WHO IS TO PAY?
IN a few days the expert committees which are con- sidering the German financial situation will, it is hoped, issue their report. Immediately the question of a European settlement, and therefore the reality of a European crisis, will be upon us. The experts' report will, we suppose, follow in the main, at any rate, the numerous predictions and forecasts which have been to allow of German recovery indicated, the question of the possibility of immediate payments stated more or less clearly, and some recommendations made as to an international loan to Germany. Events will then, of course, turn upon the attitude of France to this report. The falling franc has now reached a point which makes it pretty certain that the French attitude will appear to be unexpectedly reasonable. Nor are signs lacking of the position which the French Government is already preparing to take up. The publication on Monday last of the French Yellow Book, giving a complete descrip- tion of the abortive negotiations for a treaty of Alliance, first between this country, the U.S.A. and France, and later between France and this country, seems to indicate that the idea of security is again to be brought to the fore. The old, old story that France was seeking nothing but reparations when she entered the Ruhr Valley is at last to be dropped, and that inseparable pair, Reparations and Security, which have so long been joined together, may at last be received into the wedlock of official recognition. France may make two proposals to the world in general and to this country in particular, in return for the acceptance of which she will consent to abandon the Ruhr, to modify her policy in the Rhine- land, and to fix a " reasonable " sum in reparations.
If the contents of the Yellow Book are examined, it does not seem impossible to guess at the character of her first proposal. Great Britain will be asked to guarantee not the integrity of the frontiers of France (which is, in fact, what Mr. Lloyd George offered at Cannes), but to guarantee as sacred and unalterable the whole map of Europe as drawn up by the Treaty of Versailles, and particularly, of course, the fragile and far-stretched frontiers of Poland.
This is what M. Poincare has, we find from the Yellow Book, been working for ever since he came into power, and it seems more than probable that when negotiations are resumed we shall find that as usual he has not changed his mina. This, then, may be M. Poincare's last effort to secure in his own " realistic " way the security of his country. But he has an even more immediate task, namely, to secure for her those reparations which have always been her due, and for which there is now so urgent a financial necessity. We may hope, then, that he will at last consent to a fixed reparations total within the range of practical possibilities. To-day nobody supposes that Germany in her present position and unassisted can pay any sum, big or little, for some time. At least two years, probably much more, of moratorium would be required before she could pay a considerable sum, even if her sovereignty in the Ruhr and Rhineland were restored to-morrow, and a definite and reasonable amount fixed. But the French need for a large payment to a depleted exchequer cannot, will not, wait so long. Hence the expedient of an international loan to Germany, out of which she can pay immediate reparations to France, will almost inevitably be proposed by M. Poincare. As soon as the question of a new international loan is raised, the thoughts of British negotiators must turn to those other loans which are usually grouped under the 'term "Inter-Allied Debts." Germany, it appears, is to borrow from this country in order to pay. France. But is the circle to be completed and France to begin repaying her debt to Great Britain ? Such considerations are bound to arise in the minds of the present Government when negotiations begin. Indeed, we cannot but think that the whole proposal of the loan to Germany, out of which she is to pay reparations to France, needs a most careful consideration from the point of view of Great Britain. In fine, the British Government must make up its mind as to its position, if and when it is faced with the twin French proposals of a British guarantee for the frontiers of Versailles and a British loan to Germany, with which to pay reparations to France. If England will say " Yes " to these two proposals, France might promise to be "reasonable." Public opinion in this country will have to determine whether these are the proposals of a "gallant ally" asking her due, or of the spoilt child of Europe holding this country to ransom by threatening to upset the apple-cart if she does not get what she wants. It is, of course, impossible to do more than speculate on British counter-proposals before we know exactly what France will demand. But as it happens, the League of Nations has just elaborated its scheme for a Treaty of Mutual Guarantee. Why could not the British Government, while refusing to promise to go to war if the status quo of Europe is disturbed, offer to France a special Regional Treaty of Guarantee, such as is contemplated by the League scheme, and seek to put the whole question of security on the wider basis of security for every State in Europe rather than for France alone ?
On the problem of reparations we cannot think that it would be unreasonable for the British Government to decline to guarantee a large loan to Germany if her credit is to be used not for restoring that country as a trading and producing unit of Europe, but for making reparation payments, out of which France may increase her air force and maintain her army of black mercenaries. Surely, at any rate, our Government might insist that Germany be given a moratorium for one or two years. In that case the loan need be only a fraction of what would be needed if reparations must be paid immediately, and France would be forced to curtail her expenditure on armaments. It must be remembered that whatever money is raised in this country for the German loan (on the supposition that it can be successfully floated) must necessarily divert British capital from British enterprises. The American investor is not accustomed to placing his savings in international loans, and it is most unlikely that any large sums could be raised in America. Any reparation loan to Germany would come chiefly out of British pockets. Hence surely we have a right to have a say how such money is to be used. Let us try clearly to understand the situation that is about to face us. Otherwise we may find ourselves bribing everybody in Europe to come to a settlement, which naturally they will not think of doing, so long as the stream of British subsidies irrigates the parched estates of European ministers of finance. On the need for a British loan opinion in France and Germany is united. This is the agreed starting point for all their disputes. It is indeed an essential pre-requisite to all the ingenious schemes of European Governments, for without it the bitter realities of European bankruptcy would have to be faked, The greatest wit that ever graced the political stage of England perfectly described the attitude of this country to international affairs when he spoke of "John Bull, puzzled but still subscribing." But let us, at any rate, discover the uses to which the money which we are asked to subscribe is to be put. E. J. S.
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