(c) crown copyright
Catalogue Reference:CAB/24/162
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(This Document is the Property,, of His B r i t a n n i c M a j e s t y ^ , Government).
a
S 3 C RET.
Copy No.
C P . 410; (23) .
C A B I If,3
Reparations.
'
I c i r c u l a t e for the information of my
colleagues a note on t h e f i n a n c i a l a s p e c t s of the
French and, B e l g i a n r e p l i e s to the B r i t i s h ITote of
11th August l a s t .
TREASURY ,C HAMB5RS.j,.S;W,,
PART, I
FINANCIAL
PROPOSALS.OF
FRENCH
NOTE, O F
The o b j e c t i o n s t 6 t h e f i n a n c i a l p r o p o s a l s i n t h e
French Note may be summarised under t h r e e h e a d s .
A.
F r a n o e ' s demand f o r 26 m i l l i a r d s
of h e r d e b t s .
B.
Her a t t i t u d e towards an I m p a r t i a l
e n q u i r y i n t o Germany s c a p a c i t y t o
pay and towards a moratorium,
C.
Her a t t i t u d e towards i n t e r - a l l i e d d e b t s .
free
1
The Demand f o r 26 m i l l i a r d gold marks free of
i
'
deT/fc7*""'
Mr, Bonar Law i n January l a s t put Germany's
c a p a c i t y t o pay a t a minimum of 40. and a
maximum of 5 0 m i l l i a r d . , gold marks, but h i s p l a n
provided t h a t 8 m i l l i a r d s should be set a s i d e for
c o s t s of occupations c l e a r i n g o f f i c e b a l a n c e s , e t c . ,
l e a v i n g t h e e s t i m a t e of r e p a r a t i o n payments proper
as - minimum - 32 m i l l i a r d s ; maximum - 42 m i l l i a r d s .
To r e l y on a s much as 42 m i l l i a r d s ; t o d a y , would be
m a n i f e s t l y unsafe i n view of t h e d i s o r g a n i s a t i o n
and l o s s caused by t h e prolonged occupation of the
Ruhr*
%
I f , howeverj Germany could pay 42 m i l l i a r d
t h i s would be d i v i d e d under t h e p r e s e n t French p r o ­
p o s a l s 26 m i l l i a r d s t o France and IS t o the o t h e r
A l l i e s i though under t h e Spa agreement France I s en­
t l t i e d t c 52?: only (i-e..81'8 m i l l i a r d a )
Further
Franee d e c l a r e s h e r s e l f unable t o pay any p a r t of
her
h e r debts u n l e s s more money I s paid to h e r by Germany.
France*s defence f o r h e r claim i s based on t h e f a c t
that
i n A p r i l , 1021, the Reparation Commission valued t h e
German l i a b i l i t y for damages under the Peace T r e a t y a t
1
132 m i l l i a r d s .
But t h i s was a v a l u a t i o n of, damages
and nothing more; the A l l i e d demand on Germany (under
the "Schedule of Payments') - presented within a week of
the p u b l i c a t i o n of t h e v a l u a t i o n - was f o r the payment
of c e r t a i n a n n u i t i e s , the p r e s e n t value of which on a
very o p t i m i s t i c e s t i m a t e made by the Rapporteur of
the Finance Commission of the Chamber would not exceed
65 m i l l i a r d s .
1
For t h i s d e c i s i o n so l i m i t i n g the
A l l i e d claims on Germany, the French Prime M i n i s t e r ,
M. Briand, shared f u l l r e s o o n s i b i l i t y with the o t h e r
A l l i e d Prime M i n i s t e r s .
If the A l l i e s had ever had an e f f e c t i v e
and r e a l i s a b l e claim on Germany f o r 132 m i l l i a r d s
(£6,600 m i l i o n s ) France a f t e r paying her debts would
have got 44 m i l l i a r d s a n d Great B r i t a i n 38 m i l l i a r d s ,
of debt.
free
France now claims 26 out of 44, Great B r i t a i n
0 out of 38.
Under the Schedule of Payments, France
would have got 14 m i l l i a r d s f r e e of debt and Great
B r i t a i n 24 m i l l i a r d s f r e e of d e b t .
