CONFERENCE OF PREMIERS.

Hawera & Normanby Star, Volume XLII, Issue XLII, 4 January 1923, Page 5

CONFERENCE OF PREMIERS.

THE BRITISH SCHEME.

OBJECTION BY FRANCE

VS CABLB—PEESS ASSOCIATION—COPYEIGHT

PARIS, Jan. 2. Prior to the opening of the conference of Premiers, Cabinet reviewed M. Poincare's proposals, which were unanimously approved. The conference met in the afternoon.

M. Poincare declared his belief that Germany would never accept any new plan with the intention to execute it. It was a psychological error, and therefore it was necessary to substitute a plan from which she would be unable to escape. After-detailing the French plan, he said Herr Cuno (Premier of Germany) requested the conference to hear Herr Bergmann enunciate the new German proposals. > M. Poincare objected, suggesting that Berlin's scheme should be submitted in writing. The Allies unanimously agreed. Mr Bonar Law then "submitted the following British scheme covering reparations and inter-Allied debts:

He proposed that Germany should pay nothing for four years, and then £100,000,000 yearly for the next four years, £125,000,000 yearly for the next two years, and after" ten years £166,000,000, or such smaller sum, but not less than £125,000,000 per annum, as an impartial tribunal may fix.

The Germans should pay in five per cent, bonds redeemable at Germany's call. At the outset the bonds would be redeemable on easy terms, gradually rising to par at the end of thirty-two years. The bonds to be divided into two series, the first representing fixed payments rising to £125,000,000 annually, and the second representing additional payments from the eleventh year onwards.

There would be no sinking fund, but redemption would be permitted on such liberal terms that if German credit was restored the saving on interest will -cover the interest and sinking fund on German loans rjiised for redemption purposes. This allows Germany to change permanent into terminable'debt without expense. In order to give Germany a real chance there should' be complete freedom from payments in foreign currencies during the initial period and minimum deliveries in kind. Supplies of coke to France, coal to Italy, and possibly dyestuffs, may be continued on a reduced scale. The plan is offered on condition:—

(1) That Germany stabilises the mark and restores her Budget. (2) Accepts Allied financial supervision.

(3) Submits, on the failure of the first condition, to the seizure of revenues and, assets and to further military occupation of German territories, on the understanding that the reparations plan was accepted and all sanctions dropped.

Britain, in the matter of inter-Allied debts, proposes:

(1) That gold deposits held by Bri->-Hn as security for inter-Allied debts be applied towards the reduction of the debts.

(2) The first series of German bonds which will De received by France in respect of the Belgian war debt, and £75,000,000 which will be received by Italy for reparations are to be transferred to Britain.

(3) The balance of the nett war debts between the European Allies to be completely written off on condition that the debtors transfer their interests in the second series of bonds to a pool for distribution to those Powers indebted to America, in proportion to their American debts.

The governing principles of the plan are:

(1) To fix Germany's minimum liability and to fix additional liability if Germany prospers, which shall not be too burdensome, and wliich can be adjusted to circumstances.

(2) To substitute for the present fixed debt which the Allies owe Britain almost total remission, while Germany's excess payments go to pay America, Germany's primary obligation to be put into the form of fifty milliards of gold marks worth thirty-two year bonds, bearing no interest for four years, four per cent, for the next four, and five per cent, thereafter.

The first series of fifty milliard gold marks should be issued forthwith, repayable by or before j.954, the second series of 17.31 milliard of gold marks being deferred. Interest on the first series to 1933 will be repayable in 1965. Eighty per cent, of the first aeries of bonds will be distributed among the Powers on the Spa schedule, and the Reparations Commission will "keep the other twenty per cent, for expenses. Belgium will waive her priority rights.

It is proposed that a Foreign Finance Council shall control Germany's finance. The council will consist of representatives of Britain, France, Belgium, America, and one neutral. The German Finance Minister will ex-officio be chairman. Interference with German democratic independence is inevitable, but the council will have wide powers, which shall expire at the end of 1928.

Mr Bonar Law, at the conclusion of the conference, made a statement to Allied journalists. He emphasised the fact that Britain made the Budget position Strong by impoverishing the taxpayer, and the result was unemployment, which in Britain was as great a scourge as in other countries, and might cause a serious risk unless trade developed. If Britain was financially strong she would willingly have cancelled the German and Allied debts, while still paying, the British debts.

He said the British proposals were entirely independent of the proposals of America. If Britain received all her ■ dues from the Allies and Germany these would not equal British indebtedness to America. At the moment it was impossible for Germany to make adequate payments, because the amount of money necessary for this purpose would be so great as to destroy the possibility of the re-establishment of German credit. It was possible to get a certain amount from Germany to-day, but not sufficient to satisfy the current, demands, and at the same time enable ' Germany to re-establish her credit. These two objects were at present incompatible.

PARIS, Jan. 3

The British scheme caused- a sensation at the conference. . It is understood that the French regard it as totally unacceptable, on the ground that it jettisons the Versailles Treaty.

It is declared in official circles that France cannot accept less than £1,300,000,000, which is still required for the devastated regions. It is contended that the transfer to Britain of bonds received in respect to the Belgian debt would give Britain the right of priority on the German payment,

which follows payment under ' Belgium's priority rights. Official opinion doubts Mr Bonar Law's authoriship, declaring that the proposals distinctly upset the Versailles Treaty by suppressing the Reparations Commission. One high authority describes the proposals as a formidable disillusionment. Another says: "Even Mr Ramsay Mac Donald could produce a better plan!" One serious view is that the proposals indicate a desire to play the game of Germany. It is reported that M.M. Theunis and Jaspar support M. Poincare's demand that the French plan be the basis of discussions, and that M. Poincare insists that the continuation of the conference be conditional on acceptance of ' his demand. The French statement covers sixteen 1 foolscap pages and generally follows the Petit Parisien's summary. It opens with a declaration of France's wish to work in closest accord with the Allies, but insists that Germany has given proof again and again of her refusal to honour her obligations. The French Government can neither in equity nor fact pay the capital or interest of her inter-Allied debts unless at least covered by German payments for the devastated regions. The French Government considers foreign loans to Germany should be facilitated by the Allies in every possible way. Such loans will very shortly be possible,, in view of the fact 'that Germany possesses real securities. Steps must be taken to' prevent the escape of German capital abroad and the hoarding of foreign securities by Germany. France demands that the committee on guarantees shall carry out its programme and that in the event of the Allies not ratifying same or Germany defaulting, sanctions should immediately operate. France is of opinion that Germany will be capable during 1923 of making, in conjunction with leading merchants, sufficient effort to honour her payments. France refuses to consider a moratorium beyond two years, and this would only be granted if Germany made an effort to issue loans, balance her Budget and redeem her debt. Occupation must cover the periods of the moratorium and the subsequent payments in cash and kind. The Government is of opinion that it is desirable to return to the economic procedure laid down at the London conference in March, 1921, but in view of the objections made it would be prepared to raise the customs dues on the eastern frontiers, and thus avoid customs barriers east of the occupied territory and ' the Ruhr. France estimated the yield from this source at two hundred million gold marks a year. She also suggests that a tax of 30 per cent, should be j levied from the owners of mines, which ! would yield four hundred million gold marks per annum. As regards sanctions France suggests that in the event of Germany not carrying out the programme there should first be military occupation of Essen, Bochum and the Ruhr Valley, and, secondly, the establishment of V customs barrier east of the occupied area, all of this without prejudice to France's right to postpone evacuation of the territory in the event of the Treaty of Versailles being infringed.