The Washington herald., 1921-05-22
THE SUM ACEED upon


place take the form Of bonds. which
WOULD be- carried by annual Ger
man payments. but would have TO
be sold in the markets OF the world,
there was a dominating necessity
NJ to issue e many bonds.
Value I. Fixed.
To put the thing simply; There
was value which the world fnan-
cial markets would place upon Ger
many's capacity to pay. Beyond
his point they would not invest in
German bonds. II, for example, the
estimate was s12.50o.8 .8e0so00,z then.
II $4,000. 100000 bonds were issued,
the world would still pay only
H2.5oo. .0oo, 900 for them, and instead
Of selling the bonds at par, those
who received them from Germany
would have to sell them at a SO
per cent discount.
Yet, 1t was clear, ON the other
side that the Germans were doing
everything in the world to establish
the idea that they could pay next
TO nothing, with the fdea of re-
ducing the sum total of repara-
tions. In the case of France, in
1911, the Germans had woefully nn-
derestimated the capacity of France
TO pay, and had seen France settle
ner accounts and become prosper
Gus again. in the briefest span OF
years. Thus, IL the sum of German
payments were placed too low, then
the victims of Germany would in
reality bear a greater portion of the
costs OF reconstruction than was
necessary. In w1rd, some method
must be found by which Germany's
victims might profit by an un-
expectedly rapid return of German
prosperity.
Meets Stipulated Sum.
rms was the case because in any
event. given the largest conceivable
payment by Germany. this payment
would tall short of the costs to the
nations which Germany had at
lacked, of the war which had re-
suited from the attack. You had
then two elements in the case.
FIRST, the necessity to arrive AT a
nAed sum, which was reasonable and
telI within the limits both of con-
serVattve estimates of Germany's
capacity to pay. thus offering some
appeal to the money markets of the
world, second. the equally patent
need TO provide some methods nv
which, If it should be that the fixed
sum had been gross underesti-
mate additional returns might be
received.
now with these details in mind,
the decision Of the London confer
ence can be concisely summarized.
AS 10 the nxed sum. il was decided
Inat Germany should pay SI2,5OO,-
ooV'OOO, that II should issue bonds
70 her creditors for this sum total.
rms ngure coincided exactly with
the conservative figures of the
nnancial experts Of all nations
American as well as European, In
point of fact. Germany, in her note
10 Mr. Hughes, had suggested this
sum, but hedged it around with inn
possible political and financial con-
dltlons. Her greatest actual offer
had been $4,000. .O0O, 900.
Payment Protected.
Having issued these bonds in two
patches, $4,000. 900, 900 before July
and ss,5oo,OO0 before November 1.
Germany was asked to agree to GER
many was asked to agree to certain
interest and sinking fund charges
10 carry and retire the bonds. This
transaction took two forms: First
Germany was to agree to paw $500
oVO,OOO annually. And II should be
understood that the gold standard
is indicated in every instance. This
was a straight-out payment. Sec
onoly' she was required to turn over
value equal to 25 per cent of her
foreign exports.
Now it will be seen that since
the annual interest and sinking
fund charge of the Sl2,5OO. .O0O. 900
would amount to s75O,O0O, 900 and
only 100000, 900 was required nv
the straight-out payment, the re-
turn from the levy upon the total
OF foreign commerce would have
10 amount to $3.50, ,000, 900 to take
care of the fixed sum of bonds
which the supreme council at Lon
don decided must be issued.
But before the war the e.nor,
trade of Germany had passed So
OOO.o00.o00 annually. Thus, IL the
old prosperity returned. Germany
could on the basis of the $4,000. 600
600 figure and through the 25 per
cent tax be asked to pay not $780,
100000, which was required to meet