Evening star., 1929-06-09
DOUBTS OF DAWES
PLAN ELIMINATED
Exact Reparations Figures
Replace First Indefinite
Debt Terms.
Continued From First Page.)

and EngNSh.
The text of the report makes clear
the changes in the Young plan with
reference to the Dawes plan, part Of
the text being as follows:
THE Dawes plan although drawn up
at time OF intense crisis has by test
lasting over nearly five years justified
by facts the poStulates on which it was
based as regards both the restoration OF
the public finances of Germany and her
economic recovery.
1T may be well to summarize briefly
the points Of Observation-Disclosures to
Germany or her creditors claimed for
the new proposal which justify a de-
parture from a scheme that has In the
past rendered signal service.
The plan drawn up by the commit
tee to afford a definite solution OF the
reparation question accompanies re-
duction in the existing obligation OF
Germany by an essential modification
in their financial and political status.
In so far as the creditors are relinquish-
ing substantial advantages in the face
value of payments due under the pres
ent scheme they are doing so only by
reason of those improvements in in
trinsic and available values which arise
from the practicability and certainty OF
commercialiZation and mobilization
within a reasonable period and in Its
attendant financial and economic psy-
chology.
Among the notifications which are
considered specially important are the
following:
"O) Fixation Of the period and the
debt:
THE Dawes plan imposes in virtue
of the index Of prosperity increasing an
nuities, Of which the number are not
fixed The new program indicates
definite number Of fixed annuities.
"() Disappearance Of the index OF
prosperity:
only estimates which vary very
widely OF the ultimate effect Of the
index Of prosperity can at this date be
made. But in no circumstances could
Germans benefit therefrom and the dis
appearance Of this element of uncer-
tainty Is wholly to her benefit.
Removes External Control.
"(0 Attainment of financial au-
tonomy:
Under the Dawes plan Germany can
only obtain the discharge of her obliga-
tions in marks by the existence of a sys-
tenn Of transfer protection which in
wolves q measure of external control.
This brings attendant limiting effects
on German credit and financial inde-
pendence which render difficult, If not
impossible. any mobilization of the
German debt. The new plan would be
abandoning the fundamental purposes
for which it was intended II 1t did not
cancel this clause and leave to Ger
many the obligation of facing her en-
gagements on her own untrammeled
responsibility.
80 Postponement safeguards:
Nevertheless, If an exceptional
emergency interrupts the normal
course Of economic life to which the
scheme is adapted Germany can on her
own initiative resort to certain measures
Of temporary relief.
"The annuity is divided into two parts.
of which one is subject to postponement
of transfer and payment. Germany will
thus be enabled under certain circum-
stances temporarily to relieve her
balance of payments and will in fact
enjoy the advantages Of form of
transfer protection without its attend
ant limitations.
"(5) Deliveries.
"While the Dawes plan reluctantly ac-
cepted the expedient Of deliveries in
kind. the new plan. In spite of the desire
Of the creditor powers to dispose freely
of their shares OF the annuities. recog-
nises the undesirability of q sudden
cessation OF the system at present in
force. The creditors are therefore to
take deliveries In kind for 10 years, but
in decreasing amounts beginning with
$50 900 900.
Accept Reductions.
"(6) Mobilization.
From the point Of view Of the
creditor powers an essential feature of
the new plan, which induces them TO
agree to reductions on their claims that
leave them burdened with q consider
able part of their expenditure for the
damages caused by the war, is that fact
that the annuity Is paid in q form
lending itself to mobilization.
THE organization and machinery of
the Dawes plan were based on the con-
viction that 1t must find its proper guar
anty in the interest of all parties to
carry 1t out in good faith. In aiming
as it did at the transference Of the
reparation payments from the political
to the economic and business sphere 1t
presumed constant cooperation Of
debtor and creditors alike. The new
system goes further along the same road,
replacing the collaboration of separate
administrative and governmental organ
ization by common work in a purely
financial institution in the management
OF which Germany Is to have an appro-
prlate part. The present administrative
organizations cannot have all the elas-
ticlty necessary for banking transactions
OF the magnitude Of the payment and
transfer of the annuities. But the new
bank in close association with the banks
OF issue and with the banking facilities
at Its command. will have all the neces-
sary means OF effecting these operations
Without disturbance to the German
economy or to the economy of other
countries. In addition 1t will be In q
position to open up to trade new posi-
bilitieS OF development. The operations
which IL Is TO undertake cannot be dis
turbed or hampered without irreparable
damage to the credit of the countries
concerned. This assurance should make
It possible to limit the guarantees estab-
llshed under the present system for the
protection OF the rights of the creditors
TO the minimum required for the prompt
and facile commercialization of the
mobilizable part of the annuity.
| "t8) Summary.
THE proposed plan continues and
completes the work begun by the Dawes
plan which the position alike of Ger
many and OF the other countries made
1t impossible to do more than indicate
In outline in 1924. BY the final re-
| duction and fixation of the German
debt, by the establishment of a progress
sive scale of annuities and by the IA
cilities which the new bank offers for
lessening disturbance in the payment of
| annuitieS. 1t sets the seal on the incm-
sion of the German debt in the list of
| international settlements. If it involves
appreciable reduction of payments to
the creditor on what might have been
| anticipated under the continued opera
| ton of the Dawes plan. 1t at the same
! time eliminates the uncertainties which
were inherent In that plan and were
equally inimical to the interest of the
1nkaN Il IL