL, AS TRANSMITTED TO THE UNITED STATES GOVERNMENT, APRIL 24, 1921

The United States Government have, by their Note of April 22, opened the possibility, in a way which is thankfully acknowledged, of solving the reparations problem once more by negotiations ere a solution is effected by coercive measures. The German Government appreciates this step in its full importance. They have in the following proposals endeavoured to offer that which according to their convictions represents the utmost limit which Germany’s economic resources can bear, even with the most favourable developments:

1. Germany expresses her readiness to acknowledge for reparation purposes a total liability of 50 milliard gold marks (present value). Germany is also prepared to pay the equivalent of this sum in annuities, adapted to her economic capacity up to an aggregate of 200 milliard gold marks. Germany proposes to mobilise her liability in the following way:

2. Germany to raise at once an international loan, of which amount, rate of interest, and amortisation quota are to be agreed on. Germany will participate in this loan, and its terms, in order to secure the greatest possible success, will contain special concessions, and generally be made as favourable as possible. Proceeds of this loan to be placed at the disposal of the Allies.

3. On the amount of her liability not covered by the international loan Germany is prepared to pay interest and amortisation quota in accordance with her economic capacity. In present circumstances she considers the rate of 4 per cent the highest possible.

4. Germany is prepared to let the Powers concerned have the benefit of improvements in her economic and financial situation. For this purpose the amortisation quota should be made variable. In case an improvement should take place, the quota would rise, whilst it would correspondingly fall if developments should be in the other direction. To regulate such variations an index scheme would have to be prepared.

5. To accelerate the redemption of the balance, Germany is ready to assist with all her resources in the reconstruction of the devastated territories. She considers reconstruction the most pressing part of reparation, because it is the most effective way to combat the hatred and misery caused by the war. She is prepared to undertake, herself, the rebuilding of townships, villages, and hamlets, or to assist in the reconstruction with labour, material, and her other resources, in any way the Allies may desire. The cost of such labour and material she would pay herself. (Full details about this matter have been communicated to the Reparation Commission.)

6. Apart from any reconstruction work Germany is prepared to supply for the same purpose, to States concerned, any other materials, and to render them any other services as far as possible on a purely commercial basis.

7. To prove the sincerity of her intention to make reparation at once, and in an unmistakable way, Germany is prepared to place immediately at the disposal of the Reparation Commission the amount of one milliard gold marks in the following manner: First, 150,000,000 gold marks in gold, silver, and foreign bills; secondly, 850,000,000 gold marks in Treasury bills, to be redeemed within a period not exceeding three months by foreign bills and other foreign values.

8. Germany is further prepared, if the United States and the Allies should so desire, to assume part of the indebtedness of the Allies to the United States as far as her economic capacity will allow her.

9. In respect of the method by which the German expenditures for reparation purposes should be credited against her total liability, Germany proposes that prices and values should be fixed by a commission of experts.

10. Germany is prepared to secure subscribers for the loan in every possible way by assigning to them public properties or public income in a way to be arranged for.

11. By the acceptance of these proposals all other German liabilities on reparation account are cancelled, and German private property abroad released.

12. Germany considers that her proposals can only be realised if the system of sanctions is done away with at once; if the present basis of German production is not further diminished; and if the German nation is again admitted to the world’s commerce and freed of all unproductive expenditure.

These proposals testify to the German firm will to make good damage caused by the war up to the limit of her economic capacity. The amounts offered, as well as mode of payment, depend on this capacity. As far as differences of opinion as to this capacity exist, the German Government recommend that they be examined by a commission of recognised experts acceptable to all the interested Governments. She declares herself ready in advance to accept as binding any decision come to by it. Should the United States Government consider negotiations could be facilitated by giving the proposals another form, the German Government would be thankful if their attention were drawn to points in which the United States Government consider an alteration desirable. The German Government would also readily receive any other proposals the United States Government might feel inclined to make.

The German Government is too firmly convinced that the peace and welfare of the world depend on a prompt, just, and fair solution of the reparation problem not to do everything in their power to put the United States in a position which enables them to bring the matter to the attention of the Allied Governments.—_Berlin, April 24, 1921._

VI. THE ASSESSMENT ANNOUNCED BY THE REPARATION COMMISSION, APRIL 30, 1921

The Reparation Commission, in discharge of the provisions of Article 233 of the Treaty of Versailles, has reached a unanimous decision to fix at 132 milliard gold marks the total of the damages for which reparation is due by Germany under Article 232 (2) and Part VIII., Annex I. of the said Treaty.

In fixing this figure the Commission have made the necessary deductions from the total of damages to cover restitutions effected or to be effected in discharge of Article 238, so that no credit will be due to Germany from the fact of these restitutions.

The Commission have not included in the above figure the sum corresponding to the obligation, which falls on Germany as an addition in virtue of Article 232 (3), “to make reimbursement of all sums which Belgium has borrowed from the Allied and Associated Governments up to November 11, 1918, together with interest at the rate of 5 per cent per annum on such sums.”

VII. THE SECOND ULTIMATUM OF LONDON, MAY 5, 1921

The Allied Powers, taking note of the fact that, in spite of the successive concessions made by the Allies since the signature of the Treaty of Versailles, and in spite of the warnings and sanctions agreed upon at Spa and at Paris, as well as of the sanctions announced in London and since applied, the German Government is still in default in the fulfilment of the obligations incumbent upon it under the terms of the Treaty of Versailles as regards (1) disarmament; (2) the payment due on May 1, 1921, under Article 235 of the Treaty, which the Reparation Commission has already called upon it to make at this date; (3) the trial of the war criminals as further provided for by the Allied Notes of February 13 and May 7, 1920; and (4) certain other important respects, notably those which arise under Articles 264 to 267, 269, 273, 321, 322, and 327 of the Treaty, decide:—

(_a_) To proceed forthwith with such preliminary measures as may be required for the occupation of the Ruhr Valley by the Allied Forces on the Rhine in the contingency provided for in Paragraph (_d_) of this Note.

(_b_) In accordance with Article 233 of the Treaty to invite the Reparation Commission to prescribe to the German Government without delay the time and manner for securing and discharging the entire obligation incumbent upon that Government, and to announce their decision on this point to the German Government at latest on May 6.

