DO WAR INDEMNITIES PAY?

Waikato Times, Volume 84, Issue 13210, 28 June 1915, Page 2

DO WAR INDEMNITIES PAY?

PAST EXPERIENCES

The war indemnity of £200,000,000 exacted from France at the conclusion of the Franco-Prussian war of 1870 was nearly twice as great as the whole cost of the war to Prussia and her allies; so that the Treaty of Frankfort appeared to five Germany a profit of a hundred million sterling. Only a small part of the indemnity was paid in actual coin; most of it went to Germany in the form of commeicial bills. Sixty-two millions were in English bills, and the task of the French Government was made much simpler by Germany's indebtedness to England, both on commercial account and in short war loans raised in London. All these five milliards of francs were not paid at once but the last instalment was handed over on Sep tember 5, 1873, six months before it was due. The great influx of money naturally sent up prices in Germany and so checked exports, with the result that coin began to flow back across the French frontiers. Mr O'Farrell—who has recently published a book on the subject of war indemnities—believes that most of the funds required to subscribe the indemnity loans were obtained by the sale abroad of securities held by Frenchmen; a second source was the dividends on securities still retained; and the third was the diversion of savings which would otherwise have gone to fresh investments abroad. In any case the assumption upon which the Germans seemed to have fixed the indemnity—"that it would inflict a mortal blow on French industry and commerce"—proved an entire miscalculation. In spite of the loss of two manufacturing provinces, "the foreign trade of France continued to increase in the years succeeding the war not merely per head of the population, but absolutely." Yet for other countries, and especially for Germany, after the boom of 1842, this period was one of great depression. France, of course, also suffered in many ways. She has still the heaviest national debt in Europe, and her taxation has increased by 150 per cent, since 1870. JJ What did the Germans do with the money? They formed their currency, abolishing the seven separate systems and setting up a gold standard. Large sums were spent on military works, and smaller sums on civil works, such as the Reichstag building —£1,200,000. Some 40 millions were entrusted to Bismarck. Immense loans were made through the banks, and led naturally to great speculation and to these many people attribute the financial crisis of 1873. Mr O'Farrell, however, holds that the indemnity had little to do with the crisis, less in fact, than the currency legislation. On the other hand, ha argues that the German peoples did derive a considerable benefit, because the Empire was able to strengthen its military defences at the cost of France," and by thus securing itself against a ■guerre de revanche" obtained 40 years of peace. But Mr O'Fariell is careful to say that a nation can only make a profit by the exaction of an indemnity "in very exceptional circumstances " The nation penalised must be (1) very wealthy, and (2) immeasurably weaker in military power, and the war must be very short. If a money indemnity is thus unlikely to prove good business, annexation of territory is'likely to prove positively expensive. "Under modern conditions, a nation that acquires territory inhabited by a civilised and virile propulation is in the position, not of a proprietor, enlarging his possessions, but of a trustee increasing his burdens and responsibilities."