GERMANY AND REPARATION. T HE German Note accepting the proposals of
the Reparation Commission has cleared the air and changed the whole aspect of European politics. While public attention has been fixed on the Prime Minister's inconclusive conversations with Bolsheviks at Genoa, the fundamental question of the day, which is faced in this Note; has been overlooked. We may be forgiven, then, for pointing out that, though reparations were necessarily excluded from the Genoa programme, the matter has been fully considered by the Allied body set up to deal with it under the Treaty of Versailles. The Reparation .Commission, according to the Treaty, " shall in general have wide latitude as to its control and handling of the whole reparation problem as dealt with in this part of the present Treaty and shall have authority to interpret its provisions." The Commission is bound to see that Germany treats reparations as a prior charge upon her revenues, and that "in general the German scheme of taxation is -fully as heavy proportionately as that of any of the Powers represented on the Commission." Now, in March the Commission, in pursuance of its duty, made a series of .proposals that might help Germany to fulfil her obligations. First of all, the Commission offered a very substantial abatement of the sums due this year. Instead of paying £100,000,000 in gold, with the proceeds of an export duty of 26 per cent., Germany was only to pay £30,000,000 in gold and £72,500,000 in commodities. In return for this concession, generous as well as prudent, Germany was required to submit to certain conditions which it was to her own interest to accept. The Com- mission asked her to reform her finances, to reduce her lavish expenditure, to raise new taxes producing £40,000,000 a year, to raise loans at home and abroad, and to allow the agents of the Commission to see that these measures were being honestly carried out. There was nothing unfair or extravagant in these proposals, to which Germany was asked to make a definite reply by May 31st.
If Germany possessed a really able and courageous statesman to guide her through her troubles he would have acknowledged the Commission's Note quietly and then proceeded to argue the different points. As it was the Chancellor, Dr. Wirth, resorted to the familiar and discredited tactics of insecure politicians. He took an early opportunity of denouncing the Reparation Commission and all its works, and told the Reichstag that Germany could never accept such monstrous conditions. She was overtaxed already, she could never submit to foreign control of her finances, and so on. All this bluster doubtless pleased the unthinking deputies and their electors and gained some temporary popularity for Dr. Wirth. But it also had a rasping effect on French nerves and stirred up -afresh all the suspicions of German good faith which, not unnaturally, haunt every Frenchman. The French Press began to say very plainly that Germany was once more trying to evade her liabilities, though they were to be greatly reduced, and that she was counting on, the break-up of the Entente at Genoa. It was in the midst of this storm of indignation that M. Poincare, anxious to prove that the Cabinet was in deadly earnest about reparations, declared that France was prepared to act alone, if necessary, in occupying the Ruhr Valley as a further guarantee against default on the part of Germany. Defiant language in Berlin had thus provoked new threats in Paris, and those who interpret political speeches literally without reference to the circumstances in which they were made necessarilydrew most alarming deductions. The Entente was in danger, we were told. If French troops occupied the Ruhr Valley, the British Government would signalize their disapproval in the plainest terms. Such rumours, coupled with the differences that developed between the Allies at Genoa in regard to the treatment of the Russian problem, were multiplied and magnified. Credulous Germans must at times have thought, from the tone of some English newspapers, that their dearest wish was being gratified by an open breach between France and Great Britain. But the German Government knew better, especially after they had been foolish enough to make a hole-and-corner treaty with the Bolsheviks at. Rapallo and had thus alienated afresh many of their foreign sympathizers. When the Genoa Conference had endedwithout dealing with the reparation question, Dr. Wirth must have seen that it was useless any longer to pretend that he would defy the Reparation Commission. Vowing he would ne'er consent to its terms, he has _in fact consented.
The German Note published in Paris on Tuesday proved to be_an acceptance of the proposals which the Reparation Commission made, and which Dr. Wirth loudly rejected, In March. .Germany declared that she was reducing her exp.enditure, especially on subsidies to public services like the railways and the posts and to the food supply, and that she was resolved to keep her floating debt At _or below the figure at which it stood in March. Further- more, Germany accepted the principle of supervision, provided that the agents of the Reparation Commission who kept an eye on German finances did not challenge German sovereignty or interfere with the working of the administration. The one condition made in return was that Germany should receive " reasonable assistance " in the way of a foreign loan. It has long been obvious that Germany must raise a loan abroad if she is to make the substantial payments on account of which France, the greatest sufferer, stands in, urgent need. The best- methods of raising such a loan are now being examined by a small international commission of bankers, including Mr. Pierpont Morgan, of New York, who are at work in Paris. There can be little doubt that, if the political obstacles were removed, many foreign and especially American capitalists would take up a German loan, for Germany is hard at work and relatively prosperous though her Government is embarrassed. Germany's acceptance of the terms laid down by the Reparation Commission is important, because it seems to remove the political difficulties that stand in the way of the loan. We may reasonably assume that the Commission will be satisfied with the Note, because it was actually drawn up in Paris by the German Finance Minister, Dr. Hermes, after long negotiations with the Allied experts. The Commission may therefore be expected to lend its influence in favour of a German loan in the money markets. France, it will be remem- bered, paid off the heavy German indemnity of 1871 by raising a loan to which foreign investors readily con- tributed very large sums, and Germany may well do the same.
The whole international situation would be eased if France could receive a substantial payment on account of reparations from Germany. The logical Frenchman, who denounces the Germans as hypocritical and fraudulent bankrupts deserving of no sympathy or mercy, will change his tune if and when they make a really serious effort to meet their obligations. We should be in no way surprised if, after receiving a considerable sum in hard cash, the French were to come round to the British view of the reparations question, namely, that we are likely to get most out of Germany if the indemnities are fixed once for all and spread over a shorter period. Whether this will happen depends not so much upon the Allies as upon the Germans themselves. If the leading men of the German Republic could only realize that the late Monarchy excited universal dislike by its love of trickery and deceit even more than by its sabre-rattling, they would surely strive to make honesty and good faith the guiding prin- ciples of their policy. Germany has everything to gain and nothing to lose by slain. dealing. Petty evasions of the letter and spirit of the Peace Treaty will profit her not at all. She has now a fresh opportunity of regaining the confidence of the outer world, and it is earnestly to be hoped that she will avail herself of it. A Germany that is obviously reforming her finances and pursuing a sober course will have her reward, and the Allies will be enabled to •shake off the doubts and suspicions that are at the root of our economic troubles.
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