Great B r i t a i n *
claims 0 out of 24, France claims t h a t her 14 be
increased to^ 2 6 . *
Yet
"*
All these c a l c u l a t i o n s are in r e a l i t y much too favour­
able t o F r a n c e .
They are based on what i s c l e a r l y a
g r o s s l y excessive e s t i m a t e of the gums due to France by
c e r t a i n European c o u n t r i e s while from the debts due t o
Great B r i t a i n the Russian d e b t , 13.7 m i l l i a r d s , i s o m i t t e d .
Yet the French Note a s s e r t s t h a t England
renounces n o t h i n g of the Schedule of Payments and
makes no s a c r i f i c e i n r e t u r n for t h o s e which she de­
mands from h e r A l l i e s .
4.
An a l t e r n a t i v e defence to the 86 m i l l i a r d claim J,s
t h a t i t r e p r e s e n t s the expense t o Prance of r e s t o r i n g
her d e v a s t a t e d r e g i o n s .
This i s a s a c r o s a n c t olaim
and l i k e to no o t h e r ("notre creance r e p a r a t i o n s , qui
e s t saeree e t ne .resemble a aucune a u t r e c r e a n c e " ) .
I t must t h e r e f o r e , s a y t h e French,have complete p r i o r i t y
over ( l ) s i m i l a r claims by o t h e r n a t i o n s , (2) over
claims i n r e s p e c t of war pensions and (3) over i n t e r
a l l i e d d e b t s , which l a t t e r belong t o the i n f e r i o r
c a t e g o r y of " g e n e r a l c o s t s of the war"':.
This I s not a p o s i t i o n which Great B r i t a i n .
could p o s s i b l y a c c e p t .
I t may be observed t h a t
Belgium has now s t a t e d t h a t she has no i n t e n t i o n of
suggesting a p r i o r i t y f o r devastated r e g i o n s over
g r i t i s h shipping l o s s e s .
3.
Franco' s rfctltaCe to\.ard.s a n ^ l m p a r t i a l I n q u i r y
IM^^g^l^g^!Ji-9.SEg:P.
5.
feo,jay,;
ami '..towaifls a Moratorium.
The French Government r e j e c t s the concession which
the B r i t i s h Government had made to meet French views when
they agreed t h a t the "body conducting the expert i n q u i r y
should r e p o r t to the ReparationCommission.
The proposal
for an i m p a r t i a l Inquiry i s refused as being e i t h e r
u s e l e s s or harmful.
I t i s urged'
a t . many p o i n t s t h a t
the Reparation Commission must be l e f t f r e e to deal with
t h e problem by t h e a p p l i c a t i o n of A r t i c l e 234.­
6.
I t i s t r u e t h a t A r t i c l e 234 of the Treaty empowers
the Commission t o grant d e l a y s and modify o b l i g a t i o n s
which are e x c e s s i v e , though the a c t u a l t o t a l of t h e debt
cannot be reduced without the unanimous consent of the
Government r e p r e s e n t e d .
Treaty- have not been u s e d .
But. t h e powers given by t h e
Indeed the p r e s e n t phase of
the d i s p u t e s between .lagland.and;France, over r e p a r a t i o n s
has i t s o r i g i n in the r e f u s a l of the m a j o r i t y of the
Commission t o deal s e r i o u s l y with an a p p l i c a t i o n by
Germany for a moratorium in J u l y 1922.
I t cannot be
pretended t h a t , the conduct of the majority in the
c r i t i c a l months, August 1922 t o January 1923- was not
d i c t a t e d by p o l i t i c a l c o n s i d e r a t i o n s .
7.
^
Even i f t h i s experience were f o r g o t t e n the
proposal to r e l y on A r t i c l e 234 cannot be taken s e r i o u s l y .
The French Government in the annexe to t h e i r
Note admit t h a t the p r e s e n t c a p a c i t y cf payment by
Germany i s e q u i v a l e n t to z e r o .
That being the case a
moratorium should be granted pending a r e s t o r a t i o n of
her c a p a c i t y .
Such was the i n t e n t i o n of A r t i c l e 234. But
the
the French Government have e n t i r e l y d i f f e r e n t views.
