The French and Belgian governments have slapped another opportunity in the face. To make that slap resound as well as sting, they have accompanied their rejection of the German offer by a savage sentence of fifteen years' imprisonment on the head of the greatest industrial concern in the Ruhr, if not in Europe. What for? Because he ordered the works' syren to sound "cease work" for one day when the French troops occupied the place. There is a swagger of brutality about that sentence which betokens recklessness. It came at a moment when the German government had just made an offer of peace, and when that ally of France who had made the deepest sacrifices in the war to save her and Belgium from ruin was urging the French government to regard that offer at least as a starting-point for discussion. The answer was to treat the German note as an offence, to promulgate that penal sentence which outrages every sense of decency throughout the world, and to refuse to permit an ally, who had been so faithful in the time of trouble for France and Belgium, even the courtesy of a discussion on the tenor of the reply to be given to a note that so vitally concerned the interest of all the Allies without exception. Prussian arrogance in its crudest days can furnish no such example of clumsy and short-sighted ineptitude. It gives point to Lord Robert Cecil's observation in the House of Commons that it is very difficult to reconcile the French attitude with a conception that the French government, with the opinion behind it, desires a settlement.

What is the German offer? It proposes to limit the total obligations of Germany in cash and in kind to thirty milliards of gold marks (£1,500,000,000) to be raised by loans on the international money markets at normal conditions in instalments of:—

There are provisions for payment of interest from July, 1923, onward, and the agreements entered into for delivery of payments in kind on account of reparations are to be carried out in accordance with the arrangements already made. Then comes this important provision. After a paragraph in which it is argued that the above figures would strain the resources of Germany to the utmost it adds:—

"Should others not share this opinion, the German government propose to submit the whole reparations problem to an international commission uninfluenced by political considerations, as suggested by State Secretary Hughes."

They further state that the German government are prepared to devise suitable measures in order that the whole German national resources should participate "in guaranteeing the service of the loan." Guarantees are also offered for deliveries in kind. In order to ensure a permanent peace between France and Germany they propose an agreement that all contentious questions arising between them in future should be referred to arbitration. The note finally stipulates that the evacuation of the Ruhr "within the shortest space of time" and the restoration of treaty conditions in the Rhineland constitute "an essential leading up to negotiations on basis of above ideas." The above represents the substance of the German proposals.

The French and Belgian governments in their reply stand by the May, 1921, schedule of payments and decline to forego even the very problematical "C" bonds of £4,250,000,000. Hitherto it has been common ground that £2,500,000,000 is the figure which Germany can be expected to pay. The French and Belgian governments are now insisting on the full measure of the £6,600,000,000 award. The Hughes proposal they scoff at and treat its putting forward by Germany as part of "an expression of a systematic revolt against the Treaty of Versailles." The real temper and purpose of this intransigeant attitude is to be found in two sentences. Here is the first. Alluding to the resistance offered in the Ruhr to the French attempt to exploit its resources the note says: "The Belgian and French governments cannot take into consideration any German proposal whilst the resistance continues." That is, however complete and satisfactory a proposal may be in itself, it would be rejected unless preceded by abject surrender to French designs in the Ruhr. Then later on comes this significant sentence emphasising the moral of the first:—

"The Belgian government and the French government have decided that they will only evacuate the newly occupied territories according to the measure and in proportion to the payments effected. They have nothing to alter in this resolution."

An impossible payment is to be insisted upon—costs of occupation are to be added to that, and until both are liquidated French armies are to remain in possession of the richest areas in Germany. Meanwhile the British Empire and the United States of America, who, at a prodigious cost in life and treasure, saved France from a similar humiliation to that which she is now inflicting on Germany, are practically told when they venture to offer suggestions to mind their own business. No interference will be tolerated from meddlers of any sort.

The sum offered by Germany in settlement of reparations is no doubt inadequate. It cannot be accepted by any of the Allies in discharge of the German obligations under the treaty. The German government must make a very substantial advance on that offer before they can hope to come to terms with the Allied governments. I have no doubt the German government fully realise that fact, and I am sure they did not put forward these figures as their final tender. They meant them to be taken as a beginning and a basis for negotiation. In fact they say so. When you enter into negotiations your lawyer, if he knows his business, never starts with the figure he is authorised ultimately to propose. Nor does the client always communicate to his advocate the last figure he would be prepared to pay if he had to decide between that and a continuation of the struggle, with its costs and its complications. Once pourparlers begin the original figure disappears, and disappears quickly. That is the history of all negotiation, private and public. A refusal to meet in conference until the figure proposed is acceptable rules out discussion between parties as a means of coming to terms on the main question in a dispute.

