3. The Paris Conference

The third conference with M. PoincarÉ over reparations has ended, like its two predecessors, in a complete breakdown.

The first was held in August, the second in December, and the third fiasco has just been witnessed.

I congratulate Mr. Bonar Law on having the courage to face a double failure rather than agree to a course of policy which would in the end prove disappointing, and probably disastrous.

Agreement amongst allies is in itself a desirable objective for statesmen to aim at, but an accord to commit their respective countries to foolishness is worse than disagreement.

France and Britain must not quarrel, even if they cannot agree; but if French ministers persist in the PoincarÉ policy, the companionship of France and Britain over this question will be that of parallel lines which never meet, even if they never conflict.

What is the object of this headstrong policy? Reparations?

There is no financier of repute, in any quarter of the globe, who will agree that these methods will bring the Allies any contributions towards their impoverished resources.

At the August conference all the experts were in accord on this subject, but whilst these methods will produce no cash, they will produce an unmistakable crash.

My recollections of the August discussions enable me to follow with some understanding the rather confused reports which have so far reached me here.[2]

It is common ground amongst all the Allies that Germany cannot under present conditions pay her instalments.

It is common ground that she must be pressed to put her finances in order, and by balancing her budget restore the efficiency of her currency, so as to meet her obligations.

But M. PoincarÉ insisted that, as a condition of granting the moratorium, pledges inside German territory should be seized by the Allies.

These pledges consisted of customs already established, and of new customs to be set up on the Rhine and around the Ruhr, so that no goods should be permitted to pass from these German provinces into the rest of Germany without the payment of heavy customs dues.

The other proposed pledges were the seizure of German forests, of German mines, and of 60 per cent. of the shares in certain German factories.

Mr. Bonar Law, judging by his official communiquÉ after the breakdown of the conference, seems to have raised the same objections to these pledges as I put forward at the August conference.

They would bring in nothing comparable to the cost of collection;

They would provoke much disturbance and irritation and might lead to consequences of a very grave character.

In fact, these pledges are nothing but paper and provocation.

The customs barrier on the Rhine was tried once before, and was a complete failure.

It was tried then as a sanction and not as a means of raising money. For the former purpose it may have achieved some measure of success, but from the point of view of collecting money it was a ludicrous fiasco.

There are at the present moment hundreds of millions of paper marks collected at these new tollhouses still locked up in the safe of the Reparations Commission. They are admittedly worthless.

As long as these tolls lasted, they were vexatious; they interfered with business; they dealt lightly with French luxuries working their way into Germany, but laid a heavy hand on all useful commodities necessary to the industry and life of the people.

They were ultimately withdrawn by consent. M. PoincarÉ now seeks to revive them.

The seizure of German forests and mines will inevitably lead to even more serious consequences. The allied control established in the far interior of Germany would require protection.

Protection means military occupation in some shape or other.

Military occupation of these remote areas means incidents, and incidents quickly ripen into more serious complications.

Hence the reluctance of the British government of which I was the head to concur in this dangerous policy. Hence the refusal of Mr. Bonar Law's government to accept the responsibility for sanctioning such a policy. Even logically it is indefensible.

There are only two alternative points of view. One is that Germany cannot pay under present conditions until her finances are restored, and that a moratorium ought to be granted for a period which will enable that financial restoration to mature. The second is that Germany can pay, that she is only shamming insolvency, and that all that you have to do is to apply the thumbscrew firmly and cash will be forthcoming.

Logically I can understand either of these two alternatives, but I fail to comprehend the reason for a proposal that will grant a moratorium on the ground that Germany cannot pay, and at the same time apply the thumbscrew until she pays.

I am glad the British Prime Minister has had the wisdom not to associate himself with a policy which will bring inevitable discredit upon those who share the responsibility of enforcing it.

Meanwhile, the prospects of Europe's recovery are once more to be retarded by the vain stubbornness of some of her rulers.

Ronda (Spain), January 6th, 1923.