(_c_) To call upon the German Government categorically to declare within a period of six days from the receipt of the above decision its resolve (1) to carry out without reserve or condition their obligations as defined by the Reparation Commission; (2) to accept without reserve or condition the guarantees in respect of those obligations prescribed by the Reparation Commission; (3) to carry out without reserve or delay the measures of military, naval, and aerial disarmament notified to the German Government by the Allied Powers in their Note of January 29, 1921, those overdue being completed at once, and the remainder by the prescribed dates; (4) to carry out without reserve or delay the trial of the war criminals and the other unfulfilled portions of the Treaty referred to in the first paragraph of this Note.

(_d_) Failing fulfilment by the German Government of the above conditions by May 12, to proceed to the occupation of the Valley of the Ruhr and to take all other military and naval measures that may be required. Such occupation will continue so long as Germany fails to comply with the conditions summarised in Paragraph (_c_).

(Signed) HENRI JASPAR. A. BRIAND. D. LLOYD GEORGE. C. SFORZA. HAYASHI.

_Schedule of Payments Prescribing the Time and Manner for Securing and Discharging the Entire Obligation of Germany for Reparation under Articles 231, 232, and 233 of the Treaty of Versailles._

The Reparation Commission has, in accordance with Article 233 of the Treaty of Versailles, fixed the time and manner for securing and discharging the entire obligation of Germany for Reparation under Articles 231, 232, and 233 of the Treaty as follows:—

This determination is without prejudice to the duty of Germany to make restitution under Article 238, or to other obligations under the Treaty.

1. Germany will perform in the manner laid down in this Schedule her obligations to pay the total fixed in accordance with Articles 231, 232, and 233 of the Treaty of Versailles by the Commission—viz. 132 milliards of gold marks (£6,600,000,000) less (_a_) the amount already paid on account of Reparation; (_b_) sums which may from time to time be credited to Germany in respect of State properties in ceded territory, etc.; and (_c_) any sums received from other enemy or ex–enemy Powers in respect of which the Commission may decide that credits should be given to Germany, _plus_ the amount of the Belgian debt to the Allies, the amounts of these deductions and additions to be determined later by the Commission.

2. Germany shall create and deliver to the Commission in substitution for bonds already delivered or deliverable under Paragraph 12 (_c_) of Annex 2 of Part VIII. (Reparation) of the Treaty of Versailles the bonds hereinafter described.

(_A_) Bonds for an amount of 12 milliard gold marks (£600,000,000). These bonds shall be created and delivered at latest on July 1, 1921. There shall be an annual payment from funds to be provided by Germany as prescribed in this agreement, in each year from May 1, 1921, equal in amount to 6 per cent of the nominal value of the issued bonds, out of which there shall be paid interest at 5 per cent per annum, payable half–yearly on the bonds outstanding at any time, and the balance to sinking fund for the redemption of the bonds by annual drawings at par. These bonds are hereinafter referred to as bonds of Series (_A_).

(_B_) Bonds for a further amount of 38 milliard gold marks (£1,900,000,000). These bonds shall be created and delivered at the latest on November 1, 1921. There shall be an annual payment from funds to be provided by Germany as prescribed in this agreement in each year from November 1, 1921, equal in amount to 6 per cent of the nominal value of the issued bonds, out of which there shall be paid interest at 5 per cent per annum, payable half–yearly on the bonds outstanding at any time and the balance to sinking fund for the redemption of the bonds by annual drawings at par. These bonds are hereinafter referred to as bonds of Series (_B_).

(_C_) Bonds for 82 milliards of gold marks (£4,100,000,000), subject to such subsequent adjustment by creation or cancellation of bonds as may be required under Paragraph (1). These bonds shall be created and delivered to the Reparation Commission, without coupons attached, at latest on November 1, 1921; they shall be issued by the Commission as and when it is satisfied that the payments which Germany undertakes to make in pursuance of this agreement are sufficient to provide for the payment of interest and sinking fund on such bonds. There shall be an annual payment from funds to be provided by Germany as prescribed in this agreement in each year from the date of issue by the Reparation Commission equal in amount to 6 per cent of the nominal value of the issued bonds, out of which shall be paid interest at 5 per cent per annum, payable half–yearly on the bonds outstanding at any time, and the balance to sinking fund for the redemption of the bonds by annual drawings at par. The German Government shall supply to the Commission coupons for such bonds as and when issued by the Commission. These bonds are hereinafter referred to as bonds of Series (_C_).

3. The bonds provided for in Article 2 shall be signed German Government bearer bonds, in such form and in such denominations as the Reparation Commission shall prescribe for the purpose of making them marketable, and shall be free of all German taxes and charges of every description present or future.

Subject to the provisions of Articles 248 and 251 of the Treaty of Versailles these bonds shall be secured on the whole of the assets and revenues of the German Empire and the German States, and in particular on the specific assets and revenues specified in Article 7 of the agreement. The service of the bonds of Series (_A_), (_B_), and (_C_) shall be a first, second, and third charge respectively on the said assets and revenues and shall be met by the payments to be made by Germany under this Schedule.

4. Germany shall pay in each year until the redemption of the bonds provided for in Article 2 by means of the sinking funds attached thereto—

(1) A sum of two milliard gold marks (£100,000,000).

(2) (_a_) A sum equivalent to 25 per cent of the value of her exports in each period of 12 months starting from May 1, 1921, as determined by the Commission; or

(_b_) Alternatively an equivalent amount as fixed in accordance with any other index proposed by Germany and accepted by the Commission.

(3) A further sum equivalent to 1 per cent of the value of her exports as above defined, or alternatively an equivalent amount fixed as provided in (_b_) above.

Provided always that when Germany shall have discharged all her obligations under this Schedule, other than her liability in respect of outstanding bonds, the amount to be paid in each year under this paragraph shall be reduced to the amount required in that year to meet the interest and sinking fund on the bonds then outstanding.

Subject to the provisions of Article 5, the payments to be made in respect of Paragraph (1) above shall be made quarterly before the end of each quarter, _i.e._ before January 15, April 15, July 15, and October 15 each year, and the payments in respect of Paragraphs (2) and (3) above shall be made quarterly, November 15, February 15, May 15, August 15, and calculated on the basis of the exports in the last quarter but one preceding that quarter, the first payment to be made November 15, 1921.

5. Germany will pay within 25 days from this notification one milliard gold marks (£50,000,000) in gold or approved foreign bills or in drafts at three months on the German Treasury, endorsed by approved German banks and payable in London, Paris, New York, or any other place designated by the Reparation Commission. These payments will be treated as the first two quarterly instalments of the payments provided for in compliance with Article 4 (1).

