DAWES REPORT.

Hawera Star, Volume XLVIII, 28 August 1924, Page 6

DAWES REPORT.

SUMMARY OF PROVISIONS

REPARATION PROPOSALS,

A concise summary of the provisions of the report of the Dawes Committee of Experts is furnished by the London Times:—

The committee are unanimously of opinion that Germany can balance her Budget in the very near future, possibly in the current year, and that she can in a comparatively’ short period pay reparations on a substantial scale. This opinion is subject to one condition —namely, that- Germany shall be given complete economic control of the Ruhr as well as of other portions of her territory. The Ruhr is the heart of industrial Germany, and therefore this condition is necessary on economic grounds. Reparations, the report shows, is a two-fold problem. A Budget surplus giving the German Government command over funds (i.e., marks) in their own country is first of all necessary. To enable this surplus to be converted into a foreign balance with which to pay reparations it must be equalled by a surplus of exports, visible arid invisible, over imports, visible and invisible.

The statement of principles incorporated in the report renders flat rejection impossible for any nation which claims to be reasonable and actuated by a lively regard for a real peaee in Europe. These principles are axiomatic to economists and others who understand the questions involved. A balance Budget and a stable currency, which are intei\diependen.t things, are declared to be the first essential, and it is proposed to establish a new Bank of Issue, with the exclusive right to issue notes for a period of not less than. 50 years. The experts explain that there is a. vital difference between an internal and an external payment that therefore something more than a Budget surplus is necessary to enable Germany to make payments to her foreign creditors, and that is an exportable surplus. This distinction forms the outstanding feature of the report, for the scheme of payments is drafted upon it. PARTIAL MORATORIUM.

No complete moratorium for Germany is proposed. In the first year payments would be limited to £50,000,000, of which £40,000,000 would be provided by a foreign loan and £lO,- | 000,000 in ilie form of interest on railway bonds. The security, for a foreign loan is described in rather vague terms. We may point out, however, that an absolute priority over reparation and all other payments is held, both here and in the United States, 1o be necessary to the raising of a, foreign loan. It is advisable to emphasise the fact that the scheme wholly depends upon the raising of this foreign loan —possibly of nir otahe shrdlu hvdl sibly of more, than one. Unless, therefore, bankers and investors can be satisfied that the security offered is a thoroughly good one, and, further, that the plan as adopted will be really workable, it must fall to the ground. In the second year the payments rise to £61,000,000, to be contributed, partly by railway bond interest and partly by the sale of railway preference shares. In the third year the payment falls back to £60,000,000, because Germany’s internal expenditure is expect- | ed to increase in that year; but in the I fourth year the payments rise to £87,500,000. In the fifth year reparation payments will be payable in full. A standard total of £125,000,000 will be due annually from that time onwards, of which one-half will be contributed by the Budget, and the other half by interest on the railway bonds, by interest on industrial debentures, and by a transport tax. This so-called standard payment will be-subject to revision upwards according to the operation of a rather complicated index number. The standard payment seems a high figure, and when we consider that the total exportable surplus of this country is about £125,000,000, it would seem that Germany need not be unduly fearful of the 'contingent excess payment. In any case, if prosperity is returned to her in such measure as to enable her to make the extra payment, she would be an ungrateful debtor if she did not cheerfully pay it.