I have taken part in the settlement of probably more industrial differences than most politicians. In every case I have started with an impasse. The first meeting of the parties always revealed an apparently unbridgeable chasm between their respective positions; but perseverance and an honest endeavour on both sides to find a solution usually ends in agreement. Goodwill can bridge any abyss. Unconditional surrender if insisted upon between independent bodies is a sure prelude to fresh disputes. The mere fact, therefore, that Germany put forward a proposal which falls short of the needs and equities of the case is not a sufficient reason for declining to meet her representatives at a conference to determine what the right sum should be, and the best method of liquidating it.

But there is another and a stronger reason why the German offer should not have been so peremptorily rejected. It did not end with a submission of an inadequate amount in discharge of reparations claims. Had it done so the French government might perhaps contend that Germany must make up her mind, before she is allowed to confer, to raise that figure to something which at least approximates to the region of acceptability. But even if the French contention in that respect were reasonable, it is ruled out by the circumstance that in this note the German government have proposed an alternative if the figure they offer is considered unacceptable. That alternative changes the whole character of the note, when you come to judge of the question of its bona fides. This proposition consists in the complete and categorical acceptance by the German government of Mr. Secretary Hughes's famous New Haven suggestions. It will be recollected that, as a way out of the reparations entanglement, he proposed that an international expert commission should be set up to inquire into the question of the amount which Germany is capable of paying, and the best method of discharging her obligations once they were fixed. Mr. Hughes made it clear that the United States of America were prepared to assist in such an inquiry. It is this that lent such significance and importance to his speech. When I first read that speech I thought it of such moment that I cabled from Spain to the British and American papers my earnest hope that the Allies, about to sit in conference in Paris, would immediately consider its terms, and act upon it. It seemed to me the supreme opportunity for placing the vexed question which is fretting Europe almost into nervous paralysis on a pathway which must inevitably lead to a real settlement. The more I think of that proposal, the more am I convinced that it was right, and the more am I perplexed by the rude indifference with which it was treated by the Allied governments. To this hour I am baffled to explain why those who are anxious for a conclusion never brought this momentous declaration of American readiness to take a hand to the notice of the conference. I can suggest explanations, but none which is not a grave reflection on the way in which the proceedings of that conference were handled. I can understand those who wish to exploit reparations for ulterior purposes being anxious to keep America out of the business. But why did Britain, Italy and Belgium neglect this chance of securing the association of the one power which could be helpful to the Allies in reaching a fair and sound decision, and what is equally important, helpful in all subsequent operations for cashing that decision? Now Germany states categorically that, if her cash tender is unacceptable to the Allies, she is willing to leave the question of the amount she is capable of paying to an international tribunal on which America is represented, and to abide by the decision of that tribunal, whatever it may be. That is in substance Mr. Secretary Hughes's suggestion. How can a note containing so reasonable a proposal, and a proposal originally emanating from so powerful and so friendly a quarter, be treated as if it were an insult to the dignity of France—and of Belgium! To declare—as the French note does—that the Hughes proposition is an abrogation of the Treaty of Versailles is to ignore the provisions of that treaty. As a matter of fact it would be a restoration of the treaty. As I have repeatedly pointed out, that treaty delegated the question of the amount which Germany has to pay in respect of reparations to an Allied commission on which the United States of America was to be represented. The function of this commission was to assess the amount of the damages for which Germany is responsible under the treaty, and then to adjudicate on the capacity of Germany to pay those damages in whole or in part.

The commission was authorised to fix the amount of the annual payments to be demanded of Germany on the double basis of liability and capacity. The withdrawal of the only country which had no direct interest in reparations from the treaty left the commission a lop-sided and highly prejudiced tribunal. The reparations commission no longer carries out the treaty idea. Its character has completely changed. It is essential in order to adhere to the Treaty of Versailles that America should have a representative on the tribunal that fixes the payments to be exacted from Germany. The German government now offer to submit the fate of their country to the unaltered clauses of the treaty which was signed in the Galerie des Glaces in June, 1919. France and Belgium have no right in honour to demand submission to any other. Because they insist on enforcing something which is entirely different from the contract entered into by them with Germany in 1919, Europe is disquieted and international relations are saturated with the inflammable spirit of resentment, hatred, and revenge. No wonder Marshal Foch is touring Central Europe to put the Allied armies in order! He seems to me to be the one man in France who has an understanding of what all this is leading up to.

London, May 14th, 1923.