The Auckland Star: WITH WHICH ARE INCORPORATED The Evening News, Morning News and The Echo. THURSDAY, JULY 17, 1924. THE DAWES PLAN.

Auckland Star, Volume LV, Issue 168, 17 July 1924, Page 4

The Auckland Star: WITH WHICH ARE INCORPORATED The Evening News, Morning News and The Echo.

THURSDAY, JULY 17, 1924. THE DAWES PLAN.

For the cause that lacks assistance, For the wrong that needs resistance, ' For the future in the distance, And ike good thmt ice can do.

The meeting of the inter-Allied Conference in London to-day marks a further stage on the long-sustained effort of the Powers to achieve their double purpose of restoring the economic and financial equilibrium of Europe and com- j pelling Germany to pay adequate reparation for the injuries inflicted by the war. The immediate reason for this conference . is tho necessity for considering the ' scheme advanced by two committees of experts, one headed by General Dawes, a distinguished American financier, the ] other by Mr. Mclvenna, ex-Chancellor . of the Exchequer. The views of the ! two committees are really combined in ! . the Dawes plan, which both in its funda--1 mental assumptions and its detailed ' mechanism represents a distinct advance on any other proposal of the kind yet put forward. The Da\ves Committee, after very careful investigation, came to the conclusion that Germany can pay reparation on a very substantial scale, and the report suggests means by which this desirable result can be attained. A bank is to be established by Germany to . handle the reparations account, and its notes are to be backed by gold, to be supplied through a foreign loan of £40,000,000. The German railways aro to be consolidated into a company to operate on behalf of Germany and her creditors. The railways are to pay, on - account of reparations, £550,000,000, represented by 6 per cent mortgage bonds; and German industries are to pay £250,000,000 on the same basis; The total amount payable as reparations is not definitely fixed, but a sliding scale ( is proposed, starting at £50,000,000 per j ' annum, rising in &~. c years to I ' £125,000,000, and then capable of readjustment for the future. These proposals constitute the essential features of the Dawes plan; but ' there are in the report several highly significant comments and rccommenda- ' tions which bring out its meaning even more clearly. On the one hand, the Germans are warned that the Dawes Committee experts "repudiate tho view that Germany's whole domestic demands constitute a first-charge on resources, ' and that what is available for ! her treaty obligations is merely . surplus revenue that she may be willing to release." This rather caustic • observation indicates clearly the atti- ' tude taken up by General Dawes and his colleagues toward the whole prob- i lem. Germany must pay reparation, and she must pay not at her own discre- j tion, but in accordance with the judgment of the Allies aud their represen- j tatives. This in itself is sufficient to explain the bitter feeling aroused by the Dawes report in certain circles in Germany, where a good many people seem I ' to have anticipated that American influ- . ence was to be thrown into the scale ' to free the Germans from their obliga- , < tions entirely. On the contrary, the i Dawes Committee demands that Germany shall make every possible effort to meet tho just claims upon her, and especially that she shall "assess and collect taxes as high as those in any creditor country," as tangible proof of her desire to fulfil her promises. j But perhaps the most valuable feature ; of the Dawes report is its insistence that in the long run everything must depend on the re-establishment of order in Germany's internal finance. It is laid down as a fixed principle that "in making ' - reparation payments no device of internal or external borrowing or foreign investments in Germany can in the long run take the place of a favourable balance in international settlements." To , secure this end Germany's internal currency arrangements must be regulated on sound and rational lines. There must be no more over-issues of inconvertible paper; indeed, one of the most important minor details of the Dawes plan is the appointment of a body of experts to superintend the transfer of German pay- [ ments to tho creditor countries on the : ,' understanding that transfers shall con- | tinue so long as the currency remains • stable, but shall cease as soon as deprc- ; ciation and inflation manifest them- j ' selves. All this, of course, implies that '. to enable Germany to make substantial payments over a long period she must be given control of all her internal resources and encouraged to make the best of them; and this suggestion at once con- I fronts tho financial expert with the most - difficult of all the material facts by which the problem is complicated— France's occupation of the Kuhr. Tlie order of reference for the Dawes Committee was limited carefully to matters of finance, and did not include political . questions. But the only possible inference that can be drawn from the report is that it assumes Germany's control of all her great industries; and it remains to be seen how far France will be able to reconcile approval of the Dawes plan with her sense of dignity and national pride if it is interpreted to mean with- ; drawal from the Ruhr. I i