Lausanne and After A S result of the Lausanne Conference reparations
are dead. What is more, the issue is swept finally from the international arena by an agreement both fair and friendly. That is an achievement of immense value. It may be said with some justice that reparations were dead before any single delegate got out of the train at Lausanne. That may be so. But the difference between the abolition of reparations by repudiation and abolition by agreement is fundamental. From that point of view, in spite of the attractions of the clean slate policy, there is a good deal to be said for the decision, accepted by the German delegation without serious demur, that Germany shall make an ultimate payment of £150,000,000, not as reparations or tribute, but in final discharge none the less, of her obligations under the reparations chapter of the Treaty of Versailles. That sum, disbursed under all the safeguards devised at Lausanne, will lay no undue strain on Germany's finances, for unless her resources are considered by the Bank of International Settlements to be equal to it, the demand on her will not be made at all.
On the other hand, provision for this final payment has enabled M. Herriot to demonstrate convincingly to a still restive public that there is no question of repudiation on Germany's part. The French Prime Minister has deserved well of his country and of the world. The Paris Press was suspicious and hostile. The real temper of the country was hard to gauge. The Government majority in the Chamber, though apparently substantial, was in reality precarious, and in daily danger of disruption on domestic issues. It is a testimony to the changed outlook of France and to M. Herriot's personal courage that the Prime Minister should have set his name to the Lausanne agreement and at the end gained the general approval of his countrymen.
Equal honours, of course, rest with Herr von Papen. He, it is true, has no Parliament to trouble him at the moment, but he has an election to face in three weeks' .time, and that is far more serious. The Germans have failed to get a formal repudiation of Article 231, the war-guilt article, of the Treaty of Versailles, and it was a mistake to press for it. Lausanne was called for the negotiation of a purely financial settlement and the injection of political issues into the discussions could only cause trouble. But implicitly if not formally the whole reparations chapter, from Article 231 onwards, disappears. The survival of the article can, of course, be used against Herr von Papen at home and will be.
He has his enemies there and any stick is good enough to beat him with. But the President is clearly satisfied with the Lausanne settlement, and the approval of Dr.
Schacht, the former President of the Reichsbank, and an unsparing critic of all previous reparations com- promises, will have a far-reaching effect in financial and industrial circles.. Ratification of the Lausanne accords by Germany is no doubt in some danger, but when it comes to the point rejection of a settlement so incon- testably favourable is improbable—even under a Hitlerite Government.
In one respect the decisions reached at Lausanne are admittedly unsatisfactory. While reparations were being discussed formally the debt issue lurked menacing in the background. France and Italy refused flatly from the first day to the last to release Germany from her repara- tion obligations unless and until an understanding regarding their own obligations was reached with their creditors. With their secondary creditor, Great Britain, it . has been -reached. This country has very rightly undertaken to make no demands for payment while ratification of the Lausanne accords is still pending. The United States, unrepresented at the Conference, has given no such undertaking. The various European countries are liable, as things stand, to resume payments to Washington in December, and our own contribution from now on will be in the region of £50,000,000 a year. France and Italy, at any rate, will not release Germany till they know what America will do towards releasing them, and consequently they decline to ratify the Lausanne agreements till the American attitude is made clear. The "gentlemen's agreement" to that effect is irrational, for it is certain that nothing more is to be got out of Germany, no matter what America may do or not do, and the psychological effect in the United States may be unfortunate. But with the two chief Continental debtors firm in their resolve, and the fate of the Conference hanging in the balance, the decision to settle on that basis was inevitable. So far as America is concerned the Prime Minister and Mr. Chamberlain did a good deal by their speeches in the House of Commons on Tuesday to undo the harm Mr. Churchill had done the day before by his suggestion that the whole Lausanne agreement was vitiated by some undisclosed arrangement that meant dragging the United States, willing or unwilling, into the controversy. Mr. Chamberlain was perfectly explicit. If America was ready to cancel her debts, we should cancel our debts to others. If she were content simply to claim from her debtors the equivalent of Germany's final payment. then we should still cancel the debts due to us. if America wanted more than that, then we should have to take counsel again. That is reasonable and should work out satisfactorily in the end, provided neither this country nor any other is unwise enough to attempt, officially • or unofficially. or through irresponsible Press agitations, to force a decision by the United States prema- turely. For the debt question to become an election issue in the United States would be fatal. All countries but one will do well to let it severely alone till November.
That one is Germany. If her statesmen have any wisdom they will ratify the Lausanne agreement at the earliest moment possible. That alone, of course, will not bring the agreement into effect. The ratifications of the other contracting Powers are needed, and if they are not forthcoming the Young Plan will theoretically still stand, though actually another conference to reconsider the situation will be held. But in fact there is no question of a reversion to the Young Plan. There is no question of Germany being called on to pay a penny more than she has agreed to pay now. By ratifying promptly she would make her own position secure, improve her credit and create general confidence in her good faith. That might well be the most beneficial of all the consequences of Lausanne, first for Germany herself and then for the world. At their best the agree- ments concluded are only a first step. They have to be supplemented, as it is intended they shall be, by measures for the rehabilitation of Central Europe and the far more important world conference on financial and economic questions generally. But before there can be new construction the ground has to be cleared of the obstacles that cumber it. Lausanne has done that. The reparations issue has been disposed of finally. And for the part he played in an achievement that has begun to restore confidence to the world unstinted acknowledgment is due to the Prime Minister of Great Britain.
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