The New York herald., 1921-06-30
Franco-GernanR Rapprochement.

OBSERVATION-DISCLOSURES.
DR.. WALTER RATHENAU, German
Minister Of reconstruction, and M.
LoUcHEUR, French Minister of Devas-
lated Regions, whose portfolios in
the two governments are identical,
met three miles over the Rhine at
Wiesbaden, Germany, early in June
to talk over reconstruction and repa.
rations. 1t was a conference highly
important for the world because it
showed France and Germany getting
together on mutua! terms.
This kind of negotiation by direct
contact of French and German Min
listers to talk over their problems
without reference to England, Bel
gium or Italy, or to the Supreme
Council, has not been in vogue follow
ing the war. Never less than three
Powers have been represented at pre-
vious conferences where German Min
listers were present. The Wiesbaden
innovation may be the beginning Of a
rapprochement between France and
Germany leading to quiet settlement
Of disputed points and doing away
with the frequent rumors of diplo-
matte breaks" among the Allies.
Official advices from Paris that
France and the other Powers will
not now insist on indemnity pay
ments in gold or In dollars, but will
accept drafts on any country at cur
rent exchange rates show how fruit
full these direct confe, ences can be.
The main difficulty, now that the rep
arations have been fixed at 132,000
100000 gold marks, is 10 find way
for Germany to pay. This point was
the main subject Of the Wiesbaden
conversations. Germany must pay
5000, 900 900 gold marks year on the
indemnity account. Sle will have to
pay nearly the whole indemnity in
the products of her industries and
mines.
France and the other allied nations
cannot absorb 5000, 900, 900 marks of
German goods a year. They must be
sold all over the world and the pro-
ceeds paid to the Allies. Converting
the proceeds of these sales into dol
lars, the only currency equivalent of
gold, has proved detrimental to inter
national trade because of the wild
fluctuations caused in the exchange
market.
In this connection II is important
to note the remarks of DR.. RATHENAU
in his address to the German Impe-
rial Economic Council at Berlin
after his return from Wiesbaden.
According to an Associated Press des-
patch he advocated replacing the
26 per cent. tax on German exports
by some other method of collecting
reparations because the tax would
amount to a prohibition on outgoing
trade. The despatch continued.
"I- further believed 1t possible and
der which Germany is obliged to pur-
chase hastily quantities. OF foreign
currency in order to meet her gold
obligations. This, he contended, dis
organized the international money
market and was damaging to both
German and French interests. and
was decislvely detrimental to Ameri-
can interests.
CDR. RATnExAu believed that some
agreement must he reached whereby
the dollar should no longer be the sole
means of payment, and that payment
In foreign currency should be SO man
aged as to permit International mar
kets to recover
The evil OF using the dollar to make
indemnity payments was pointed out
by THg NEw YORK HERALD at the time
the decision to follow this plan was
taken some weeks ago. The unset
tling effect of these huge indemnity
purchases of dollars is now mat
ter OF record.
There are several remedies The
Allies could accept at the exchange
rate of the day any foreign currencies
Germany might tender ~ payment OF
maturing reparations drafts. This
mixed quantity could be converted
gradually into doTnrs or whatever
other currency the Allies desired, and
any gaiH or loss in the conversion
-'aa down in the German ineerr-