They
e x p r e s s l y s t a t e t h a t "During the p e r i o d r e c u i r e d for
r a - e s t a b l i s h m e n t of her f i n a n c e s Germany must
effect.such
d e l i v e r i e s in t i n d and in c a p i t a l as the Commission may
consider p o s s i b l e , t h e A l l i e s meanwhile r e t a i n i n g the
s e c u r i t i e s which they h o l d " .
Germany i s t o be r e q u i r e d
to r e s t o r e her f i n a n c e s while the r e s o u r c e s of the Ruhr ­
are Closed to her, while the customs, coal t a x , l e v y on
exports e t c . a r e c o l l e c t e d for r e p a r a t i o n s , and while the
r a i l w a y s of the Rhineland and the Ruhr are worked by the
French and Belgian a u t h o r i t i e s at the cost of the Reich.
8.
Moreover the Reparation Commission have no
power to reduce Germany's payment except with t h e a s s e n t
of a l l t h e A l l i e d Governments.
Cv
France j s a t t i t r a d e towards I n t e r - A l l i e d Debts.
0.
The c r i t i c a l passage of the French Mote i s the
following
:­
"France has never r e p u d i a t e d her debts and w i l l
never r e p u d i a t e them.
But she i s convinced t h a t
no B r i t i s h Government w i l l ever apply to an Ally''
t h e p r e s s u r e which the B r i t i s h Cabinet does not
consider i t p o s s i b l e to apply to-day to the former
enemy of both c o u n t r i e s .
T7s can, t h e r e f o r e ,
only
' r e p e a t t h a t we s h a l l not be in a p o s i t i o n to
''
'
'
'
'
'
'.
'
:
'
''
'
'
:
'
:
.
, '
r e - i m b u r s e :6ur debt t o Great B r i t a i n or even to
pay her i n t e r e c t on t h a t aebt, u n t i l the German
payments have enabled us to complete the r e p a r a t i o n
of the damages caused by i e v a s i o n and b a t t l e on our
soil".
10.
The Treasury B i l l s in the hands of the B r i t i s h
Government are d i r e c t marketable promises to pay,
signed
:
signed."by the Government of France and d e l i v e r e d for
due c o n s i d e r a t i o n , the f u l f i l m e n t
of which was not
subordinated and Cannot now be subordinated to extraneous
a n d - i r r e l e v a n t q u e s t i o n s as to German payments-
An
attempt to impose-such.conditions would not -be c o n s i s t e n t
with the statement t h a t France has not
r e p u d i a t e d and
w i l l not r e p u d i a t e her debts..
11.
On the f-uestion whether France i s f i n a n c i a l l y
capable of paying e i t h e r the i n t e r e s t or c a p i t a l of her
debt a t the p r e s e n t time, the following f a c t s may be
noted
(a)
:­
The French Government succeeded in repaying
e x t e r n a l commercial d e b t s between the years 1918 and
1921 to t h e e x t a n t of 11,015 m i l l i o n f r a n c s .
These
f i g u r e s i t i s understood are not n e t t repayments, as
the French Government has been c o n t r a c t i n g other loans
abroad, -but the f a c t t h a t she has been, able to r a i s e
such l o a n s i s an i n d i c a t i o n of French c r e d i t .
(b)
During the p a s t few months l o a n s for very
s u b s t a n t i a l --amounts"have. been granted, t o - t h e Governments
of Poland, Czecho-Slovahia, and Roumania.
At p r e s e n t
a loan of 4 0 0 . m i l l i o n f r a n c s i s being r a i s e d with the
approval,-of t h e French -Government - in favour of the^
Belgian Government.
- (c)
A l l ihose f a c t s suggest t h a t - t h e commercial
balance of France i s f a v o u r a b l e , ' a n d t h i s was d e f i n i t e l y
s t a t e d t o be the case by the Prench Minister of Finance
in an interview published o n t h e 19th August.
:
(d)
The s t a t i s t i c s of French Commerce for the
p r e s e n t c a l e n d a r year show t h a t e x p o r t s to Great B r i t a i n
have increased during the f i r s t 7 months by no l e s s than
1,355
1,355 m i l l i o n f r a n c s .
