EXTRA EDITION, REPARATIONS

Hawera & Normanby Star, Volume XLII, Issue XLII, 13 August 1923, Page 7

EXTRA EDITION, REPARATIONS

BRITAIN'S REPLY ANSWER TO FiIANCE AND BELGIUM. 2jY CABLE—PRESS ASSOCIATION—COPY&IGHT deceived August 13, 11.15 a.m. The omission was hardly compensated :Sor by a series of argumentative; passages, inquiries on points of detail, and -otters of further discussions holding out the prospect of an indefinitely spun out .controversy, whilst fundamental principles were only mentioned in order to declare that they do not admit of discussion. It may perhaps be said that the Belgian reply does not reject as as the French the pro--.•posal for fresh investigations into'Gerrmany's capacity to pay, but the con:sent of the Belgian Government for •.such an inquiry was made conditional upon obtaining for Belgium and France -pecuniary advantages of a far reaching i-kind at the expense of the Allies, not--ably the ascertainment of which, if ~=any, practical arrangements or cony ~i>inations for obtaining payment to the ifullest possible extent must be based. "The Government accordingly proposed f v steps to ascertain this important fact. 'Belgium replies that she will not con- ; sent unless, a- corresponding advantage ;is obtained for herself and France. The ' British Government could not willingly , •■«nter into any such transaction which, the Belgian Note does not indicate.; Any -precise claim of special and semi-official pronouncements by, and on behalf of 'the 'French and Belgian Ministers, j made it clear that the French wish tosl on the minimum payment of their ; • twenty-six milliard gold marks over above the amount required to meet -debts owing to Britain and the United States, and the Belgians on a minimum -payment of five milliard gold marks for -which, or for -part, they now ask fur- j "ther. priority. If the estimate, made on a five per cent, basis by M. ! "Bokahpwski (Rapporteur) in the French Budget, piitting the present value of annuities under the ' schedule of pay- ■ ■pients at sixty-five milliard gold marks, ~foe accepted as an approximately correct basis of calculation of the share of , France and Belgium, as. fixed by per- ' noentages under -the Spa agreement, it should not exceed thirty-four milliard ' marks for France and 5.2 milliard for T Belgium, even "if Germany were in a ' -position to pay the total figures in the • schedule,- but already under ' "the agreement entitling her to priority ' ■of payments amounting to a hundred ■ million sterling, has received approxir.mately severity-three millions sterling, S far exceedincr the receipts cf any other , 'Power. Though ifhis priority was ! f given when the sum expected from Gerrmany was immensely larger than anything now likely to "be received, it has not been reduced proportionately, and -therefore operated 'to -give Belgium an. -increasingly disproportionate share of 'the actual receipts to date. In addition she has been entirely relieved of debts to the Allies amoiintimr to nearly hundred millions ' sterling ! France, on the other hand, when counting on receiving thirty-four milliard gold marks from Germany, would have 4 b*lance thls amount against her debt 'tO. ll ? nJ- Mn , representing about twelve ;tnilhard gold marks and debts to the United States amounting to at least the equivalent of fifteen milliard gold marks which, together, leave France a balance •of_seven milliard gold marks • *Vhen, thereforej-:it i^-now suggested That she ought to receive- twenty-six milliards net her total debts, to Britain the United States being cancelled, it will be seen that the demand is for an amount between fh^ee and four -times larger than would, on balance, ■ Jail to her share under the existing -agreements. It is difficult to see on -what grounds the failure of Germany to meet obligations, whereunon Britain was _indemmfied equally with "the Allies, can l>e held to justify the claims by France ;to be placed, at the expense of her Allies, in a far more favourable position -than she would lave occupied under the rschedule of payments itself. Th c Belgian proposal to a grant of special priority in the restoration of devastated areas seems to rest on a somewhat artiificial distinction. It suggested that -not merely priority be conceded in re.gard to tie material damage over the , war period, but that one particular type, of material damage, namely, damage by land, should be selected to the -exclusion of other forms. No justification for such a .proposal can be found rin the armistice terms or the Peace Treaty, nor is it easy to conceive the •arguments which can be adduced in' of sunk ships and rotting • cargoes. These may not shock the eye like ruined villages, but they are ..