6. The Commission will within 25 days from this notification, in accordance with Paragraph 12 (_d_), Annex II. of the Treaty as amended, establish the special Sub–Commission, to be called the Committee of Guarantees. The Committee of Guarantees will consist of representatives of the Allied Powers now represented on the Reparation Commission, including a representative of the United States of America, in the event of that Government desiring to make the appointment.

The Committee shall co–opt not more than three representatives of nationals of other Powers whenever it shall appear to the Commission that a sufficient portion of the bonds to be issued under this agreement is held by nationals of such Powers to justify their representation on the Committee of Guarantees.

7. The Committee of Guarantees is charged with the duty of securing the application of Articles 241 and 248 of the Treaty of Versailles.

It shall supervise the application to the service of the bonds provided for in Article 2 of the funds assigned as security for the payments to be made by Germany under Paragraph 4. The funds to be so assigned shall be—

(_a_) The proceeds of all German maritime and land customs and duties, and in particular the proceeds of all import and export duties.

(_b_) The proceeds of the levy of 25 per cent on the value of all exports from Germany, except those exports upon which a levy of not less than 25 per cent is applied under the legislation referred to in Article 9.

(_c_) The proceeds of such direct or indirect taxes or any other funds as may be proposed by the German Government and accepted by the Committee of Guarantees in addition to or in substitution for the funds specified in (_a_) or (_b_) above.

The assigned funds shall be paid to accounts to be opened in the name of the Committee and supervised by it, in gold or in foreign currency approved by the Committee. The equivalent of the 25 per cent levy referred to in Paragraph (_b_) shall be paid in German currency by the German Government to the exporter.

The German Government shall notify to the Committee of Guarantees any proposed action which may tend to diminish the proceeds of any of the assigned funds, and shall, if the Committee demand it, substitute some other approved funds.

The Committee of Guarantees shall be charged further with the duty of conducting on behalf of the Commission the examination provided for in Paragraph 12 (_b_) of Annex 2 to Part VIII. of the Treaty of Versailles, and of verifying on behalf of the said Commission, and if necessary of correcting, the amount declared by the German Government as the value of German exports for the purpose of the calculation of the sum payable in each year under Article 4 (2) and the amounts of the funds assigned under this Article to the service of the bonds. The Committee shall be entitled to take such measures as it may deem necessary for the proper discharge of its duties.

The Committee of Guarantees is not authorised to interfere in German administration.

8. Germany shall on demand, subject to the prior approval of the Commission, provide such material and labour as any of the Allied Powers may require towards the restoration of the devastated areas of that Power, or to enable any Allied Power to proceed with the restoration or development of its industrial or economic life. The value of such material and labour shall be determined by a valuer appointed by Germany and a valuer appointed by the Power concerned, and, in default of agreement, by a referee nominated by the Commission. This provision as to valuation does not apply to deliveries under Annexes III., IV., V., and VI. to Part VIII. of the Treaty.

9. Germany shall take every necessary measure of legislative and administrative action to facilitate the operation of the German Reparation (Recovery) Act, 1921, in force in the United Kingdom, and of any similar legislation enacted by any Allied Power, so long as such legislation remains in force. Payments effected by the operation of such legislation shall be credited to Germany on account of the payment to be made by her under Article 4 (2). The equivalent in German currency shall be paid by the German Government to the exporter.

10. Payment for all services rendered, all deliveries in kind, and all receipts under Article 9 shall be made to the Reparation Commission by the Allied Power receiving the same in cash or current coupons within one month of the receipt thereof, and shall be credited to Germany on account of the payments to be made by her under Article 4.

11. The sum payable under Article 4 (3) and the surplus receipts by the Commission under Article 4 (1) and (2) in each year, not required for the payment of interest and sinking fund on bonds outstanding in that year, shall be accumulated and applied so far as they will extend, at such times as the Commission may think fit, by the Commission in paying simple interest not exceeding 2½ per cent per annum from May 1, 1921, to May 1, 1926, and thereafter at a rate not exceeding 5 per cent on the balance of the debt not covered by the bonds then issued. No interest thereon shall be payable otherwise.

12. The present Schedule does not modify the provisions securing the execution of the Treaty of Versailles, which are applicable to the stipulations of the present Schedule.

VIII. THE WIESBADEN AGREEMENT, OCTOBER 6, 1921

This Agreement, signed by M. Loucheur and Herr Rathenau at Wiesbaden on October 6, 1921, is a lengthy document, consisting of a Protocol, Memorandum, and Annex. The effective clauses are to be found mainly in the Annex. The full text has been published in a British White Paper [Cmd. 1547]. This White Paper also contains (1) an explanatory Memorandum, (2) the Decision of the Reparation Commission, and (3) a Report from Sir John Bradbury to the British Treasury. Extracts from these three documents are given below.

1. _Explanatory Memorandum_

In order to understand the arrangements proposed by the Wiesbaden Agreement, it is necessary to bear in mind certain provisions of the Treaty of Versailles, the application of which is affected by it.

The Treaty itself provides in the Reparation Chapter, Part VIII., and in some of its Annexes, for the partial liquidation of Germany’s reparation indebtedness by deliveries in kind. The important passages in this connection are Paragraph 19 of Annex II. and Annex IV., which together make extensive provision for the delivery, through the Reparation Commission, to the Allied and Associated Powers of machinery, equipment, tools, reconstruction material, and, in general, all such material and labour as is necessary to enable any Allied Power to proceed with the restoration or development of its industrial or economic life.

Germany’s obligation being stated in terms of gold and not in terms of commodities, provision has necessarily been made in all cases for crediting Germany, from time to time, with the fair value, as assessed by the Reparation Commission, of such deliveries. Moreover, since the proportions received by the respective Powers in kind need not necessarily correspond exactly with their respective shares in Germany’s reparation payments, as determined by Inter–Allied agreement, provision is further necessarily made in the Treaty to render each Power accountable not only to Germany, but to the Reparation Commission, for the value of these deliveries. Thus, on the one hand, the Treaty stipulates as between the Allies and Germany that the value of services under the Annexes shall be credited towards the liquidation of Germany’s general obligation, and the Schedule of Payments assigns the value of Annex deliveries to the service of the bonds handed over by Germany as security for her debt. On the other hand, the Treaty provides that for the purpose of equitable distribution as between the Allies, the value of Annex deliveries shall be reckoned in the same manner as cash payments effected in the year, and the Schedule of Payments stipulates that the value of the deliveries received by each Power shall, within one month of the date of delivery, be paid over to the Reparation Commission, either in cash or in current coupons.