I t i s t r u e t h a t imports from
Great B r i t a i n have a l s o i n c r e a s e d by 1,215 m i l l i o n
f r a n c s , but t h i s l a r g e l y r e p r e s e n t s coal which the
French could have got from Germany, had they n o t . i n v a d e d
the Ruhr.
The i n c r e a s e in e x p o r t s would be roughly
sufficient
to enable the French to pay 3 per c e n t , on
t h e i r debt to u s .
(e)
Taxation per head in France i s £ 5 . 1 0 . 3 ;
Britain.£15.18.1.
in Great
Remission to France of d e b t s w i t h i n
her c a p a c i t y i s e q u i v a l e n t to the imposition o f . t a x a t i o n
on t h e B r i t i s h t a x p a y e r .
I n t e r e s t on French debt alone
i s n e a r l y 6ct. i n the £ in,Income Tax.
I n t e r e s t on
I t a l i a n debt about the same.
12.
I t would be d i f f i c u l t for the French Government
to maintain t h a t i t cannot pay anything on i t s d e b t s , and
p o s s i b l y what the Note means i s that, t h e B r i t i s h
Government ought not to ask for them,
low Great B r i t a i n
has never proposed (as suggested by the French Government)
to apply p r e s s u r e t o France which has not been a p p l i e d
to Germany;
t h i s would seem s u f f i c i e n t l y obvious from
the f a c t t h a t Germany has been compelled t o pay some
£400-500 m i l l i o n s s i n c e the A r m i s t i c e , while France in
a much b e t t e r economic p o s i t i o n has paid nothing at a l l .
Moreover the B r i t i s h Government have made very g r e a t
concessions by l i m i t i n g t h e i r demands on t h e i r A l l i e s to
the amount of t h e i r own debt to the United S t a t e s
Government, and by reducing them f u r t h e r by the f u l l
amount of any sum which they may recover from Germany,
provided t h a t the A l l i e s w i l l adopt a p o l i c y which w i l l
enable payments to be recovered from Germany.
FCTASgJAL, J R 0 P 0 3 4 I . S I F . THE' BELGIAN NOTE
1,
The Belgian Government c o n s i d e r s t h a t the f i r s t
step: i s . f o r t h e A l l i e s to agree how much Germany has to
pay and how isuch payments a r e to be d i s t r i b u t e d among
themeelves.
"Everyone i s agreed t o - d a y
M
t h a t t h e f i g u r e s of I n t e r
A l l i e d Debts must be examined a t t h e same time as the
reparation figures.
. (Great B r i t a i n does n o t accept the f i r s t p r o ­
position.- b e l i e v i n g t h a t the f i r s t s t e p must be to a s c e r t a i n
what Germany can p a y .
The -French Government d i s s e n t s from
the second p r o p o s i t i o n ) .
However t h e Belgian Government proceed to point..
out t h a t P r a n c e ' s claimmay be taken aa 26 m i l l i a r d gold
marks, Great B r i t a i n s as 14,2 m i l l i a r d s , her own 5
1
m i l l i a r d s and I t a l y ' a 5 m i l l i a r d s .
These f i g u r e s
(which
t o t a l 50.2 m i l l i a r d gold marks) might ceem to i n d i c a t e t h a t
progress has been made.
If a l l i n t e r a l l i e d debts can be
cancelled,, the Belgian Government think that, t h e A l l i e s a r e
in a p o s i t i o n ' to, offer Germany.a reduction i n her l i a b i l i t i e s
under the Schedule of Payments leaving her with^a task she
?
i s e a s i l y a b l e to accomplish,.
But the apparent agreement
i s wholly f i c t i t i o u s
.2.
The following c r i t i c i s m s , i l l u s t r a t e the divergence
between the B r i t i s h standpoint and- the Belgian standpoint
set
s e t out in the above p a r a g r a p h : ­
(a)
Under the B e l g i a n plan. Germany i s to pay
a present
value of' 50..2 m i l l i a r d gold marks to Great. B r i t a i n , Prance,I t a l y and Belgium.
