THE FEASIBILITY OF THE DAWES SCHEME
SOME GERMAN OPINIONS AVISIT to Germany confirms the impression that opinion there generally welcomes the Dawes plan. It is considered by a long way the. most hopeful basis for the payment of reparations that has been hitherto put forward. Even the Right, who attacked it re- peatedly in the Reichstag, did so on grounds more or less admittedly political rather than financial. The agree- ment gave them an excellent opportunity of accusing the Government of a weak betrayal of the interests of the Fatherland. Although no compromise could be made with the Allies by any other Government which would not be savagely and vociferously condemned by this apparently- intransigent party, there is good reason to suppose that had they themselves been in power at the time of the submissiOn of the Dawes plan, little difficulty would have been made about its acceptance.
This unanimity is due, first and. foremost, to the fact that the Dawes plan is the first scheme for the pay- ment of reparations which has any -contact with reality ; which takes into account not only the justice and the necessity of such and such payments, but also the possibility of their being made. Secondly, the plan, what- ever its actual merits and demerits, looks extremely well on paper. As therefore it has been in operation for so brief a time, none of its faults have become apparent, so there is as yet no disillusionment. And, lastly, the success of the foreign loan has aroused considerable confidence. In spite of the unanimity of German opinion in regarding the Dawes plan as the best so far produced, it is sharply divided about the question of the possibility of its complete fulfilment. The bankers tend, on the whole, to be the optimists, while the manufacturers tend, with some notable exceptions, to be pessimists. For the industrialists generally, during the inflation which they arc widely believed to have encouraged for that purpose, augmented their manufacturing plant on a colossal scale, so that now that the currency is once more stable and exceedingly scarce, they are left with these vast factories and no money with which to run them. In a word, the fluidity of their capital has vanished. In order to restart their works they have to borrow fresh capital, for which they often have to pay as high a rate as 18 per cent. With this fabulously expensive capital they have to buy fresh stocks of raw material in the expensive world market. Taxation is extremely heavy, and the German workman will not be willing any longer to take lower wages than those which prevail over the rest of Europe. In view of these circumstances the pessimism of the majority of the industrialists is not remarkable. It would, indeed, be surprising to hear that a Germany in this condition, with several rich provinces taken from her, could hope to pay yearly in reparations a sum two and a half times the size of the surplus of her exports over her imports in 1913. And this at a time when her imports actually exceed her exports ! And yet this is exactly what a small and enterprising group believe that she can do. They argue roughly along these lines : We have, they say, vast equipment for production. This organiza- tion can—will—start producing on an immense scale directly it is supplied with adequate capital. This capital will begin to pour into Germany directly she is entirely free from the twin spectres of monetary chaos and re- newed French aggression. The success of the Renten- mark and the basis of the loan for the new currency seem to ensure security from the first, while France's participation in the loan and her anxiety to be paid ensure immunity from the second. If the Allies are sincere in their desire to receive reparations, tlicy will be bound to give every facility to German trade. Even under these circumstances we may fail to pay the whole sum required. But that is, on the whole, unlikely. If we succeed, Germany will have become so powerful an organization for production that when payments cease England and America will no longer be able to compete seriously with her for the trade of the world.
Chimerical as this hope sounds, it would be difficult to set limits to the accomplishments of a nation which could raise such sums as those demanded under the plan. " We shall be able to raise the money," a member of this group told me, "hut you will find yourselves unable to absorb it—that will be the first difficulty."
The other, but more moderately, optimistic group is largely composed of bankers. Their comparative optimism primarily rests upon the smaller but surer basis of their own dominance in the German commercial life of to-day, a dominance which is the result of the shortage of capital and the consequent high rates of interest which they arc able to obtain for it. Secondly, their optimism rests upon their belief in the inability of the Allies to absorb reparations on a really large scale, and the consequent necessity for drastic changes in the Dawes plan itself. Uninstructed public opinion throughout the country, although it is staggered by the size of the sums payable by Germany under the plan, remains favourably disposed towards it, in a vague, groping way. It is pretty cleaily understood, also, that until England is permitted by America to forgo her European debt, any possible solution of the War Debts Reparations vicious circle is out of the question. " The reparations problem," a director of a great Berlin bank said to me, " is no longer a Franco- German one ; it has become an Anglo-American one."
JOHN ROTHENSTEIN.
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