Further, the Treaty imposes upon the Reparation Commission not only the duty of fixing prices, but also of determining the capacity of Germany to deliver goods demanded by any of the Allies, and, by implication, of deciding between the competing demands which are made upon that capacity by the Allies themselves.

The Wiesbaden Agreement provides for the delivery by a German company[116] to French “sinistrés” of “all plant and materials compatible with the productive capacity of Germany, her supply of raw materials and her domestic requirements,” that is to say, of the articles and materials which can be demanded under Annex IV. and Paragraph 19 of Annex II., which are, by the terms of the Agreement, in so far as France is concerned, virtually suspended, the obligations of Germany to deliver to France under the other Annexes remaining unaffected.

Any question as to the capacity of Germany to satisfy the requirement of France, and all questions of price, are to be settled by a Commission of three members, one French and one German, and a third selected by common agreement or nominated by the Swiss President.

The aggregate value of the deliveries to be made under the Agreement, and of the deliveries to be made under Annexes III., V. and VI. (hereafter, for the sake of brevity, called the “Annex deliveries”) in the period expiring on the 1st May 1926, is fixed at a maximum of 7 milliard gold marks.

In regard to the Annex deliveries the Agreement in no way modifies the Treaty provisions under which Germany is credited and France debited forthwith with the value, but special provisions, which are financially the essential part of the Agreement, are made for bringing to reparation account the value of the Agreement deliveries. These special provisions are designed to secure that Germany shall only be credited on reparation account at the time of delivery with a certain proportion of them, and that deliveries not thus accounted for, which may be called “excess deliveries,” shall be liquidated over a period of years beginning at the earliest on 1st May 1926. The provisions themselves are somewhat intricate, comprising, as they do, a series of interacting limitations, and they require some elucidation.

(1) In no case is credit to be given to Germany in any one year for Annex and Agreement deliveries together to an amount exceeding one milliard gold marks.

(2) In no case is credit to be given to Germany in any one year for more than 45 per cent of the value of the Agreement deliveries or for more than 35 per cent if the value of the Agreement deliveries exceeds one milliard gold marks.

The effect of the above is to prescribe that 55 per cent (or, if the Agreement operates successfully, 65 per cent) of the value of the Agreement deliveries _as a minimum_ will be the object of deferred payment by instalments. If the Agreement deliveries reached really high figures, the operation of the milliard limitation would make the carry forward much more than 65 per cent.

The excess deliveries are to be liquidated with interest at 5 per cent per annum in 10 equal annual instalments as from 1st May 1926, subject to certain conditions:—

(1) France shall in no case be debited in one year for Agreement deliveries with an amount which, when added to the value of her Annex deliveries in that year, would make her responsible for more than her share (52 per cent) of the total reparation payments made by Germany in that year.

(2) Agreement deliveries continue after 1st May 1926, with the same provisions for deferred payment. If in any year between May 1926 and May 1936 the amount (not exceeding 35 or 45 per cent) of the value of that year’s Agreement deliveries to be credited to Germany, together with the annual instalment to repay the debt incurred in respect of the period ending 1st May 1926, exceeds one milliard, the excess is to be carried forward from year to year until a year is reached in which no such excess is created by the payment. But in no case shall the amount credited, even if it is less than one milliard gold marks, exceed the limit laid down by the preceding condition.

(3) Any balance with which Germany has not been credited on 1st May 1936 is to be credited to her with compound interest at 5 per cent in four half–yearly payments on 30th June and 31st December 1936 and 30th June and 31st December 1937. But, again, these half–yearly payments shall not be made if the effect of making them would be to exceed the limit laid down in Condition 1 above.

(4) Agreement deliveries continue indefinitely after 1st May 1936, with power, however, to Germany to arrest them whenever the execution of them would result in France owing more than 52 per cent of Germany’s annual reparation payment in respect of Annex deliveries, deferred payments already matured, and the 35 or 45 per cent of current deliveries.

From the above it is to be noted that, while there is a limitation for the first five years of the amount of Agreement deliveries which can be demanded, there is—

(1) No point at which the right of France to demand these special deliveries automatically terminates.

(2) No final limitation upon the value of the deliveries which can be demanded by France during the lifetime of the Agreement.

(3) No definitely prescribed period within which France’s debt to Germany and to the other partners in reparation shall be liquidated.

* * * * *

It remains necessary to draw attention to one subsidiary point of a financial character under the Schedule of Payments. Part of Germany’s annual reparation liability consists of the payment of 26 per cent of the value of German exports in each period of twelve months, and part of the security for the payment consists of the proceeds of a levy of 25 per cent on the value of all German exports. The French Government has undertaken to support a request, to be submitted by the German Government to the Reparation Commission, for the inclusion in the exports which form the basis of these calculations of that part only of the value of the deliveries made under the Agreement which is credited to Germany and debited to France during any particular year.

If it can be assumed that any part of the special deliveries to be made under the Agreement would, in the absence of the Agreement, have been diverted to Germany’s ordinary external trade, then the concession desired will have the effect of diminishing the annual payments made by Germany for the benefit of the Allies as a whole.

2. _Decision of the Reparation Commission on October 20, 1921, after considering the Franco–German Agreement of October 6, 1921_

The French Government, having submitted to the Reparation Commission in accordance with Paragraph 3 of the Memorandum thereto attached the Agreement between the representatives of the French and German Governments signed at Wiesbaden on the 6th instant, the Commission has come to the following decision:—

(1) It entirely approves the general principles underlying the Agreement whereby special arrangements are proposed for enabling Germany to liquidate the largest possible proportion of her reparation obligations in the form of goods and services, more especially with a view to the speedier restoration of the Devastated Regions.

(2) At the same time, it considers that the Agreement involves certain departures from the provisions of Part VIII. of the Treaty of Versailles, notably Article 237, Paragraphs 12 and 19 of Annex II. and Paragraph 5 of Annex IV.

(3) As the Commission has no power to authorise such departures, it decides to refer the question to the Governments represented on the Commission, with a copy of the Memorandum and its Annex, recommending a favourable examination of them.

