The League of Nations and Reparations

No OFFICIAL COGNIZANCE.

THE League of Nations has no jurisdiction in the matter of Reparations. The States concerned have always arranged to stand aloof, and the members of the League who were not signatories at Versailles insist that the League should assume no political responsibilities in this respect. It is for this reason that the question of Reparations was omitted from the programme of the Brussels Financial Conference in 1920, and also from that of the Economic Conference of 1927. Officially, therefore, the League of Nations has nothing to do with the negotiations between Germany and the Allies.

INFORALAL CO-OPERATION.

The real question is : Cannot the States concerned themselves be brought to enlist the collaboration of the League's technical services ? To a certain degree, that is what happened when the Dawes Plan was drafted. The Committee entrusted with this work did not avail itself officially of the services of the League, but the results obtained in the financial recon- struction of Austria and Hungary certainly contributed largely to the success of the. Dawes Committee.

FINANCIAL RECONSTRUCTION.

The principles upon which the financial reconstruction of Germany was founded—namely, the immediate stabilization of the mark, an outside loan, the establishing of an independent issuing bank, the fixation of reparation charges, the arrange- ments necessary to ensure the balancing of the Budget— are all shared in common between the Dawes Plan and the financial adjustments accomplished previously by the League of Nations in Austria and Hungary. These principles were not new ; but until then they had been regarded with scepti- cism by the economists, who considered them to be purely theoretical. In 1924, thanks to the League of Nations, they were able to benefit by experience. It is only when these points are taken into consideration that the influence exercised by the work of the League on the Dawes Committee becomes apparent, and it is chiefly on the political side that the League of Nations may be said to have pointed the way to a settlement of the Reparations problem.

AMOUNT OF REPARATIONS.

The principal endeavour of the Dawes Committee was to bring together the views of the States concerned on the question of Reparations, which were crystallized in a struggle that lasted for several years. At the outset 'the Dawes Committee had to consider whether it was necessary to fix the amount of the Reparations before it was possible to think of an economic or financial restoration in Germany, or whether, on the other hand, this restoration should not precede the fixing of the amount of the debt.

THE CASE OF HUNGARY.

The same difficulty arose in the case of Hungary, and the same solution was resorted to, which was not to fix the sum total of the Reparations, but to decide that the payments be exacted over a period sufficiently long to inspire confidence. Moreover, in both cases, the amount comprised not only the Reparations but all the other charges resulting from the Treaty.

ORGANIZED CONTROL. -

In the second place, the experts had to decide whether Germany's ability to pay should be determined by her interior resources or by the surplus of her exports. The solution was the system propounded by the Transfers Committee, of which the elements are to be found in the financial restoration of Hungary.

Finally, the Committee had to contend on the one hand with those who held that a control of German revenue would give confidence to creditors, whilst on the other hand the Germans declared that a- control of this sort would retard their country's economic rehabilitation. Here, again, the solution accorded with experiments made in Austria • and in Hungary. Certain sources of revenue were selected of which the total was likely to exceed the amount required, and these were placed under organized control of a kind_which did not ,handicap the working of the country's economic life.

TECHNICAL. AND POLITICAL PROBLEMS.

It is therefore clear—upon reference to past experience— that the League of Nations, in the matter of Reparations settlements, has exercised a much greater influence than is generally believed. And everything points to a similar experience. in the future.

Of course, in the early stages of the negotiations the services , of the League of Nations could not be usefully employed. The matter essentially concerned questions of procedure and policy. But now the interested States are in agreement as to the principle of fixing a sum total for Reparations, they must come to an agreement about the figure. This is not a technical problem : it is a political one. Its solution will depend upon a number of considerations foreign to the Reparations question itself, and upon which the League has nothing to say.

REPARATIONS AND INTER _ALLIED DEBTS.

This applies equally to the second question : the relation between Reparations and Inter-Allied Debts. To what extent may these two problems be treated together ? Would it be better to deal with them separately ? Here are questions the answers to which depend largely upon the attitude of the United States Government, and of which the League of Nations has no knowledge.

When, however, this preliminary fence has been taken, the problem will become essentially technical. During the four years' working of the Dawes Plan questions of all kinds have arisen. The matter of transfers will be explored much more deeply than has been the case hitherto, as much from the standpoint of Germany's outside loans as from that of her exports.

NEW EXPERIMENTS.

Meantime, the League of Nations has, on its side, made new experiments. It has proceeded to effect the financial restoration of several States, in which the position was less involved than that of Austria and Hungary. New systems have been devised and experimented upon in Esthonia, in Greece, and in Bulgaria. The great Economic Conference of 1927 made a number of decisions, regarding commercial relations, which have begun to take effect in certain countries. It is hard to believe that, under the pretext of revising the Dawes Plan, the Powers could construct an economic policy other than that which they formulated at Geneva. The Committee of Experts which will study afresh the problem of Reparations must take note of the results of the Economic Conference, and of the policy formulated by the Financial Committee of the League of Nations.

COLLABORATION OF TECHNICAL SERVICES.

The League has become, in a few years, a centre which is unique in the world of documentation. It has created a body of clever technicians whose knowledge of international problems is second to none. It would be deplorable, to say the least, if their services were rejected at the very moment when they might be of the greatest use in the reconstruction of Europe.

We believe this to be the opinion of the States concerned. The task is briefly this : to ensure the collaboration of the technical service of the League of Nations, without,, however, making the League itself responsible in a matter in which it has no jurisdiction and should have none.

• WILLIAM MARTIN.