-equally material damage. Nevertheless the Government does not favour ..priority to material damage, if only for "-the reason that certain other Allies would be gravely and adversely_affect--ed. In practice the suggested'priority would be equivalent to an alteration, France and Belgium, of the ..percentages division fixed by the Spa •agreement, for it is clear that if the .Belgian and French claims in resnect to """ the devastated regions were met in full, ;and if at the same time the total sums recoverable from Germany are diminish- " ed, the loss inevitably falls on those not tsnjoying the privileges of priority. The British Government cannot admit any aground whatever for revising the Spa percentages, and it cannot admit anyaccount the position of its' own country. The Government is involved in -heavy payments to meet unemployment, Man which it has been counselled'to spend •over £400,000,000 since "the armistice. ?They alone among the Allies are paying interest on debts incurred abroad during the war on a canital sum of r£1,000,00q,000. They alone~ have been deprived in the Allied interests of . rforeign securities estimated from £700,----'OOO,OOO to £800,000,000, which other"wise would substantially assist, in the "payment of the British debt to America. Notwithstanding these gigantic burdens Britain offered at the Paris xConference in January to forego her 3-ights to the reimbursement of her and expressed a readiness, by her debts to our Allies, to her share of Germany's . reparations as if a repayment by the Allies •of their debts due to Britain. It would loe inequitable and impossible to ask "the British taxpayer, already much more heavily burdened than the French Belgian, to make further sacrifices T>y modifying the Spa percentages for the benefit of France and Belgium, and "while the Belgian Government attach ix> their consent the investigation of -conditions which render it of little "value, the French Government rejects Ihe plan altogether, and appears •to 'justify its refusal by putting a series -of questions which might lead to an indefinitely protracted discussion at the "time when a prompt decision is of essential importance. The reply then points -out that the Reparations Commission's finding of 132 milliards of gold marks was simply an estimate of the amount ■of damages for which compensation was claimable under the treaty, without any regard to the question of Germany's capacity to pay them. The schedule of payments subsequently adopted, while *purporfcin S tc provide for payment in full, 'n fuel

granted substantial concessions representing, even in the opinion of the Rapporteur (French Budget), a virtual reduction of practically half the sum of 132 milliards of mairks. The fact that half of these were approved by the Allied.Prime Ministers in drafting the schedule of payments respectively answers the contention that the sum as originally fixed was not considered too high by_ anyone. At the same tmie it cannot he said, that the concessions were the outcome of anything ucsi-nb-able as an expert enquiry jjilo Gfcimany's capacity to pay. The "duty ot ultimately deciding that rests partly with the Reparations Commission and partly with the Allied Governments, who are in the position of trustees, since th& interests affected were not only their own, but also those of the Governments not represented on the 1 Commission. The Government venture Ito think that the Firench Government overlooked this when declaring that France never would consent to cancellation except of a proportion in which their war debts may be cancelled. The enquiry, therefore, 'by impartial experts to assist the Commission and the Allies clearly cannot be held to violate any principle expressed • r implied in the Treaty. The French, and Belgian claim that the Reparations ' Commission vras competent to hold j such an enquiry must be .seriously , qualified in the absence of the tTniied 'States representative. As originally 1 contemplated, France and Belgium are in the position to carry any proposition with the help of the casting, vote of the French chairman. It is notorious that the Commission has become in practice an instrument of French and Belgian policy alone. The British Government would willingly see upon the expert committee nominees not only ; of the Powers entitled to reparations,' but of the" ..United States and the Powers which took no part in the war, and it seems desirable that Germany he-self should be represented; but the Government \yill willingly consider any other .form preferred by France. While the British Government was entirely willing to agree that the finding of \'^> experts be binding, several of the Governments would be content if their functions are only advisory. Answering the French and Belgian complaints that Germany had repeatedly failed to act up to her undertakings, the British Government remain of the opinion that -the undertaking was freely entered into because it wo.s just as reasonable, and stands on a different footing from the engagement subsaribed to under the compulsion of the ultimatum and protested against at the moment of signature. i 'On the subject of occupation of the Ruhr, whilst the Government has indicated its readiness to ioin in advising the German Government to withdraw without delay the ordinances, and decrees which have organised or promoted passive resistance, they cannot subscribe to the thesis that passive re- ; sistance must cease unconditionally, because it- is contrary to the Versa^es Treaty. The German Government has consistently held that the occupation does not, on a proper interpretation of paragraph 18 of tb« annex 2 to Part 8 of the Treaty, fall within the category of economic and financial prohibitions and reprisals, and such other measures as the respective Governments may determine to be necessary in the circumstances. —Aus.