(4) The Commission recommends that reasonable facilities for deferred payment in respect of the exceptional volume which, if the arrangements are successful, the deliveries in kind to France are likely to assume during the next few years, should be accorded to France, subject to any safeguards which the Allied Governments may regard as necessary to protect their respective interests.

3. _Concluding Recommendations of Sir John Bradbury’s Report to the British Government (October 26, 1921)_

The safeguards which are envisaged as necessary by my Italian and Belgian colleagues on the Reparation Commission and myself, and for which we presume that our respective Governments will desire to stipulate are—

(1) That a limit of time should be laid down after the expiration of which no new deferment of debit should be permitted and the liquidation of the existing deferred debits should commence to be made by regular annual instalments.

The precise length of this period should be determined upon an estimate of the time necessary to carry out the main work of reconstruction, regard being had to the time required by Germany to effect the necessary supplies. In view of the delays which are inevitable in regard to operations of the magnitude of those contemplated, the prescribed period might be reasonably somewhat longer than the four and a half years’ initial period under the agreement, but it should not exceed seven years.

(2) That in no circumstances should the aggregate amount for which debit against France for the time being stands deferred be allowed to exceed a prescribed amount, say, 4 milliard gold marks.

(3) That a provision should be inserted for the payment by France to the general reparation account from time to time (within the limits of the deferred debits for the time being outstanding) of any amounts which may be necessary to secure that the other Allies shall receive their proper proportions of the amounts due from Germany under the Schedule of Payments.

Subject to the introduction of these safeguards, to which it would not appear that legitimate exception could be taken, the arrangements contemplated by the agreement may be expected to accelerate the solution of the Reparation problem on practical lines in a manner advantageous to France without prejudicing the interests of other Powers, and it is upon this ground that the Reparation Commission has unanimously recommended them for favourable examination by the Allied Governments.

If the Allied Governments approve the general scheme, subject to whatever safeguards they may decide to be necessary, there will remain certain subsidiary points for the Reparation Commission to consider—amongst other:—

(1) The proposed omission of the excess deliveries from the index figure determining the annual liability under the Schedule of Payments, until such time as these deliveries are finally brought to account for reparation purposes.

(2) The special arrangements for substitution in respect of articles of which France is entitled to restitution by identity, involving in certain cases money payments; and

(3) The special arrangements in regard to the delivery of coal and the prices to be credited and debited, which in several particulars affect the interest of other Powers.

IX. TABLES OF INTER–GOVERNMENTAL INDEBTEDNESS

(_A_) _Advances by the United States Government to other Governments (as in July 1921)_

───────────────┬─────────────────┬───────────────┬──────────────┐ │ Credits granted │ │ │ │ under Liberty │ Surplus War │ Food Relief. │ │ Loan Acts.[117] │Materials Sale.│ │ │ │ │ │ ───────────────┼─────────────────┼───────────────┼──────────────┤ Armenia │ │ │ $8,028,412.15│ Austria │ │ │ │ Belgium │ $347,691,566.23│ $27,588,581.14│ │ Cuba │ 9,025,500.00│ │ │ Czecho–Slovakia│ 61,256,206.74│ 20,621,994.54│ 6,428,089.19│ Esthonia │ │ 12,213,377.88│ 1,785,767.72│ Finland │ │ │ 8,281,926.17│ France │ 2,950,762,938.19│ 400,000,000.00│ │ Great Britain │ 4,166,318,358.44│ │ │ Greece │ 15,000,000.00│ │ │ Hungary │ │ │ │ Italy │ 1,648,034,050.90│ │ │ Latvia │ │ 2,521,869.32│ 2,610,417.82│ Liberia │ 26,000.00│ │ │ Lithuania │ │ 4,159,491.96│ 822,136.07│ Poland │ │ 59,636,320.25│ 51,671,749.36│ Rumania │ 23,205,819.52│ 12,922,675.42│ │ Russia │ 187,729,750.00│ 406,082.30│ 4,465,465.07│ Serbia │ 26,175,139.22│ 24,978,020.99│ │ ├─────────────────┼───────────────┼──────────────┤ Totals │$9,435,225,329.24│$565,048,413.80│$84,093,963.55│ ───────────────┴─────────────────┴───────────────┴──────────────┘

───────────────┬──────────────┬─────────────┬────────────────── │ │ Interest │ │ Grain │ accrued and │ Total[118] │ Corporation │unpaid up to │ Obligations. │ │ July 1921. │ ───────────────┼──────────────┼─────────────┼────────────────── Armenia │ $3,931,505.34│ │ $11,959,917.49 Austria │ 24,055,708.92│ │ 24,055,708.92 Belgium │ │ $34,000,000 │ 409,280,147.37 Cuba │ │ │ 9,025,500.00 Czecho–Slovakia│ 2,873,238.25│ 6,000,000 │ 97,179,528.72 Esthonia │ │ │ 13,999,145.60 Finland │ │ │ 8,281,926.17 France │ │ 284,000,000 │ 3,634,762,938.19 Great Britain │ │ 407,000,000 │ 4,573,318,358.44 Greece │ │ │ 15,000,000.00 Hungary │ 1,685,835.61│ │ 1,685,835.61 Italy │ │ 161,000,000 │ 1,809,034,050.90 Latvia │ │ │ 5,132,287.14 Liberia │ │ │ 26,000.00 Lithuania │ │ │ 4,981,628.03 Poland │ 24,353,590.97│ │ 135,661,660.58 Rumania │ │ 2,500,000 │ 38,628,494.94 Russia │ │ 19,000,000 │ 211,601,297.37 Serbia │ │ 3,500,000 │ 54,653,160.21 ├──────────────┼─────────────┼────────────────── Totals │$56,899,879.09│$943,500,000 │$11,084,767,585.68 ───────────────┴──────────────┴─────────────┴──────────────────

(_B_) _Advances by the British Government to Other Governments (as on March 31, 1921)_

_Allied Governments[119]_—

France £557,039,507 6 8 Russia 561,402,234 18 5 Italy 476,850,000 0 0 Belgium 103,421,192 8 9 Serbia 22,247,376 12 5 Montenegro 204,755 19 9 Rumania 21,393,662 2 8 Portugal 18,575,000 0 0 Greece 22,577,978 9 7 Belgian Congo 3,550,300 0 0 ───────────────────────£1,787,262,007 18 3

Loans for Relief— Austria £8,605,134 9 9 Rumania 1,294,726 0 8 Serb–Croat–Slovene Kingdom 1,839,167 3 7 Poland 4,137,040 10 1 Czecho–Slovakia 417,392 3 3 Esthonia 241,681 14 2 Lithuania 16,811 12 4 Latvia 20,169 1 10 Hungary 79,997 15 10 Armenia 77,613 17 2 Inter–Allied Commission on the Danube 6,868 17 6 ─────────────────── 16,736,603 6 2 Other Loans (Stores, etc.)— Czecho–Slovakia £2,000,000 0 0 Armenia 829,634 9 3 ──────────────────── 2,829,634 9 3 ──────────────────── Total £1,806,828,245 13 8 ────────────────────

FOOTNOTES:

[112] The following is the official summary issued at the time. The complete text of the Agreement has not been published.

