COMMON SENSE AND THE GERMAN INDEMNITY.
WE all want to make Germany pay, and it is absolutely just that she should pay up to the reasonable limit of her capacity ; but with the exception of a few persons who have a passion for preferring the shadow to the sub- stance, Englishmen do not want to make Germany pay in such a manner that the Allies would be hit harder than Germany herself. There are several ways in which the Allies might be badly hit by an unwise handling of the indemnity. It is not merely a question of a failure to garner the German tribute year by year. There is the much larger question of the quietude and., so far as it may be, the contentment of the whole world. Unless the people of all countries settle down with a will to reproduce the wealth which was dissipated by the war, there is no prospect of the Allies being benefited by the German indemnity. Payments of the annual sum might be made with regularity, and yet owing to the crippled state of the markets and the general anxiety and discontent the Allies would have lost more than they would have gained. As regards Germany herself, our policy should be to use every argument, financial or otherwise, in such a way that she will have no excuse to put into office a militaristic Government. The present German Government are democratic in name, and, so far as we can judge, to a considerable extent also in action ; it is most important to make it possible for such a Government to survive, and also for them to be succeeded by a Govern- ment of like complexion. We should never give German Republicans a handle for saying, " You squeezed us so hard that we could not carry on. We became impotent, and we naturally fell a prey to our enemies who were always prowling round watching for their opportunity." To put the matter on purely material grounds, it pays us • [We direct our readers' attention to the financial letter of " Onlooker." who discusses Mr. iffeKenna's speech from a different and leas favourable standpoint.— En. Spada:44i to have a non-militarist Government in Germany. If there were to be another putsch, and it should succeed, the discredited Hohenzollern exile in ffolland would be galvanized back to life, at least by rumour if not in fact. The whole of Europe would be ready once more to catch fire. All countries would once again be looking to their guns and their ammunition and their fighting aeroplanes, instead of re- creating wealth. We could not afford another tremendous commercial set-back of that kind. The truth is that the unseating of a democratic Government in Germany would cost us so dear that, rather than allow it to happen, we should do well to accept a smaller indemnity if it became clear that the amount of the indemnity was the chief danger to that Government. Further, we ought to frame our policy in such a way as to make it perfectly plain to the Germans that it will be better for them as well as for us if they keep clear of militarism. The existence of a non-militaristic. German Government is in itself an assurance of peace—a Policy taken out in the International Peace Assurance Company, and no prudent person would object to paying premiums for that Policy. While pointing out to German democrats that we fully recognize the advisa- bility of helping them, we ought at the same time to make it perfectly clear that a militaristic Government in Germany would get no sort of sympathy from us. So far from making life easy or even possible for such a Government, we ought to consider it our duty to exact our pound of flesh as a matter of principle for the simple reason that we should regard them as a fresh threat to the world. These, as it seems to us, are the main ideas we should keep in mind in dealing with Germany. They are only common sense.
So long as the German Delegates come to the Conference in London—and it would be a preliminary act of madness on the part of Germany not to send them—it does not matter greatly what basis of discussion is accepted. Every- body knows that however strictly terms of reference are drawn, it is almost impossible to keep people exactly to those terms even when the most skilful debaters and the mostpedantic constitutionalists are engaged, When you are criticizing a particular method of paying an indemnity you cannot conceivably confine the discussion to that particular method ; its defects and its disadvantages do not appear until they have been compared with the defects and advantages of other methods. It is to be hoped that the Conference will clear up matters which are now very obscure. After reading all that the Prime Minister has said on the indemnity we cannot feel sure that we under- stand what he means. At the end of last month he said that Germany could pay " only by an excess of exports over imports," but that if she raised her exports too high she would destroy the trade of the Allies. At Birmingham last Saturday he returned to the sub- ject, and when he came to define the manner in which the Allies might get more harm than good out of the indemnity he said something which has been variously reported. Some papers report him as having said, " If Germany were allowed to pay in goods hundreds of thousands of workmen would be thrown out of employment in every country which received the indemnity." But other papers insert the word " cheap " before the word " goods. On the whole the evidence is in favour of Mr. Lloyd George having said " cheap goods." No doubt he had in his mind the anti-dumping Bill which was promised .in Parliament, but there is still enough vagueness to puzzle everybody. It is very difficult to define cheap goods," and even if we could define them it would be silly to refuse to let abundance be created when all our troubles come from scarcity. You cannot with any consistency say that an indemnity must be paid but that you will refuse it when it comes in the only form in which it can come.
Sir Robert Home spoke on this subject at Sheffield on Monday, and said that though Germany must not be allowed to pay in finished goods she must pay us in raw materials. We do not see how Germany, one of whose own wants is notoriously raw materials, can pay the indemnity with what she has not got. Of course Sir Robert Home recognized that difficulty as well as we do, and he replied that Germany could get the raw materials from other countries in exchange for her finished goods. But is not that to bring about at one remove the very conditions against which Mr. Lloyd George warned us ? The finished goods which Mr. Lloyd George is afraid would defeat our manufacturers would have their origin not in Germany but in other countries stocked by Germany.
All the time behind and beyond the proposal for the regular annual payments by Germany there is the scheme, evidently much liked by the French, for a further payment of a 12i- per cent. tax on German exports. Exactly how this tax is to be paid is still something of a mystery, and it is one of those things which we hope will be made plain at the Conference. If the 12i per cent. is to be a tax levied on exported goods, most of it will be paid, however much we may disguise the operation, by the purchaser—that is to say, by ourselves. If the 121 per cent, is to be paid in some other way—if the amount of German exports for the year is merely to be the measure of the sum to be collected without the help of taxation on exports—there will be a regular addition to the annual German indemnity properly so-called, and it is difficult to see why the indemnity should be paid under two different names.
To our thinking it is so important that the party of moder- ation should be kept in office in Germany that we should not be at all sorry to see a permanent Commission appointed to assess the paying capacity of Germany year by year. In one way this may seem a retrograde proposal, because we have often pointed out the advantage .of fixing a definite sum for Germany to pay in order that she may have an incentive to free herself from financial fetters as soon as possible. A wholly wrong principle to lay down is " the harder you work the more you will have to pay." A Commission of assessors, it might be said, would perpetuate trouble by giving Germany a pretext for disputing the claim every year. The answer to that is that by the grotesque plan of taxing Germany for the next forty-two years we have already prepared the way for endless disputes, for it is impossible to say so far ahead- what Germany will be able to pay in any given year. A Commission might therefore be a real help without introducing any new complication.
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