Evening star. [volume] (Washington, D.C.) 1854-1972, 1928-06-24
BY FRANK II. SIMONDS.

necessity Oh uQuludtlIS t1lC 0dWCo
plan and reducing tie German annual
payments. On the surface and for
the casual reader this statement would
seem to mean that MIR. Gilbert is sat-
isfled that Germany can pay the maxi
mum sum provided in the Dawes sys-
tenn, which is 1925 900 900, and be-
comes operative with the year begin
ming in September.
In such case there are naturally two
questions: If the plan works, why
liquidate it? If Germany can pay the
maximum, why the discussion OF re-
ducin2 the annual payments? But here
again one comes to the old problem OF
transfer, which has bedeviled the rep
arations question from the outset.
What Mr.. Gilbert actually said was
that he was satisfied that Germany,
which is this year paying for repara-
tons and through taxation 1850. 100000
marks, could next year raise the sum
TO 2.500.000, 900 marks.
But there remains the old problem,
how is this to be transformed into
value for the nations entitled to repa-
rations? They do not want marks.
They would only want marks If the
world collectively bought more German
goods than it sold to Germany. Then
the world would want marks to pay
the difference and there would be a
world market for the marks. These
could be exchanged for dollars. pounds
sterling and francs. But Germany
buvs much more abroad than she sells.
Therefore there is no demand for
marks.
Make Cash Demand.
There remains the question Of pay
f.. - TY1 Hr0n1I-
ors of Germany on account OF repara-
tions are willing to take German goods
or raw materials, manufactured articles
or coal and potash. these could be
bought with the marks paid IN taxation.
But the creditor nations do not want
German goods to the sum OF the avail
able marks. AS it stands, they are able
and willing to take just about half the
total of reparations in goods, raw ma
terials and services. The rest they de-
mand in cash-and in their own cash;
that Is. In dollars. pounds and francs.
But how are the foreign currencies to
be obtained? So far by the simple
device of borrowing abroad. Germany
has in the past three years-tnat Is, IN
the first three full years of the Dawes
plan-borrowed abroad about S2,50O,-
600 900. In that time she has paid
round 81 900 .000, 900 IN PREPARATIONS. The
balance has been used to meet the ex-
cess of imports over exports. It mas
been possible to change the marks into
desired currencies because these loans
have supplied the foreign curreneies,
chiefly American. for we have done
most of the lending.
But il we should stop lending. II Ger
man cities. states and industrial enter
prises could not longer induce foreign
capital to invest. where would the nee
essary foreign currency come from? NO
one knows AS a matter OF fact, II would
not come. But then, what about repa-
rations? Mr.. Gilbert could turn over
the 2,500 900 900 marks which had been
duly raised by taxation. But what could
the allies do with It? Sell 1t? No, be-
cause there would be no market. The
mark would begin to sink. But at this
precise moment Mr.. Gilbert would step
in and order such selling 70 cease, be-
cause the Dawes plan provides that
nothing must be done to lower the par
value of the mark.
Obviously at this point reparations
would stop automatically. And this Is
the exact point we are coming to.
As for the creditors of Germany,
what can they do? Nothing, because
Germany has complied with the treaty.
The Ruhr cannot be occupied again;
sanctions cannot be taken or threat
ened. The game is simply up. The
Dawes plan has not failed; 1t has SIM
ply but definitely demonstrated the I'M
possibility of collecting reparations.
In this situation what do the creditors
desire to do? Obviously to sell out
their rapidly shrinking claim at the
best possible figure. But how? As
claim 1t is obviously not very good. not
good the moment after the world. the
United States chiefly. decides to take
no more German paper in return for
hard cash. Happily for them, they
have another hold or Germany. Allied
armies occupy German soil and can
stav under the treaty Of Versailles
until January /. 1895. Naturally. the
Germans desire to he rid of this hui
initiating and embarrassing nuisance,
For a prompt evacuation they will pay.
The sum paid will be called pay
ment 10 liQuidate PREPARATIONS. but In
fact, 1t will be q sum paid for prenaa-
ture evacuation. 3 sum coilected
through legal blackmail.
But while the Germans are willing
TO pay, they are very decided in their
own minds about the amount they can
and viii pay. At most, $4,000. 0oO. 600.
say the bankers. among the poll
ticians the figure Is not In excess OF
$4,000 100000.
Mortgage Is Necessary.
But obviously they have not the
money, and even If they could raise
the sum In marks. these would be use
less. What Is necessary is to execute |
a mortgage on Germany industry and |
transport and sell the bonds abroad. |
With the proceeds they can pay the |
allies and get receipt and be done |
with reparationS, occupation, all the |,
physical interferences with their indie (,
pendence incident to their defeat,
But what Of the creditors? Britain /
and France together owe us above |
81, 900 00o. 900 on war debts. II Ger |
many raised the $4,000 oo0. 900 France |
would get half, Britain quarter, But |
France would have to divide her share |
equally between Britain and the United |
States according to the terms OF the !
Churchill agreement. That would |
mean that the British would stu owe !
us So ,00O, 900 900. while the French |
would not only still owe us $4,000, 600 |
600, but also owe the British more than !
s., SOC. 0o0,0 900, In word, the foreign
debt of France due to the war would !.
then be materially In excess OF the
German
But what to do about thiSs Patiently |
nothing, II the United States refuses 70
consent to general liQutdation. On the |
one hand We refuse 10 join PREPARATIONS |
and debts, while on the other We equal |
ly firnly refuse to cancel. Meantime |
the allied situation grows daily worse. |
Time runs against them, The value OF |
evacuation diminlSheS because every /
week We get nearer 10 January l. 1888.
when they have 20 clear out. anyway.
without regard to payments. provided |
only Germany goes through the motions
az the Dawes plan. Nor can they tvrce
Germany to Bid HIGHER. because they /
have no means Of coercion, Muxcover.
since the bonds have 10 be sold on the l
world market. The German statement