[113] Of which the most tangible were 400,000,000 Danish kroner payable in respect of Sleswig, certain sums were from Luxemburg for coal, any balance available in respect of German ships seized as prizes in Brazilian ports, and any balance available towards reparation out of German assets in the United States.

[114] So far as I am aware, no complete official text of these decisions has been published in English. The above is translated from the French text.

[115] The Commission published at the same time a warning that it had not adopted these claims, but was about to examine them.

[116] The arrangement under which a German private company is to be created to deal directly with the orders without the intervention of the French and German Governments is intended to obviate the delays which experience has shown to be inseparable from the employment of the present machinery. It does not appear to have any important bearing on the general financial situation, since the deliveries will clearly have to be financed by the German Government and will ultimately be paid for by means of a reparation credit in account with the German Government.

[117] This is a net figure and allows for repayments made up to July 1921, of which the chief items are $78,000,000 by France, and $111,000,000 by Great Britain.

[118] The totals at the foot of these two columns include miscellaneous items for interest not entered in the particulars given in the columns themselves. A further sum of about $250,000,000 will have accrued for interest by February 1922.

[119] These accounts include interest, except in the case of Belgium and Serbia, from whom interest has not been charged, and in the case of Russia, where no interest has been entered up since January 1918.

INDEX

Allied debts, 170 f., 183, 193 f., 238

Armistice negotiations, 145, 148 f.

Army of Occupation, expenses of, 84_n._, 133 f., 140, 191

Austria, 130, 190, 191

Balfour, A. J., 148_n._

Baruch, 72_n._, 106_n._, 153, 155, 156, 159, 160_n._

Belgian priority, 135–6, 139–40, 190, 204 Reparation claims, 123–4, 197

Boulogne Conference, 19

Boyden, 112, 130

Bradbury, Sir John, 93, 95, 128_n._, 129, 216

Brenier, 109, 110, 118_n._

Briand, 24, 25, 27, 41, 69, 114

British Reparation Claims, 124, 211

Brockdorff–Rantzau, 29

Brussels Conference (Experts), 22–3

Brussels Conference (League of Nations), 86

Brussels Conference (Premiers), 19

Bulgaria, 130, 190

Clemenceau, 84_n._, 108, 149, 150

Coal, 44 f., 75, 98

Cunliffe, Lord, 72, 156

Curzon, Lord, 57_n._

D’Ahernon, Lord, 31

Decisions of London, 95

Disarmament of Germany, 16–19

Dominion Prime Ministers’ Conference, 139

Doumer, 111, 141

Dubois, 110, 115_n._, 128_n._

Dulles, John Foster, 156–7

East Prussia (plebiscite), 11

_Economic Consequences of the Peace_, 5, 39, 45, 51, 55_n._, 71, 72, 74_n._, 107, 108, 114, 119, 124, 126_n._, 127_n._, 144, 146_n._, 166, 173

Elsas, Dr. Moritz, 88–9, 92_n._

Exports, German, 79 f., 99, 165 f.

Financial Agreement of Paris (Aug. 1921), 135, 141 f.

Foch, Marshal, 31, 33, 57, 148_n._

Forgeot, 70_n._

Fournier–Sarlovèze, 116_n._

Frankfurt, Occupation of, 15, 57

French Reparation Claim, 107 f., 117 f., 210

George, Lloyd, 1, 17, 18, 21, 27, 30, 33, 41, 84_n._, 121, 138_n._, 139, 150, 155, 179, 198

German Budget, 81 f.

German Counter–proposal (March 1921), 28–30

German Counter–proposal (April 1921), 36 f., 215 f.

German individual income, 86 f.

German property in United States, 77, 143

Gladstone, 6

Guarantees, Committee of, 68 f., 225 f.

Haig, Sir Douglas, 148_n_.

Harding, President, 171

Heichen, Dr. Arthur, 87

Helfferich, 88, 90

_History of the Peace Conference of Paris_, 147_n._, 152_n._, 160_n._

House, Col., 148_n._

Hughes, W. M., 156

Hungary, 192

Hymans, 150

Hythe Conference, 18

Invasion of Germany, 31, 32, 36

Italian Reparation Claims, 127, 211

Italy, 190

Kaiser, trial of, 14

Kapp, “Putsch,” 15

Klotz, 24, 72, 109, 111, 147, 151 f.

Lamont, J. W., 106_n._, 161, 162_n._

Lansburgh, Dr. Albert, 87

Law, Bonar, 150

League of Nations, 12, 61, 188

Leipzig trials, 15

Lévy, Raphaël–Georges, 118_n._

Leygues, 21, 24

Lignite, 55

London Conference I., 28, 34

London Conference II., 40

London Settlement, 64 f., 72, 73, 81, 84_n._, 130, 188 f., 221

London Ultimatum I., 30, 35, 213

London Ultimatum II., 16, 19, 31_n._, 42, 44, 57, 219 f.

Loucheur, 31, 92, 95, 109, 110, 112_n._, 117, 120

Loucheur–Rathenau Agreement; _vide_ Wiesbaden Agreement

Mark Exchange, 81, 100 f.

Mercantile Marine of Germany, 16, 137

“Mermeix,” 148_n._, 149_n._

Millerand, 18, 20

Newspaper opinion, 7

Nitti, 18

Occupation, Army of, 84_n._, 133, 140

Occupation of Germany, 188, 214, 219

Occupation of Germany, legality of, 32, 41, 57 f.