-N.Z. Cable Assn. , The highest legal authorities in Britain axivise that Germany's contention is well founded. The British Government never concealed its view that Firanco-Belgian action in occupying the Ruhr was quite apart from expediency, and was without sanction, not bedn°authorised by the Treaty itself, but i*t would be willing that this or any other difference respecting the legal interpretation of the vital provisions of the Treaty be automatically submitted to The-Hague, or any other suitable arbitration court. -There is-Tro- inconsistency in the British Government refusing to acknowledge the legality ofrthe occupation of the Ruhr after joining in the presentation of the ultimatum and actually pairticipatine in the occupation of Dusseldorf. Ihiisberg and Ruhrort in 1920. The action then taken was never claimed to be in pursuance of the reparation clauses of the Treaty. The Allies jointly decided to threaten Germany with the occupation ot further territory,, just as they might have threatened the renewal of the war, for failure to ) fulfil'the Treaty obligations, some of which have no connection whatever with reparations. In the British Government's view, it cannot legitimately be claimed that the measures the Allies, under paragraph 18 of annex 2 of the Treaty, are authorised to take include militatry occupation of the territory. If the Government hitherto abstained from formally contesting .the legality 'of the Franco-Belgian occupation, it has done so simply in conformity with Mr Bonar Law's declaration at the Paris Conference in January—that the Government desired to avoid causing needless embarrassment to the Allies. This cannot be made a reproach to the Government which, not even now. would have taken up the question of legality had it not been challenged to do so. Even if Britain joined in the occupation, passive resistance would never have been started. It, is not clear how this would bring the problem of reparations appreciably nearer solution. The French Government has now declared that its object in entering the Ruhr was not -to prompt or complete Germany's resistance -and create the will, on her part, to pay, but the will to pay is useless without the power, and Germany's power to pay, in the opinion of His Majesty's Government, is Jikely to be rapidly diminished, and in the end extinguished altogether by the continuation of occupation with, its stranglehold on the most highly and delicately-organised German industries. 'The parallel which the French Government seak to draw with the German ' ac-tion in 1871 can hardly be sustained. No similar authority can be cited in the case of the Ruhr. . 'ilie real analogy in the present case is the occupation of the left, bank of the Rhine. Further, it may be pointed out that the recovery after the short campaign ot ] 1870-71. of an indemnity equal to four milliards gold marks is* hot really com- • parable with the enforcement of a thirty-three-fold claim against a country financially exhausted by four years of strenuous wairfare ai»i blockade. The ease with which the indemnity In 1871 was naid was largely the result of credit facilities which France was able to obtain.' Germany, on the other hand, suffered from complete inability to obtain foreign loans, largely because of the long period which had elapsed before the reparation liabilities were defined, and the . world-wide uncertainty regarding her ability to discharge them. It is yet fair to state, though His Majesty's Government by no means is satisfied with the performance, that Germany has in fact paid in respect" to reparations in the cost of the armies of occupation more than twice the amount exacted from France in 1871, as well" as considerable sums in connection with the clearing offices and miscellaneous treaty obligations. —Aus.N.Z. Cable Assn. The French Government is in error ;in attributing to His Majesty's Goyern- . ment the suggestion, simultaneously with the advice to be given to Germany to abandon passive resistance in ■ the Ruhr/that matters must be made ito return to normal conditions. The j suggestion made in the British note of - July 20 was that proposals should be > made for the restoration of the Ruhr b to conditions which would enable it to

become an area of fruitful production rather than on© of~'international strife. The Government was surprised and disappointed at the French and Belgian Governments finding difficulties Jn agreeing to so reasonable and advantageous a proceeding. Although it was vaguely intimated that France and Belgium may, when passive resistance ceased, consult as to how it may be possible to lighten the burden in the Ruhr, nothing tangible had been suggested which holds out any hope of the occupation being terminated, even when the avowed .object of breaking Germany's will to resist had been obtained. His Majesty's Government , believed in 'Showing" the fullest consideration to the position of France and Belgium as well as ensuring an effective guarantee of continued steadj payments when they suggested that occupation would' naturally terminate from the moment guarantees or pledges, less economically hurtful and more effec- . tively productive than the occupation of the Ruhr, should have been not merely devised and obtained, but seen to bo satisfactorily operating. Even this suggestion met with a definite refusal. The French and Belgian Governments emphatically declare that there will be no question of evacuation except in proportion as Germany makes payments —apparently imtil the total German reparation liability is discharged; and we reiterate that announcements to this effect can only be interperted as an intention to remain in occupation of the Ruhr, .at least for a period of thirty-six years, which, in view of the generally admitted improbability of the complete execution of the schedule being found practicable may be extended indefinitely, if not in perpetuity. Such a situation cannot but be viewed by the Government with the greatest concern. It vividly conjures up the danger of international