INTER-ALLIED DEBTS

Otago Daily Times, Issue 18752, 4 January 1923, Page 5

INTER-ALLIED DEBTS

THE REPARATIONS PROBLEM CONFERENCE IN PARIS. THE BRITISH SCHEME. OUTLINED BY MR BONAR LAW. -reas Association —By Telegraph—Copyright PARIS, January 2. At the Prime Ministers’ Conference Mr Bonar Law proposed a moratorium for four vears, then the payment of from £IOO 000,000 to £125,000,000 yearly in 5 per cent, bonds. This scheme is conditional on Germany balancing her Budget, stabilising the mark, accepting Allied financial supervision, and further occupation in the event of non-compliance.—A. and N.Z. Cable. Another message states M. Poincare, after detailing the French plan's, said that Herr Ouno 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 £109,000,000 yearly for the next four years, £125,000,000 yearly lor the next two years, and after 10 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 to pay in 5 per cent, bonds, redeemable at Germany's call.—A. and N.Z. Cable. (Received Jan. 3, at 5.5 p.m.) Mr Bonar Law continued; At the outset the bonds would be redeemable on easy terms, gradually rising to par at the end of 32 years. The bonds would be divided into two series, the first representing the fixed payments rising to £125,000,000 annually, and the second representing additional payments from the 11th year onwards. There would be no sinking fund, but redemption would be permitted on such liberal terms that if German credit were restored the saving on interest would cover the interest and sinking fund on German loans raised for redemption purposes. This allowed Germany to change a permanent into a terminable debt without expense. in order to give Germany a real chance there should be complete freedom of payments in foreign currencies during the initial period and the minimum deliveries in kind—supplies of coke to France, coal to Italy and possibly dyestuli's might be continued on a reduced scale. The plan was oSered on condition : (1) ,That Germany stabilises the mark and restores her Budget. (2) Accepts Allied financial supervision. f 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 is accepted and all sanctions dropped Britain in the matter of the interAli,ed debts proposes : (1) That the gold deposits held by Britain as security for the inter-Allied debts be applied toward a reduction of the debts. [2j The first series of German bonds ■which will be received by France in respect of the Belgian war debt and t/0,000,000 which will be received by Italy lor reparations are to be transtened to Britain. (3) The balance of the net war debts between the European Allies to be completely written off on condition that the debtors transfer their interests in 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 can be adjusted according to circumstances. (2) To substitute lor the present fixed debt which the Allies owe Britain almost total remission, while Germany’s excess payments shall go to pay America, Germany’s primary obligation to bo put into the form of 50 milliards of gold marks worth of 32-year bonds, bearing no interest for four years, 4 per cent, ior the next four years, and 5 per cent, thereafter; the first series of 50 milliards of gold marks, to be issued forthwith, repayable by or before 1954, the second series of 17.31 milliards of gold marks being deferred. Interest on the first series to 1933 will be repayable in 1965. Eighty per cent, of the first series of bonds will be distributed among the Powers on the Spa schedule. The Reparations Commission will keep the other 20 per cent, for expenses. Belgium will waive her priority rights. It is proposed that a Foreign Finance Council shall control Germany’s finance. Tne council will consist ol representatives oi Great Britain, France, Belgium, Italy, America, and one neutral. The German Finance Minister will, ex-officio, be chai. man. Interference with German democratic independence is inevitable, but t. 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 the Allied journalists. He emphasised the fact tlnu Great Britain had made her Budget position strong by impoverishing the taxpayer. 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 were financially strong she would willingly cancel the German and Allied debts while still paying the British debts. The present Britisn proposals were entirely independent of America’s proposal. If Britain received all her dues from the Allies and Germany these would not equal the 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 c. the re-establishment of the German credit It was possible to get a certain amount from Germany to-day, but not suffici' to satisfy the current demands and at the same time to enable Germany to re establish her credit. These two objects at the present time were incompatible.— A. and N.Z. Cable, SCHEME CAUSES SENSATION UNACCEPTABLE TO FRANCE. LONDON, January 2. Mr Bonar Law proposes, if the British plan is accepted, that the inter-A.Uicd debts shall be written off, except for a small percentage France and Italy are to pay Britain in German bonds. 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.—A. and N.Z. Cable. M. POINCARE’S PROPOSALS. DISTRUST OF GERMANY. PARIS, January 2. Prior to the opening of the conference, Cabinet reviewed M. Poincare’s proposals, which were unanimously approved. The conference met in the afternoon. M. Poincare declared that the belief that Germany would accept any new plan with the intention of executing it was a psychological error; therefore it was necessary to substitute a plan from which she would be unable to escape.—A. and N.Z, ■ Cable.

THE ROAD TO PEACE.

FRENCH PRESIDENT’S MESSAGE. PARIS, January 2. M. Millerand, in replying to a New Year address from the Diplomatic Corps, said that all tiho Allies in the late war were determined to adhere to the peacemaking spirit in which they terminated hostilities; but this could nob bear fruit unless their former enemies resolved loyally to execute the provisions of the peace treaties.—Reuter. BASIS OF DISCUSSIONS. M. POINCARE’S DEMAND. SUPPORTED BY BELGIUM. PARIS, January 3. (Received Jan. 3, at 8.15 p.m.) 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 Great Britain of bonds received in respect of the Belgian debt would give Great Britain the right of priority in the German payment which follows the payment under Belgium’s priority rights. Official opinion doubts Mr Bonar flaw’s authorship 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 Macdonald could produce a better plan.” One authority takes the serious view that the proposals indicate a desire to play the game of Germany. It is reported that M. Theunis and M. Jaspar support M. Poincare's demand that the French plan be the basis of the discussions, ana that M. Poincare insist that the continuation of the conference be conditional on the acceptance of his demand. —A. and N.Z. Cable. FRENCH PLAN OUTLINED. A LENGTHY STATEMENT. PARIS, January 2. (Received Jan. 3, at 8.4 t p.m.') The French statement covers 16 sheets of foolscap and generally follows. the Petit Parisien’s summary. It opens with a declaration of Franco’s wish to work in the 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 or fact pay capital or interest on her inter-Allied debts unless such payment is at least covered by German payments for the devastated, regions. The French Government considers that 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 a Committee of Guarantees shall carry out the programme, and that in the event of the Allies not ratifying same or Germany defaulting the sanctions should immediately operate. France is of the opinion that Germany will be capable during 1923 of making, in conjunction with leading merchants, a sufficient effort to honour her payments. France refuses to consider a moratorium beyond two years. 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 or kind. The Government is of the opinion that jt 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 the Customs barriers east of the occupied territory and the Ruhr. Prance estimates the yield from this source at 200,000,000 gold marks per year, and she suggests that a tax of 30 per cent, should be levied from the owners of mines, which would yield 400.000,000 gold marks per annum. As regards the sanctions, France suggests in the event of Germany not carrying out her programme there should be, first, military occupation of Essen, Bochum, and the Ruhr valley; and secondly, the establishment of a Customs barrier east of the occupied area, all this being without prejudice to France’s right to postpone the evacuation of the territory in the event of the Treaty of Versailles being infringed.—A. and N.Z. Cable.