Orlando, 150

Paris decisions, 18, 26, 32, 34, 39, 40, 57, 207

Payment in kind, 97 f., 168

Pensions, 125, 146 f., 185

Poincaré, 24, 108, 128, 129

Poland, 192 f.

Poland’s coal, 52

Private opinion, 7, 8

Rathenau, 92, 95

Reparation Claims, 126 f., 210 f.

Reparation and International Trade, 163 f.

Reparation Bill, 39, 106 f., 185

Reparation Bonds, 58 f., 101, 207, 221

Reparation Commission, 21, 32, 35, 45, 47, 59, 61, 66_n._, 67, 68, 73, 93, 106, 110, 118, 126, 156, 221 f., 235

Reparation Commission, Assessment of, 27, 127 f., 219

Reparation, Estimates of, 39, 72

Reparation Receipts, division of, 138 f., 203

Restitution, 16, 149, 150

Revision of Treaty, 185 f.

Ruhr, Occupation of, 36, 41, 58, 204

Ruhr riots, 15

San Remo Conference, 15, 18

Sanctions, 32, 36, 57_n._

Schlesvig (plebiscite), 11

Simons, 28, 29, 32, 38_n._, 213

Smuts, General, 160

Sonino, 150

Spa Coal Agreement, 45 f., 102, 133, 136, 205

Spa Conference, 18, 19, 45, 138, 203

Sumner, Lord, 156

Tardieu, 24, 27, 60, 72, 106_n._, 107_n._, 108_n._, 114_n._, 117, 120_n._, 121_n._, 138, 147, 148_n._, 149_n._, 150_n._, 151, 153

_The Times_, 18, 20, 22, 27, 32, 55_n._, 100, 110, 117_n._

United States, 36, 38, 78_n._, 143

United States and Inter–Allied Debts, 170, 183, 194 f., 238

United States, Treaty rights of, towards Germany, 77, 78, 130, 140, 142

Upper Silesia, 11, 30, 32, 39, 52, 54

Westphalian riots, 15

Wierzlicki, 53

Wiesbaden Agreement, 76, 92 f., 187, 211 f.

Wilson, President, 146 f., 151 f., 157, 160, 161–162

Young, Allyn, 5_n._

BY THE SAME AUTHOR

THE ECONOMIC CONSEQUENCES OF THE PEACE

_First published in London, December, 1919, and in New York, January, 1920. Afterwards reprinted in French, German, Italian, Spanish, Dutch, Flemish, Danish, Swedish, Rumanian, Russian, and Chinese, these editions, of which the chief are mentioned below, amounting in all to 140,000 copies._

1. THE ECONOMIC CONSEQUENCES OF THE PEACE.

London: Macmillan and Co., 1919.

2. THE ECONOMIC CONSEQUENCES OF THE PEACE.

London: Labour Research Department, 1920.

[Out of print.]

3. THE ECONOMIC CONSEQUENCES OF THE PEACE.

New York: Harcourt, Brace and Co. 1920. $2.50.

4. LES CONSÉQUENCES ÉCONOMIQUES DE LA PAIX. Traduit de l’Anglais par PAUL FRANCK.

Paris: Editions de la Nouvelle Revue Française. 1920.

5. DIE WIRTHSCHAFTLICHEN FOLGEN DES FRIEDENSVERTRAGENS. Übersetzt von M. J. BONN und C. BRINKMANN.

München: Duncker und Humblot. 1920.

6. DE ECONOMISCHE GEVOLGEN VAN DEN VREDE. Met een Inleiding van Mr. G. VISSERIG.

Amsterdam: Uitgevers–Maatschappij Elsevier. 1920.

7. LE CONSEGUENZE ECONOMICHE DELLA PACE. Traduzione di VINCENZO TASCO. Prefazione di VINCENZO GIUFFRIDA.

Milano: Fratelli Treves. 1920.

8. FREDENS EKONOMISKA FOLJDER. Översättning av EVERT BERGGRÉN.

Stockholm: Albert Bonnier. 1920.

9. LAS CONSECUENCIAS ECONÓMICAS DE LA PAZ. Traducción por JUAN UÑA.

Madrid: Calpe. 1920.

10. DE ECONOMISCHE GEVOLGEN VAN DEN VREDE. Vlaamsche Uitgave vertaing van G. W.

Brussel: Uitgeverij _Ons Vaderland_. 1920.

11. URTMARILE ECONOMICE A LE PĂCH.

Bucaresti: Editura _Viata Romineasca_. 1920.

12. EKONOMITJESKIJA POSLEDSTVIJA MIRA.

Stockholm: W. Tullbergs Boktryckeri. 1921.

PRESS NOTICES

_British_

_THE NATION_, Dec. 13, 1919.—“This is the first heavy shot that has been fired in the war which the intellectuals opened on the statesmen the moment they realized what a piece of work the Treaty was.”

_WESTMINSTER GAZETTE_, Dec. 20, 1919.—“Mr. Keynes has produced a smashing and unanswerable indictment of the economic settlement.... It is too much to hope that the arbiters of our destinies will read it and perhaps learn wisdom, but it should do much good in informing a wide section of that public which will in its turn become the arbiters of theirs.”

_SUNDAY CHRONICLE_, Dec. 21, 1919.—“No criticism of the Peace which omits, as Mr. Keynes seems to me by implication to omit, the aspect of it not as a treaty, but as a sentence, has any right to be heard by the European Allied peoples.”

_THE SPECTATOR_, Dec. 20, 1919.—“The world is not governed by economical forces alone, and we do not blame the statesmen at Paris for declining to be guided by Mr. Keynes if he gave them such political advice as he sets forth in his book.”

_THE TIMES_, Jan. 5, 1920.—“Mr. Keynes has written an extremely ‘clever’ book on the Peace Conference and its economic consequences.... As a whole, his cry against the Peace seems to us the cry of an academic mind, accustomed to deal with the abstractions of that largely metaphysical exercise known as ‘political economy,’ in revolt against the facts and forces of actual political existence.... Indeed, one of the most striking features of Mr. Keynes’s book is the political inexperience, not to say ingenuousness, which it reveals.... He believes it would have been wise and just to demand from Germany payment of £2,000,000,000 ‘in final settlement of all claims without further examination of particulars.’”