relations being affected in a manner threatening to disturb international peace. The Government cannot believe the French and Belgian Governments will be able to reconcile the opinion of the world to the indefinite maintenance of so perilous a situation. Already the occupation of the Ruhr is having directly and indirectly a grave effect on the economic and industrial outlook, not only in Germany, whose capacity to pay: reparations has been rendered more and more precarious, but in the rest of Europe, if not of .the world, and not the least in this country. Explaining the attitude regarding the inter-Allied discussions for a financial settlement suggested in the Note* of July 20, the main principle of the scheme is that Britain is ready to limit her demands for repayments by the Allies and Germany together to get a sum approximating to 1-1.2 milliards of gold marks, this sum representing the" present .value of ..the recently funded British debt to,the United States. The concessions the Government may be able to offer in respect of inter-Allied debts must accordingly depend largely on the percentage of'this sum which they can. recover from Germany. The concessions can only be granted in substantive form -when -the general repara-. tion settlement has been agreed upon and is such that the Government can rfirnrd their share of the German paynr»its as an a.sset of real financial v'ufv. The first step, nviefc be to fix th<^ m"-;niiiPi sum the Allfp-s cnn reason? Wv liotyv to recover, to be followed or accompanied by arrangements whioh vill ens'i'- e the •effective re-establish-ment of Germany's finances and credit on a sound basis and guarantee punctual payments of the German debt by a.system of control, free from econnmiVallv unsound ■'impediments inher-<->r,f i n th«-"-military, occupation of the Puhr. The Government offered to discuss sympathetically the .Question of the. future, security of Belgium, and warmly welcomed the offer. France remarked: that the nbiect has nothimr to do with the Ruhr, and the dfs^ fission was postponed to an unnamed date. " ■ ... Having regard to the F^nch Govemmer>t'<; new declarer] indifference, no useful purpose can be served by' nursuing the matter. * " Summarising the arguments piit forward, the reply says: In view* of-His Majesty s forcible interference with Germany s economic life, it cannot assist in the necessary restoration. Not only will it prevent the realisation of any surplus for reparations, but by intensifying disorder of the German finance and currency have the gravest reactions on trade. The Government therefore regard as doomed to failure the methods pursued by France and Belgium to secure reparations. The Government consider that the impartial fixation of the German liability" at a figure not consistent with her practical power of making payment is a matter of great urgency. When steps are taken to ascertain the real value of the assets represented by the German reparations and secure its realisation without further depreciation . the Government is ready to deal as generously as circumstances will permit and in the light of their respective capacity to pay. With the debts due to Britain by the Allies the policy laid down by Mr. Bonar Law at the Paris Conference in January has not changed, and means that Britain is prepared to waive her interest of a very large amount, which the British taxpayer holds as due obligations of the Allied Powers. The reply concludes: The Government hope that the above explanations will convince the French and. Belgian Governments of the reasonableness of the British position and win their assent to its acceptance. The Government is reluctant to contemplate the possibility of separate action, which may be required in order to hasten the settlement which cannot much longer be delayed without the gravest consequences to the recovery of trade and to the peace of the world. —Aus.-N.Z. Cable Assri. .' . -■...•■.■ In a separate memorandum on interAllied debts, the Government says the 'ViUingness which they and their predecessors had shown to discuss the French Government's arrangements whereby the burden of the Ftrehch debt to Britain might bo mitigated, must not be interpreted as a waiver of their rights as creditors, which is governed solely by contracts under which the money advanced on securities which they hold. It is an inadmissable doctrine that a French Government Treasury Biil given the British Government for value received is a less binding obligation -than a similar bill Jciven to a. private investor. The payments c!ue on French Treasury bitts represent amounts which ihe* British Tmisary is in fact paying fo the holders of the securities issued on behalf of the Fiench Treasury, of which the French Treasury received the proceeds, while the Government have, l>y continuing to renew the bills lioyond the perio'.i of the contract, tacitly recognised that the time has not yet arrived for giving effect to the intention they should be redeemed out of French loans raised on the London market- when the French credit is sufficiently re-estab-lished. It must be clearly understood that the carrying out of>this intention remains an obligation of the French Government, which cannot be honourably repudiated, and that in the meantime the practice of adding interest to the capital cannot be indefinitely continued' and that the commencement of the payment of at any rate part of the interest should be made as soon as the sterling on the French exchange becomes reasonably stable. —Aus.-N.Z. Cable Assn.