Allowing f o r the claims of the other-
A l l i e s and f o r thoee of the Dominions and I n d i a , the f i g u r e
would need t o be increased to a t least 56 m i l l i a r d s ;
But
the B r i t i s h e s t i m a t e of t h e a b i l i t y of Germany to pay
r e p a r a t i o n s proper (as d i s t i n c t from c o s t s of occupation
e t c . ) was u n d e r t h e Bonar Law p r o p o s a l s of January 32
m i l l i a r d s (minimum) to 42 m i l l i a r d s (maximum).
The maximum
would be p u t lower to-day in view of t h e d i s o r g a n i s a t i o n
consequent on the Ruhr o c c u p a t i o n .
If t h e United S t a t e s of America d e c l i n e to cancel
or accept w o r t h l e s s German paper in l i e u of the French and
I t a l i a n d e b t s , the 56 m i l l i a r d s must be r a i s e d to 80
milliards.
So f a r from being below the Schedule of
Payments f i g u r e , we should he a long way above i t ­
Bokanowski's h i g h e s t e s t i m a t e of the l a t t e r being 65
milliards,
(b)
On the B r i t i s h view no f i n a l s e t t l e m e n t can be
reached on t h e b a s i s of Germany paying 50 m i l l i a r d s or
upwards.
The whole t r o u b l e w i l l a r i s e again in the near
future.
(c)
%
Great B r i t a i n has never agreed to accept her 14,2
m i l l i a r d s from. Germany.
Germany's c a p a c i t y should be'
i m p a r t i a l l y examined so t h a t t h e r e may be t r e a s o n a b l e
assurance t h a t the t o t a l demanded of her i s w i t h i n her
power to perform.
Of t h e t o t a l so fixed. Great B r i t a . t a ' s
share
share i s 22;! and. t h e r e c e i p t of t h i s sum' would enable her
to reduce her claims on t h e A l l i e s pro t a n t e below the
14,2 m i l l i a r d s which r e p r e s e n t h e r debt to the united States
of America.
I t i s p o s s i b l e t h a t Great B r i t a i n might agree
t o adcept German bonds in l i e u of the whole or p a r t of the
A l l i e s ' , debts to h e r , but they must be sound German bonds
r e p r e s e n t i n g o b l i g a t i o n s she i s s a t i s f i e d t h a t Germany can
fulfil.
'
If t h e t o t a l demanded from Germany is 50
m i l l i a r d s or upwards, m a n i f e s t l y Great B r i t a i n cannot accept
Germany bonds forming p a r t of t h a t t o t a l as sound s e c u r i t y
which would j u s t i f y her in c a n c e l l i n g i n t e r a l l i e d d e b t s . .
(d)
'i?hile t h e f u l l j u s t i f i c a t i o n f o r the: B r i t i s h f i g u r e
has bean p u b l i s h e d , no case has been made out f o r giving
Franca 26 m i l l i a r d s f r e e of debt, I t a l y 5 m i l l i a r d s f r e e of
debt or Belgium .5 m i l l i a r d s . .
Everyone of these claims
i s in excess of what the r e s p e c t i v e c o u n t r i e s would have
received f r e e of debt, if the Schedule of payments had in
f a c t been e x e c u t e d .
The weakness of' the Belgian plan i s t h a t i t
proposes to s e t t l e what Germany has to pay on the b a s i s of
what we should l i k e her to pay not on a reasoned expert
estimate of.her capacity.
There i s no prospect of
*
s e t t l e m e n t along these l i n e s , and meanwhile Great B r i t a i n
VouId have f i n a l l y l o s t the debts due to her by the A l l i e s ,
;
f o r no r e t u r n .
.3.
A g r e a t p a r t of the Belgian note ie taken up by
a defence of Belgian p r i o r i t y - which the B r i t i s h Government
had not. in. f a c t proposed to touch - and by e l a b o r a t e
c a l c u l a t i o n s as t o what Belgium has received a l r e a d y .
the l a t t e r p o i n t t h e o f f i c i a l f i g u r e s of .the Reparation
:,.-)
:
:
'
7/.\;.:
:
r - ; \ .
... ... .
Commission
On
Commission show t h a t s h e h a s r e c e i v e d £73 m i l l i o n s cut of
:
the £117 m i l l i o n s a l r e a d y d i s t r i b u t e d to the A l l i e s on
account of r e p a r a t i o n s p r o p e r .
4.
