Evening star. [volume] (Washington, D.C.) 1854-1972, 1926-08-29
BY DENYS p. MYERS,
Librarian. World Peace Founda

TINE second year Of the Dawes plan ends
next Tuesday with a perfect score.
There is scarcely a problem in its exc
cution that has not far been we'll
solved but there indications that
the third year of it's operation will be easier
for Germany and harder for her creditors. Yet
the prospect is that the problems of the third
year will be technical rather than practical.
In the year ending August 81 Germany
has met the payments promptly and s. Parker
Gilbert, jr., the agent general for reparation
payments. closes sthe books Of the second an
nuity with practically all of the 1920 000, 900
gold marks received actually turned to
creditors or effectively committed. The out
standing feature Of the year has been the
relative with which Germany has met
her obligations. The disturbing feature has
been slight hint that the creditors not
quite eager for the commodities figuring
deliveries in kind with which the payments
have Overwhelmingly been made.
The agent general now has on his books
1880. 900 gold marks ($S305 000) that he can't
dispose of. The United States has not told him
what to do with it. This sum represents two
years accruals the American claims, which
charged off from the plan income to the
credit Of Washington, and which the Secre'
tary OF the Treasury has not secured congress
sional authority to use for paying awards
against Germany
The United States is, however, taking
some reparation in a roundabout way. The Bel
gian debt agreement includes the so-called
war debt" which Is up to Germany. By the
agreement, however. the repayment of the
debt is to come from Belgium. Thus.
portion of Belgium's semiannual debt pay
ments to the United States is in the last analy-
sis met by Germany. In the two years Belgium
has received 12,122 900 gold marks from Ger
many on this account
Under both heads At 002, 900 gold marks
t$11 100. 000} of the German payments has been
earmarked for American receipt in two years.
OF this, 1854 900 gold marks ($6,272 500 has
accrued in the current year Of the plan, equal
to about one.fourth of Belgium's receipts.
Four-fifths of the payments made in the
first year came from the German loan. In the
second year all the income produced by
Germany, whose political economy improved
under the operation. The budget provided ESQ.,
900, 900 gold marks. but the budget was voted
before the beginning of the fiscal year for the
current fiscal year for the first time since
1911. 1t balanced despite tax reduction and
exhibited IAN encouraging return toward nor
NAL budgetary practices" In the third year,
just beginning, the budget will contribute only
10000, 900 marks, the reduction affording a
certainty that the obligation can be easily met.
X
Another ESQ 900 900 came from the trans
port tax which in the previous two years
Yielded 25 per cent more than the require
ments Considerable change was noted through
out this annuity period in car loadings and
entirely offset by increase Of shipments. This
next year the transport tax will rise to 290,-
600 900 marks, which becomes the standard
payment henceforth. The payment can I'M
doubtedly be met. but it is evident that the
business conditions which the tax is based
are subject to wide fluctuations. The extent to
which the income from the tax exceeds the
reparation requirements against 1t will be in
teresting to watch during the coming year
In the second year 125,000,O00 marks
frOr,, into
lures which bonds issued by some &c..
900 German concerns, totaling 5000, 900
marks in value Next year the income from
this source will be doubled or 250,O000OO
marks, representing per cent interest. 1t nad
been expected that many of the concerns
would promptly buy up their own obligations,
but nothing of the kind done during the
second year The reason a practical one.
Germany still needs industrial capital, and
buying up the bonds for cancellation would
be a capital expenditure, which ought to come
from surplus. Moreover, In the second year
it would have been bad business to buy up
bonds carrying only Pa per cent with money
that could be borrowed only at over twice that
rate During the third year some cancellations
will doubtless be effected by some of the in
dustries for the debentures will then be cost
ing per cent to carry and money may be had
at close to that rate in all likelihood.
The final amount of the second annuity
was 595 900 900 marks, being interest on the
German railway bonds, of which II 900 100000
are subject to reparation. In the third year the
charge will be $50. 900 900 or per cent on the
issue The German Railways Co. operates the
largest system in the world. having track
mileage Of 5000. 1t has been intended from
the start to place the railway bonds on the
international market, enabling the states TO
receive the capital Immediately and the ponos
themselves thus becoming an ordinary com
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