_THE ATHENÆUM_, Jan. 23, 1920.—“This book is a perfectly well–equipped arsenal of facts and arguments, to which every one will resort for years to come who wishes to strike a blow against the forces of prejudice, delusion, and stupidity. It is not easy to make large numbers of men reasonable by a book, yet there are no limits to which, without undue extravagance, we may not hope that the influence of this book may not extend. Never was the case for reasonableness more powerfully put. It is enforced with extraordinary art. What might easily have been a difficult treatise, semi–official or academic, proves to be as fascinating as a good novel.”

_FORTNIGHTLY REVIEW_, March 1, 1920.—“Mr. Keynes’s book has now been published three months, and no sort of official reply to it has been issued. Nothing but the angry cries of bureaucrats have been heard. No such crushing indictment of a great act of international policy, no such revelation of the futility of diplomats has even been made.”

_TIMES LITERARY SUPPLEMENT_, April 29, 1920.—“Mr. Keynes ... has violently attacked the whole work of those who made the Treaty in a book which exhibits every kind of ability except the political kind.... Mr. Keynes knows everything except the elements of politics, which is the science of discovering, and the art of accomplishing, the practicable in public affairs.”

_TIMES_ (“Annual Financial and Commercial Review”), Jan. 28, 1921.—“The almost unhealthy greed with which Mr. Keynes’s book on _The Economic Consequences of the Peace_ was devoured in a dozen countries was but a symptom of the new desire to appreciate, and, if possible, to cope with, the economic consequences not only of the peace but of the war.”

_LIVERPOOL COURIER_, Feb. 2, 1921.—“In the eyes of the world—at least, of the world that is not pro–German—the reparation costs are wholly inadequate. It is true that in the eyes of Mr. J. M. Keynes it is wicked to charge Germany with the cost of war pensions, but we imagine that the average man with a simple sense of simple justice does not agree with Mr. Keynes.”

“REALIST” in the _ENGLISH REVIEW_, March 1921.—“The operation of indemnity–payment must be followed through to its remorseless end.... The cry ‘Germany must pay’ has still a good healthy sound about it.”

_ENGLISH REVIEW_, June 1921.—“What Mr. Maynard Keynes predicted in his remarkable book is coming only too true. All over Europe the nations are standing to arms, thinking boundaries, while trade languishes, production stagnates, and credit lapses into the relativities.”

_American_

JOSEPH P. COTTON in the _EVENING POST_, New York, Jan. 30, 1920.—“Mr. Keynes’s book is the first good book on peace and the reconstruction of Europe. The writing is simple and sincere and true ... a great book with a real message.”

PAUL D. CRAVATH in the _SUN AND NEW YORK HERALD_, Feb. 2, 1920.—“No English novel during or since the war has had such a success as this book. It should be read by every thoughtful American. It is the first serious discussion of the Peace Treaty by a man who knows the facts and is capable of discussing them with intelligence and authority.”

HAROLD J. LASKI in the _NATION_, New York, Feb. 7, 1920.—“This is a very great book. If any answer can be made to the overwhelming indictment of the Treaty that it contains, that answer has yet to be published. Mr. Keynes writes with a fullness of knowledge, an incisiveness of judgment, and a penetration into the ultimate causes of economic events that perhaps only half–a–dozen living economists might hope to rival. Nor is the manner of his book less remarkable than its substance. The style is like finely–hammered steel. It is full of unforgettable phrases and of vivid portraits etched in the biting acid of a passionate moral indignation.”

F. W. TAUSSIG, Harvard University, in the _QUARTERLY JOURNAL OF ECONOMICS_, Feb. 1920.—“Mr. Keynes needs no introduction to economists. The high quality of his work is known. This book shows the sure touch, the wide interests, the independent judgment, which we expect. It shows, also, fine spirit and literary skill.... Coming to the economic provisions of the Treaty, I find myself in general accord with what Mr. Keynes says. He makes out an estimate of what Germany can do in the way of reparation.... The maximum cannot, in his judgment, exceed ten billions of dollars. Some such figure, it is not improper to say, was reached independently by Professor A. A. Young in his estimates for the American financial advisers.”

_FINANCIAL WORLD_, New York City, Feb. 16, 1920.—“There is a thousand dollars of information in it for the average business man.”

FRANK A. VANDERLIP in _CHICAGO NEWS_, March 3, 1920.—“I regard it as the most important volume published since the Armistice. It is certain to have a profound effect on world thought. It is a deep analysis of the economic structure of Europe at the outbreak of the war, a brilliant characterisation of the Peace Conference, a revealing analysis of the shortcomings of the Treaty, a dissection of the reparation claims, done with the scientific spirit and steadiness of hand of a great surgeon, a vision of Europe after the Treaty, which is the most illuminating picture that has yet been made of the immediate situation on the Continent, and, finally, constructive remedial proposals. Every chapter bears the imprint of a master hand, of a mind trained to translate economic data, and of absolutely unfaltering courage to tell the truth.”

ALVIN JOHNSON in the _NEW REPUBLIC_, April 14, 1920.—“There has been no failure anywhere to recognise that Keynes’s _Economic Consequences of the Peace_ requires an ‘answer.’ Too many complacencies have been assailed by it.... What progress are his critics making in their attack on it?... There is surprisingly little effort made by American reviewers to refute the charge that the Treaty is in many respects in direct violation of the preliminary engagements, nor is anywhere a serious attempt made to show that those engagements were not morally binding.... The critics have not seriously shaken Keynes’s characterization of the Treaty. They have not been able to get far away from agreement with him as to what the Treaty should have been. They admit the desirability of revision.”

_DETROIT FREE PRESS_, Nov. 21, 1921.—“Only once have I seen Viviani go into action gradually. It was after his last trip to the United States. He was talking in a subdued conversational tone when suddenly he thought of John Maynard Keynes’s book, _The Economic Consequences of the Peace_. His face, hitherto motionless, twitched a little. His words accelerated slowly. The current of his emotion spread curiously through the muscles of his whole body, until the figure which had been relaxed from head to foot became tense in every fibre. In a moment he was denouncing, with the sonorous blast of his anger, the book which he said he had encountered in every country in the New World, as ‘a monument of iniquity,’ a monster which confronted him everywhere in South or North America, and which for some (to him) incredible reason everyone seemed to believe as the gospel truth about the pact of Versailles.”

TRANSCRIBER’S NOTE

-Plain print and punctuation errors fixed.

-Table at page 238 has been splitted into two tables, because of its large dimension.

End of Project Gutenberg's A Revision of the Treaty, by John Maynard Keynes