Belgium's own claim i s f o r 5 m i l l i a r d s which
added- to 1% m i l l i a r d s a l r e a d y r e c e i v e d makes &g- m i l l i a r d s
(£325 m i l l i o n ) .
-
This f i g u r e i s in excess of the figure
(5,2
m i l l i a r d s ) she would have r e c e i v e d had the Schedule of
Payments in f a c t been executed.
* In e x p l a n a t i o n of t h e claim i t is s t a t e d t h a t
i t r e p r e s e n t s 13?:'' of.an assumed German payment of 50
milliards-.
At the Spa Conference Belgium was given a
percentage of Qfo, based on m a t e r i a l damages and c o s t of
war pensions..
' Belgium argues t h a t the--percentages should
1,
be r e c a s t on t h e b a s i s of m a t e r i a l damages only, r a i s i n g
her percentage to 13$.
(She i s q u i t e w i l l i n g to include
B r i t i s h shipping l o s s e s w i t h i n m a t e r i a l damages i . e . she
does n o t claim an a b s o l u t e p r i o r i t y f o r d e v a s t a t e d r e g i o n s ) .
This p r o p o s i t i o n would not very s e r i o u s l y a f f e c t
B r i t a i n but would a f f e c t I t a l y s e r i o u s l y .
Great
There are no
very d e c i s i v e t h e o r e t i c a l arguments f o r or a g a i n s t but
t h e r e i s an overwhelmingly s t r o n g p r a c t i c a l argument, v i z .
t h a t we do-not d e s i r e any r e t u r n of the prolonged and
annoying d i s c u s s i o n s among t h e A l l i e s as to percentages
from which the Spa s e t t l e m e n t d e l i v e r e d u s ,
5.
Various f i g u r e s , not v e r y s t r i k i n g - or conclusive,
a r e given as to t h e a c t u a l expenditure by-Belgium in
r e s t o r i n g t h e devastated regions and. on war pensiens..
Leaving out i n a d m i s s i b l e , claims, such as t h a t ( a l r e a d y
many t i n e s r e j e c t e d by "ranoe and Great B r i t a i n ) In respect
y - ' ,
-
' "
-
:
.
-
Of
.':
of the German marks l e f t in Belgium, one would n e c e s s a r i l y
conclude t h a t to give Belgium 5^ m l l l i a r d a r g o l d marks
would leave her in a p o s i t i o n f a r s u p e r i o r to t h a t of any
other Ally,
The burden of her war debts has, beon
e n t i r e l y t r a n s f e r r e d from her and her expenditure on war
pensions i6 on a t i n y s c a l e compared w i t h t h a t of Franca
or Great B r i t a i n c a s u a l t i e s having bean low.
' 1,
As c e r t a i n phrases r e c u r r e p e a t e d l y in t h e s e
documents, it. m a y b e w e l l to explain t h e i r ' e x a c t meaning:­
(a)
Ihe-famous "152 m i l l i a r d s "
of £6,600 m i l l i o n .
This i s the j u d i c i a l v a l u a t i o n by the Reparation
Commission (April 20th, 1921) of Germany's Treaty
l i a b i l i t i e s in r e s p e c t of m a t e r i a l damages and war pensions,,
I t - h a s nothing t o do w i t h Germany's c a p a c i t y or o b l i g a t i o n
t o pay.
(b)
The Schedule of payments of May 1921.
This was a d e c i s i o n drawn up by t h e A l l i e d Prime
M i n i s t e r s (MM J a s p a r , Briand, Lloyd George, Sforza,
Ifeyashij
and subsequently p r e s c r i b e d by the Reparation Commission
f i x i n g t h e time and manner i n which Germany must p a y .
. Germany's l i a b i l i t i e s a r e f i x e d a t an a n n u i t y of
£100. m i l l i o n s plus a sum equal to- 26$ of the value of
her exports - f a r l e s s than t h e 132 m i l l i a r d s p r e s e n t
value.
(c)
TM-.^5ju,.&^A-5,95i£i
These are- the connecting l i n k between the
a n n u i t i e s and t h e 132 m i l l i a r d s .
