The New York herald., 1921-06-26

bonds are not to bear interest. but
the protocol provides that whenever
the Reparation Commission is satisfied
that Germany's annual payments OF
S500.000.00O a year plus an amount
equal TO 26 per cent. of her exports are
sufficient to provide for the payment OF
the interest and the sinking fund SER
vice on additional bonds such bonds are
to be released by the commission from
the non-interest bearing bonds. The
bonds thus released are TO have the
same provisions in respect of interest
and sinking fund payments as the bonds
of series and b, which, however, re-
tain their priority of lien.
No interest will be payable upon the
non-interest bearing bonds except from
the small surplus of the reparation pay
ments that will remain after the pay
ment of the interest and sinking fund
instalments upon the interest bearing
bonds outstanding, and except for the
payment mentioned above of an amount
equal TO l per cent of exports. This
partial waiver of interest is the most
important concession made by the allied
ultimatum as compared with the re-
quirements of the treaty.
Apparently the new bonds have nc
definite date of maturity, but are to
remain outstanding until retired through
the annual redemptions from the sinking
fund, for which bonds are to be chosen
by lot.
1t is the essence of tho new pro-
gramme that the amount of Germany S
annual payments and the period re-
quired for the complete liquidation Of
the reparation debt will depend upon
the volume of her exports. Some inter-
esting estimates of the possible or prob
able outcome may be made based upon
Germany's past performance.
In 1913 Germany's exports were about
81, 500, 900, ,000-an amount considerably
above the average of the preceding five
years. They are now at the rate OF
about $1,000, 600. 900 year. but are ex-
pected soon to reach S1,500, 100000 a
year.
Allowing. on the one hand for the
decrease in Germany's population and
economic resources resulting from the
war and the operation of the treaty, and
on the other hand, for substantial in
crease in the pre-war prices Of COM
modities and for increased pressure upon
the productive capacity of the German
people. 1t would seem not to be a. wild
guess that If and when Germany attains
her pre-war Industrial efficiency her ex-
ports may amount to $4,000, 100000 g
year. 1t may, therefore, be assumed
| for purposes of illustration that Ger.
| many's exports will begin at $1,000
| 000,0 a year and ultimately attain q
volume of $4,000. 100000 a year.
| On this basis the reparation obligation
would begin with $3.50, 100000 g. veal
| and ultimately reach S1,2S0. 100000 6
year. The assured payment of $3.50. .000..
! 600 for the first year is only 10000, 00t
more than the interest and sinking FUND
service for one year (S750.000, ,000) upor
the $12,500, 100000 OF bonds to be ISSUED
during 1921.
If at the end of five years Germany
exports have reached the volume o.
$4,000, 100000 tke Reparation Commits
sion would have been authorized to re
lease at least SS,500,000,0O0 additiona
of interest bearing bonds. This woult
bring the total issue of interest bearing
bonds up to $21, 900, 100000 carrying al
annual interest and sinking fund servic,
of $1,260, 000.0 900, which would be within
the annual reparation payment baset
upon SO. 900, 900. 900 Of exports.
Manifestly any estimate as to tn,
length Of time IT will take Germany Il
liquidate her reparation debt in tn,
event of her full performance of the new
agreemnt involves assumptions that can
not now be made with accuracy. TIL
best one can do is to give an illustration
Assuming that Germany's exports 70