Germany was to d e l i v e r bonds to a t o t a l amount of
132 m i l l i a r d s ^
Of t h e s e , 50 m i l l i a r d s (12 * i l l i a r d 3 "A"
bonds and 38 m i l l i a r d s "B" Bonds) were to b e a r 5$ i n t e r e s t
and 1% sinking fund from t h e o u t s 6 a .
Th? balances were
t o remain dormant u n t i l their, s e r v i c e (5% i n t e r e s t and 1%
s i n k i n g fund) could be provided f o r out of t h e , a n n u i t i e s .
Under t h i s arrangement,, i f i t had worked, the
A. and B. Bonds would have-been extinguished in a period of
36 years from the commencement of the sdheme and the C.
Bonds by i n s t a l m e n t s in periods of 36 years from the
commencement- of p r o v i s i o n f o r the s e r v i c e of the r e s p e c t i v e
blocks.
(d)
;
'
The , e s t i m a t e of Monsieur Bokanowskl;
"As the g r e a t e r p a r t of the German debt ( i , e , C.
Bonds) does not beoome o p e r a t i v e u n t i l an"undefined
future
d a t e , o l e a r l y the p r e s e n t value of t h a t debt i s very f a r
below i t s nominal v a l u e .
.
We have used the f i g u r e s s e t
out by a w e l l known French p a r l i a m e n t a r i a n , who was
Rapporteur of the French Budget, in t h i s o f f i c i a l
report
r e p o r t to the Chamber of D e p u t i e s .
On t h e 5$ t a b l e s , the. A. and B, Bonds a r e worth
80 m i l l i a r d s and he e s t i m a t e s the C. bonds in the 5$ t a b l e
a t IS m i l l i a r d s v i z . , i n a l l 65 m i l l i a r d s "or £3,250 m i l l i o n .
This i s a h i g h estimate of what the Schedule of Payments
was worth, i f c a r r i e d out, and i t was d e l i b e r a t e l y chosen
by the B r i t i s h Government as being a high estimate which
ought not to-be open to c a v i l .
Monsieur Bokanowski him­
s e l f did not think i t safe to c a p i t a l i s e a t 5$ and the
r e s u l t he f i n a l l y reaches i s not 65 but 49 m i l l i a r d s , no
more than £2,450 m i l l i o n .
iSven t h a t figure ho q u a l i f i e s
by saying t h a t he was working on v e r y o p t i m i s t i c
ft
hypotheses.
( )
e
The.British Paris plan.
f
The B r i t i s h Government has long been of tho
opinion t h a t the C
bonds a r e w o r t h l e s s I
At P a r i s in
Hanuary, Mr,Bonar Law. put Germany ^ c a p a c i t y to pay a t a
1
maximum of £2,500 mill-ion and a minimum of £1,975 m i b l i o n .
This
This was not a l l f o r r e p a r a t i o n s b u t included dosts of
occupation, c l e a r i n g o f f i c e b a l a n c e s e t c .
In other words,
even i n January t h e B r i t i s h Goveriiment regarded the Co
bonds as worthless and the A*.and B , Bonds a s worth
s u b s t a n t i a l l y l e s s than t h e i r f a c e value of £2.,500
million,.
The Ruhr occupation has c e r t a i n l y dbsire-ased
Germany's c a p a c i t y t o pay:
f o r many reasons., an expert
enquiry i s d e s i r a b l e before f r e s h e s t i m a t e s a r e framed.
( )
f
"Artie 3.e^S3j.3;
There r e p e a t e d l y occurs throughout t h e
second p a r t of t h e French r e p l y t h e phrase "we demand t h e
a p p l i c a t i o n of A r t i c l e 234".
This a r t i c l e
instructs
t h e Reparation Commission from time to time to consider
t h e r e s o u r c e s of Germany and empowers the Commission a f t e r
hearing German r e p r e s e n t a t i v e s t o extend t h e d a t e or modify
t h e form of German payments, but n.&.tto,' xffdufie except w i t h
s p e c i f i c a u t h o r i t y of t h e s e v e r a l Governments represented,,
So f a r from o b j e c t i n g to t h i s , i t i s p a r t of our case a g a i n s t
t h e m a j o r i t y of the Commission chat fchey ha-ve f a i l e d t o
make proper use of t h i s A r t i c l e in t h e -past,